Donald Trump received a favorable rating from the general public on only one issue -- the economy (although even that approval has been dropping recently).Since many elections are won or lost on the condition of the national economy, Trump (and congressional Republicans) are counting on a good economy to save them in the 2020 election.
Nobel Prize-winning economist Paul Krugman (pictured) says that won't happen. In his New York Times column, he offers this explanation:
The reality is that Donald Trump is extraordinarily unpopular. A recent Pew analysis found only one other modern president with such a low approval rating two years into his administration. On the other hand, that president was Ronald Reagan, who went on to win re-election in a landslide. So some Trump boosters are suggesting their champion can repeat that performance. Can he? No, he can’t. And it’s worth understanding why, both to assess current political prospects and to debunk the Reagan mythology still infesting U.S. conservatism. Let’s talk first about the Reagan story. Reagan was indeed unpopular in January 1983, mainly because of the economic situation. Despite a huge tax cut in 1981 and a sharp rise in military spending, more than 10 percent of the labor force was unemployed. Although many voters blamed Reagan for this economic distress, the truth was that it had little to do with his policies; it was, instead, the consequence of the Federal Reserve’s attempts to bring down inflation, which had driven interest rates as high as 19 percent. By mid-1982, however, the Fed had reversed course, sharply reducing rates. And these rate cuts eventually produced a huge housing boom, which in turn drove a rapid economic recovery. Like the earlier slump, this boom had little to do with Reagan’s policies, but voters gave him credit anyway. Unemployment was still fairly high — more than 7 percent — in November 1984, but what matters for electionsis whether things are getting better or worse, not how good they are in absolute terms. And in 1983-84, unemployment fell fast, so Reagan won big. How does this story compare with Trump’s prospects now? First of all, where Reagan was unpopular because of a weak economy, Trump is unpopular despite a strong economy. That is, he starts from a much lower baseline. And there is no chance of a “morning in America”-type boom over the next two years. For one thing, in 1983-84 America was able to grow very fast by taking up the huge amount of economic slack that had accumulated over the course of the double-dip recession from 1979 to 1982. Right now, with unemployment below 4 percent, it’s not clear whether there’s any economic slack at all. There’s certainly not enough to allow the 7-plus percent growth rates in real personal income that prevailed in the run-up to the 1984 election. Also, a housing boom driven by dramatic interest rate reductions was central to the rapid growth of Reagan’s third and fourth year in office. (No, it wasn’t all about the miraculous effects of tax cuts.) But today’s Fed can’t — literally can’t — deliver the kind of boost it did back then by bringing double-digit interest rates down to single-digit levels, because rates are already quite low. And with housing prices looking rather high, it’s hard to imagine a huge surge looking forward. Are there other ways that the economy might rescue Trump? What about the 2017 tax cut, which Trump said would be “rocket fuel” for the economy? Well, by increasing the budget deficit, that cut probably gave the economy some stimulus, temporarily raising growth. But that effect is already fading out, and the economy would have been slowing down even without the extra drag created by the Trump shutdown. This doesn’t necessarily mean that we’ll have a recession soon, but we’re almost surely looking at unimpressive growth at best. But wasn’t the tax cut supposed to increase long-run growth, by increasing business investment? Yes, it was — but it isn’t delivering on that promise. Corporations received huge tax breaks, but they mostly used the money to pay higher dividends and buy back stocks, not for investment. And even the modest rise in business investment that did take place in 2018 seems to have been driven by higher oil prices, not tax cuts. So Donald Trump is no Ronald Reagan. Actually, even Ronald Reagan was no Ronald Reagan. Although right-wing legend portrays his experience as proof of the magical power of tax cuts, the economy actually performed somewhat better under Bill Clinton, who raised taxes. (Although, to be fair, almost all Republicans seem to have managed to expunge that fact from their memories.) Most of Reagan’s political success reflected not fundamental economic achievement but good luck with the timing of the business cycle. And Trump almost certainly won’t experience comparable luck. Combine this lack of a strong economic upside over the next two years with Trump’s extreme current unpopularity, and his chances for re-election — if he even makes it to the end of his first term — don’t look too good. Which raises the question of what he and his party will do if defeat is staring them in the face. I don’t know the answer to that question, and if you aren’t scared about how a cornered Trump might lash out, you haven’t been paying attention. What’s clear, however, is that Trump and his allies are in a deep hole right now — and the economy isn’t going to dig them out of it.
