In his State of the Union address, President Biden made every effort to take credit for what he claimed is an economy improving at an historic pace. Americans disagree.
According to a recent ABC poll, “40% [of Americans] say they are worse off financially than they were two years ago – the most negative response to that question in nearly 40 years.” According to a recent CBS News/YouGov poll, 61% of Americans rate the economy as “bad.” So where is the disconnect?
A big part of the problem is Biden’s attempt to spin the inevitable jobs market recovery that followed the end of the pandemic. Seriously, you didn’t need a degree in economics to know that once the pandemic’s economic shutdown ended, people would eventually return to work no matter who was in office.
Nonetheless, Biden wants to credit his economic policies. If anything, actually, Biden’s work-discouraging policies – such as massive welfare benefits that made staying home unemployed more profitable than going to work – have delayed and hobbled that recovery.
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So, let’s look at a few of Biden’s job creation claims.
We have created “12 million new jobs – more jobs created in two years than any president has created in four years.”
To believe this claim you also have to believe that people returning to work is the same as creating jobs. But even assuming that were true, President Trump created more jobs in 9 months than Biden has in 24. In February 2020, the US economy boasted 152 million jobs (then a record high). States then shut down their economies and by April that number dropped by 22 million jobs to 130 million. Under Trump, over the next nine months, 13 million people returned to work and the number of jobs stood at 143 million when Biden took office in January 2021.
As Biden claims, over the next 24 months the economy added a total of 12 million jobs. The total number is now 155 million (just 3 million more than the pre-pandemic total).
So, since the number of jobs hit rock bottom in April 2020, the economy added back 13 million jobs under President Trump and 12 million under President Biden for a total of 25 million jobs. Of that total, 22 million – or 88% – were people returning to work and 3 million – or 12% – were “new” jobs.
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But people returning to work really isn’t the same as the economy creating new jobs. Let’s say you work at a company that employs 1,000 people and it shuts down for a week due to a flu outbreak. When the employees return to work is that really the same as creating 1,000 new jobs? Obviously not.
Similarly, sitting in the White House at a time when people are returning to their jobs following pandemic induced economic shutdowns is not the same as creating new jobs. You would assume White House economists know that – and they do.
So, in context, the economy adding a total of 3 million new jobs over 24 months under Biden isn’t even particularly impressive – let alone record setting.
The “unemployment rate is at 3.4%, a 50-year low. Near record – near record unemployment. “
Reality – if people are not looking for work the unemployment rate will be very low. Again, seems obvious. So, a key determinate of the unemployment rate is the labor participation rate – that is, the number of people either working or looking for work. If people aren’t looking for work, the labor department does not consider them unemployed – which obviously lowers the unemployment rate.
So, why is the unemployment rate currently at a 50-year low? Well, it’s because people are staying out of the labor force – they aren’t even looking for work – in larger numbers than was the case pre-pandemic. That spells all kinds of danger for our economic outlook.
Were the labor participation rate today (62.4%) the same as it was when the pandemic began (63.3%), the unemployment rate would be 4.9%, which isn’t bad but also isn’t a 50-year low or even the pre-pandemic rate in February 2020 of 3.5%.
Just to give you an idea about how important this is, if labor participation in February 2020 were what it is today, the unemployment rate under Trump would have been 2% heading into the pandemic – and that would have been an all-time historic low.
“In the last two years, my administration has cut the deficit by more than $1.7 trillion – the largest deficit reduction in American history.”
Biden’s claims on the deficit are also worth a quick fact check. Prior to the pandemic, the record year for the U.S. deficit was $1.4 trillion in 2009, the first year of the Obama-Biden administration. The all-time record was set in 2020 when Democrats and Republicans approved massive spending in the midst of pandemic economic lockdowns. The result was record federal spending and a record deficit of $3.1 trillion.
In 2021, the deficit declined somewhat to $2.8 trillion as massive federal spending continued, boosted by Biden’s March 2021 $1.9 trillion so-called American Rescue Plan – which Democrats passed on a completely partisan basis.
In 2022, with people returning to work and the pandemic at an end, pandemic spending declined. This occurred despite Biden’s efforts to increase federal spending with his $3.5 trillion Build Back Better bill. As a result, the deficit declined to $1.4 trillion, about the old Obama-Biden record.
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It declined primarily for two reasons, neither of which go to Biden’s credit. First, the reduction of pandemic spending despite Biden’s efforts to expand that spending. Second, record high tax revenue of $3.2 trillion due to the Trump tax cuts. The revenue record pre-Trump tax cuts was $2 trillion in 2015.
So, while Biden claims credit for the post-pandemic deficit reduction, it was actually due to the failure of a policy he supported (deficit increasing legislation) and the success of a policy he opposed (the Trump tax cuts).
Nonetheless, he unabashedly took credit with an “aw shucks” smile on his face.
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Reality – of the four record-high federal deficits, three (2009, 2021 and 2022) occurred while Biden was either president or vice president.
So, like the old story about the man caught in bed with another woman who asks his wife – “Who you gonna believe, me or your eyes,” my advice is that you believe what you’re seeing – particularly in your bank account, at the gas pump and at the grocery store – not the suspect claims of a lifelong Beltway politician desperate to put a positive spin on the worst economy our country has seen in decades.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He is currently a Senior Visiting Fellow at the Heritage Foundation, and a Senior Fellow at both the Pepperdine University School of Public Policy and the America First Policy Institute. He was nominated by President Donald Trump to serve as U.S. Labor Secretary.