One of the joys of writing for the public is that, occasionally, the public contacts you. If it’s on Twitter, you learn not to take it personally—especially if the tweeter is anonymous. Same with email—sometimes the responses are supportive, sometimes they’re not. And almost always, anonymous comments tend towards the downright hateful or weird.
Over the weekend my Twitter feed and email were filled with rebuttals to some of my recent columns about homelessness in California, Tesla’s crony corporate subsidies, and the state of the economy.
After filtering out the ad hominems and foul language, one fact-based criticism emerged (though anonymous and snark-filled). Such criticisms are always useful for two reasons: it forces a revisiting of conclusions to see if they, and the data used to support them, are correct; and, it helps us to understand the opposing argument.
The first contention of interest was a frequently circulated table one critic forwarded asserting that “There is no Trump Economic Boom.” It came with the admonition that I “needed to stop lying.” Here’s the table:
Examining the weakest quarters of compound annual growth rate under Presidents Trump and Obama—starting after the recession officially ended to give Obama the benefit of the doubt—yields a completely different picture—one that not at all flattering to Obama’s economic stewardship:
Further, while President Obama was in office for 32 quarters, 30 of which were post-recession, Trump has been in office for only nine quarters. That means when looking for strong quarters (or weak ones) Obama has a higher statistical chance of producing more of both. As a result, the average of those quarters is more instructive. Obama’s post-recession compound annual growth rate average was 2.16% compared to Trump’s 2.54%, comparatively 18% stronger than Obama’s.
The next contention of interest the critic threw out was likely in response to my articles highlighting the economic performance of America’s two most-populous states, California and Texas. Since both states feature large, diverse economies and majority-minority populations, comparing their economic performance is illuminating, especially as California features high taxes and the highest marginal income tax rate in the nation, 13.3%, while Texas has far lower taxes and no personal income tax.
The critic correctly noted that private sector real GDP growth in California since it hiked its top income tax bracket from 12.3% to 13.3% in 2012 was 4.0% from the 4th quarter of 2012 to the 4th quarter of 2018 compared to 3.2% in Texas. But, how does California fare over a wider range of periods? Not as well, according to data from the U.S. Bureau of Economic Analysis. Further, it’s important to note, that California lost far more ground during the last recession than did Texas, so, when the economic recovery there took off, it had more ground to make up.
Lastly, the critic cited the Federal Reserve Bank of St. Louis and its private sector job creation numbers since the 4th quarter of 2012 to present, showing that California saw job growth of 17.7% during the period, edging out Texas at 16.6%. Again, correct. But, as with the case of GDP growth above, California experienced more severe job losses during the recession than did other states, especially Texas. For a time, this was reflected in a strong rebound. That rebound has since faded.
Comparing the two states’ private sector job creation record from both the start and the end of the recession show a different picture, with Texas producing 22.6% more jobs in the private sector since December 2007 compared to 14.0% for California, a 61% comparative advantage for Texas.
Measuring private sector job growth since the end of the recession still advantages Texas, with 27.2% growth vs. 23.9% in California.
Lastly, looking at the time since President Trump took office in January 2017, we see that Texas added 5.7% more private sector jobs through April 2019, compared to 4.9% in California.
California’s slowdown in job growth over the past year may be part of a larger pattern in evidence since the 2017 tax cut and reform was signed into law in December of that year. The tax cut bill capped the per-household deductibility of state and local taxes (SALT) to $10,000, affecting about 30%of filers. This may be shifting more job-creating capital to the 27 low-tax states and away from the 23 high-tax states, resulting in the rate of private sector job growth running 80% higher in the low-tax states, of which Texas is one, since January 2018.
Why does all this matter? Because policies matter. Policies, such as lower taxes, less burdensome regulations, and fair trade on a level playing field, result—all things being equal—in more jobs and greater prosperity for all Americans. The argument over what policies lead to the best results is important. That’s why it’s critical to strip away the bluster and blue language that all too frequently passes for debate now, and instead engage in a more civil public dialogue.