On February 4, President Donald Trump delivered his third State of the Union address. Manhattan Institute scholars offer their analysis and reactions to some of his policy proposals and announcements.
It was wise, and not particularly surprising, that President Trump chose to kick off his State of the Union address with a celebration of the labor market. A record low unemployment rate means that people who want work can generally find jobs—and with wages growing, especially for the lowest earners, having a job means being able to pay the bills and put dinner on the table. The economy is among the highest concerns for most American voters, which means that current conditions are a feather in the president’s cap as we approach the 2020 election. While President Trump did inherit an economy in expansion, it would be difficult to argue that his policies haven’t largely supported continued growth.
President Trump has earned the right to take a victory lap on the growing economy—it would be political malpractice for a President not to take one in this economy. The CBO’s estimate of total 2017-2024 GDP has risen by $4.3 trillion since President Trump took office in January 2017. By contrast, President Obama’s economy produced $6.5 trillion less in GDP over eight years than had been projected when he took office (accounting for the inherited recession).
The 3.5% unemployment rate is the lowest in 50 years, and the recent slowdown in job growth reflects the lack of remaining unemployed people to move into jobs. This low unemployment rate has also pushed annual wage growth up past 3%, with wages now growing the fastest for the bottom-half of earners as well as for non-whites. The continued economic expansion is now the longest in American history, and the S&P 500 has soared by 46% since January 2017, due in part to both the anticipation and delivery of tax relief. Even worker productivity growth—the most important driver of long-term prosperity—is finally on an upswing. Overall, 52% of Americans rate the economy as “good” or “excellent,” versus just 13% calling it “poor.”
Yet major challenges remain. Too many Americans lack wealth, and struggle to make ends meet. The budget deficit will surpass $1 trillion this year despite relative peace and prosperity. Tariffs are cancelling out many of the positive effects of the 2017 tax cuts. Social Security and Medicare are sinking under the weight of 74 million retiring baby boomers. Rising health care costs are devouring too much of the rising worker compensation, and too many Americans remain uninsured. Washington remains gridlocked and often paralyzed, which is unlikely to change in this election year, leaving far too many challenges unaddressed.
In his State of the Union address, the President highlighted his administration’s work to make available renewable term insurance options as an affordable alternative to Obamacare plans. These plans provide Americans who sign up for insurance before they get sick with the option of comprehensive coverage and better access to doctors and hospitals at half the price than was previously available.
- Renewable Term Health Insurance: Better Coverage Than Obamacare, MI Report, May 2019
- Trump Can Start Fixing Health Insurance Markets Without Congress, The Hill, April 2017
Last night, President Trump introduced America to Janiyah Davis, a fourth grader who had hoped to find her way out of a failing school in Philadelphia through a tuition tax credit program that was vetoed by Pennsylvania’s governor. The president announced that he had found her a scholarship that would allow her to attend a great school of her family’s choice. A poll last week showed that Americans overwhelmingly support the Trump administration’s Education Freedom Scholarships proposal, which could help tens of thousands of children like Janiyah. Unfortunately, it has little chance of passing while the Democrats control the House of Representatives. These legislators should listen to the voices of parents of color and rethink their lack of support for effective school choice proposals that expand access to high-quality educational opportunities for minority students.
- Charter Schools Boost Results for Disadvantaged Students and Everyone Else, Issues 2020, January 2020