Fact Check: Trump’s Statements on the Economy

With an eye toward his 2020 campaign, President Donald Trump is turning to a familiar playbook of exaggerated boasts about economic performance and overdrawn complaints about a race tilted against him.

He insisted the Electoral College gives Democrats a “big advantage” in US presidential elections, making it difficult for Republicans like himself to win. That's wrong. Though in 2016 he often described the election as “rigged” against him, Trump, in fact, wouldn't have won the presidency without the Electoral College system in which the votes of smaller rural states that tend to vote Republican are weighted more heavily than big, Democratic-leaning states like New York and California.

Trump also claimed over the weekend that he's presided over one of the best US economies ever. He's wrong about that too.

The misleading rhetoric over the past week came as the president prepared to kick off his re-election campaign on Tuesday, 18 June, in Florida.

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In Trump's reckoning, an Iran tamed by him no longer cries “death to America”, the border wall with Mexico is proceeding apace, the estate tax has been lifted off the backs of farmers, the remains of US soldiers from North Korea are coming home and China is opening its wallet to the US treasury for the first time in history. These claims range from flatly false to mostly so.

Here's a look:

ELECTORAL COLLEGE "“It’s always tougher for the Republican because, you know, I don’t know, people... people never cover this, but the Electoral College is very much steered to the Democrats. It’s a big advantage for the Democrats. It’s very much harder for the Republicans to win,”" - Donald Trump, Fox News interview addressing his lag behind some 2020 Democratic candidates on 14 June.

THE FACTS:

Actually, the Electoral College's unique system of electing presidents is a big reason why Trump won the presidency. Four candidates in history, including Al Gore in 2000, have won a majority of the popular vote only to be denied the presidency by the Electoral College. All were Democrats.

In the 2016 election, Democrat Hillary Clinton received nearly 2.9 million more votes than Trump after racking up more lopsided victories in big states such as New York and California, according to election data compiled by The Associated Press. But she lost the presidency due to Trump's winning margin in the Electoral College, which came after he narrowly won less populous Midwestern states such as Michigan and Wisconsin.

Unlike the popular vote, Electoral College votes are set equal to the number of US representatives in each state plus its two senators. That means more weight is given to a single vote in a small state than the vote of someone in a large state.

ECONOMY & TAXES "“No President has done what I have in... the first 2 1/2 years of his presidency, including the fact that we have one of the best economies in the history of our country.”" - Donald Trump, Twitter, 5 June.

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THE FACTS:

This is one of Trump's most frequent falsehoods. The economy is solid but it's not one of the best in the country's history. Trump is also claiming full credit for an economic expansion that began under President Barack Obama in mid-2009.

The economy expanded at an annual rate of 3.2 percent in the first quarter of this year. That growth was the highest in just four years for the first quarter.

In the late 1990s, growth topped 4 percent for four straight years, a level it has not yet reached on an annual basis under Trump. Growth even reached 7.2 percent in 1984.

While the economy has shown strength, it grew 2.9% in 2018, the same pace it reached in 2015, and simply hasn't hit historically high growth rates.

"“Wages are growing, and they are growing at the fastest rate for... this is something so wonderful... for blue-collar workers. The biggest percentage increase... blue-collar workers.”" - Donald Trump, Council Bluffs, Iowa, on 12 June.

THE FACTS:

He's claiming credit for a trend of rising wages for lower-income blue-collar workers that predates his presidency.

Some of the gains also reflect higher minimum wages passed at the state and local level; the Trump administration opposes an increase to the federal minimum wage.

With the unemployment rate at 3.6 percent, the lowest since December 1969, employers are struggling to fill jobs. Despite all the talk of robots and automation, thousands of restaurants, warehouses, and retail stores still need workers.

They are offering higher wages and have pushed up pay for the lowest-paid one-quarter of workers more quickly than for everyone else since 2015. In April, the poorest 25 percent saw their paychecks increase 4.4 percent from a year earlier, compared with 3.1 percent for the richest one-quarter.

Those gains are not necessarily flowing to the “blue collar” workers Trump cited. Instead, when measured by industry, wages are rising more quickly for lower-paid service workers. Hourly pay for retail workers has risen 4.1 percent in the past year and 3.8 percent for hotel and restaurant employees. Manufacturing workers, the blue collars, have seen pay rise just 2.2 percent and construction workers 3.2 percent.

"“And to keep your family farms and ranches in the family, we eliminated the estate tax, also known as the ‘death tax’ on the small farms and ranches and other businesses. That was a big one... People were having a farm, they loved their children, and they want to leave it to their children... And the estate tax was so much, the children would have to go out and borrow a lot of money from unfriendly bankers, in many cases. And they’d end up losing the farm, and it was a horrible situation.”" - Donald Trump, Council Bluffs, Iowa.

THE FACTS:

There still is an estate tax. More small farms may be off the hook for it as a result of changes by the Republican-controlled Congress in 2017 but very few farms or small businesses were subject to the tax even before that happened.

Congress increased the tax exemption, temporarily, so fewer people will be subject to those taxes.

Previously, any assets from estates valued at more than $5.49 million, or nearly $11 million for couples, were subject to the estate tax in 2017. The new law doubled that minimum for 2018 to $11.2 million, or $22.4 million for couples. For 2019, the minimums rose to $11.4 million, or $22.8 million for couples. Those increased minimums will expire at the end of 2025.

According to an analysis by the nonpartisan Tax Policy Center, only about 80 small farms and closely held businesses were subject to the estate tax in 2017. Those estates represent about 1 percent of all taxable estate tax returns.

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RUSSIA INVESTIGATION "“He (Robert Mueller) said no collusion... The report said no collusion.”" - Donald Trump, ABC News interview on special counsel Robert Mueller’s report, 16 June 2019.

On 12 June, Trump said in Oval Office, “The Mueller report spoke... It said, ‘No collusion and no obstruction and no nothing.’ And, in fact, it said we actually rebuffed your friends from Russia; that we actually pushed them back... we rebuffed them."

THE FACTS:

He's wrong to repeat the claim that the Mueller report found no collusion between Russia and the Trump campaign; it's also false that his campaign in 2016 denied all access to Russians. Nor did the special counsel's report exonerate Trump on the question of whether he obstructed justice.

Mueller's two-year investigation and other scrutiny revealed a multitude of meetings with Russians. Among them: Donald Trump Jr.'s meeting with a Russian lawyer who had promised dirt on Clinton.

On collusion, Mueller said he did not assess whether that occurred because it is not a legal term.

He looked into a potential criminal conspiracy between Russia and the Trump campaign and said the investigation did not collect sufficient evidence to establish criminal charges on that front.

Mueller noted some Trump campaign officials had declined to testify under the Fifth Amendment or had provided false or incomplete testimony, making it difficult to get a complete picture of what happened during the 2016 campaign. The special counsel wrote that he “cannot rule out the possibility” that unavailable information could have cast a different light on the investigation's findings.

In his interview with ABC News, Trump said if a foreign power offered dirt on his 2020 opponent, he'd be open to accepting it and that he'd have no obligation to call in the FBI. “I think I'd want to hear it,” Trump said. “There's nothing wrong with listening.”

Republican Senator Lindsey Graham, Judiciary Committee Chairman, tweeted in response to Trump's comments that he'd be open to accepting political dirt from foreign adversaries like Russia, “The outrage some of my Democratic colleagues are raising about President Trump's comments will hopefully be met with equal outrage that their own party hired a foreign national to do opposition research on President Trump's campaign.”

THE FACTS:

Graham is making an unequal comparison.

He seeks to turn the tables on Democrats by pointing to their use of a dossier of anti-Trump research produced by Christopher Steele, a former British intelligence officer, that was financed by the Democratic Party and Hillary Clinton's campaign. Graham also insists on “equal outrage” over Democrats using that information from a former intelligence officer of Britain, an ally with a history of shared intelligence with the US. That's a different story from a foreign adversary such as Russia, which the Mueller report concluded had engaged in “sweeping and systematic” interference in the 2016 presidential election.

Moreover, Steele was hired as a private citizen, though one with intelligence contacts.

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The Mueller report found multiple contacts between the Trump campaign and Russia, and the report said it established that "the Russian government perceived it would benefit from a Trump presidency and worked to secure that outcome, and that the Campaign expected it would benefit electorally from information stolen and released through Russian efforts."

Trump and his GOP allies typically point to the Steele dossier as the basis for the Russia probe. But the FBI's investigation began months before it received the dossier.

"“What kind of a rigged deal is this? And then on top of it, after two years and after being the most transparent in history...”" - Donald Trump, ABC news interview. 

In the Oval Office, Trump remarked, “The Democrats were very unhappy with the Mueller report. So now they're trying to do a do-over or a redo. And we're not doing that. We gave them everything. We were the most transparent presidency in history.”

THE FACTS:

It's highly dubious to say Trump was fully cooperative in the Russia investigation.

Trump declined to sit for an interview with Mueller's team, gave written answers that investigators described as “inadequate” and “incomplete”, said more than 30 times that he could not remember something he was asked about in writing, and according to the report, tried to get aides to fire Mueller or otherwise shut or limit the inquiry.

In the end, the Mueller report found no criminal conspiracy between the Trump campaign and Russia but left open the question of whether Trump obstructed justice.

According to the report, Mueller's team declined to make a prosecutorial judgement on whether to charge partly because of a Justice Department legal opinion that said sitting presidents shouldn't be indicted. The report instead factually laid out instances in which Trump might have obstructed justice, specifically leaving it open for Congress to take up the matter.

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IRAN "“They haven’t screamed ‘Death to America’ lately.”" - Donald Trump, Fox News interview.

Trump, speaking about Iranians "screaming 'death to America'" when Barack Obama was in the White House claim that they don’t occur the sentiment anymore.

THE FACTS:

Yes, they have. The ‘Death to America’ chant is heard routinely.

The chant, "marg bar Amreeka" in Farsi, dates back even before Iran's 1979 Islamic Revolution. Once used by communists, it was popularised by Ayatollah Ruhollah Khomeini, the revolution's figurehead and Iran's first supreme leader after the US Embassy takeover by militants.

It remains a staple of hard-line demonstrations, meetings with current Supreme Leader Ayatollah Ali Khamenei, official ceremonies, parliamentary sessions and main Friday prayer services in Tehran and across the country. Some masters of ceremonies ask audiences to tone it down. But it was heard, for example, from the crowd this month when Khamenei exhorted thousands to stand up against US “bullying.”

In one variation, a demonstrator at Tehran's Quds rally last month held a sign with three versions of the slogan: ‘Death to America’ in Farsi, ‘Death to America’ in Arabic, ‘Down with USA’ in English.

NORTH KOREA " “I think we’re going to do very well with North Korea over a period of time. I’m in no rush. ... Our remains are coming back; you saw the beautiful ceremony in Hawaii with Mike Pence. We’re getting the remains back.”" - Donald Trump, in a joint news conference with Poland’s president on 12 June.

THE FACTS:

The US is not currently getting additional remains of American service members killed during the Korean War.

With US-North Korea relations souring, the Pentagon said last month it had suspended its efforts to arrange negotiations this year on recovering additional remains of American service members. The Pentagon said it hoped to reach agreement for recovery operations in 2020.

The Defense POW-MIA Accounting Agency said it has had no communication with North Korean authorities since the Vietnam summit between Trump and North Korean leader Kim Jong Un in February. That meeting focused on the North's nuclear weapons and followed a June 2018 summit where Kim committed to permitting a resumption of US remains recovery; that effort had been suspended by the US in 2005.

The agency said it had “reached the point where we can no longer effectively plan, coordinate, and conduct field operations” with the North during this budget year, which ends on 30 September.

Last summer, in line with the first Trump-Kim summit in June, the North turned over 55 boxes of what it said were the remains of an undetermined number of US service members killed in the North during the 1950-53 war. So far, six Americans have been identified from the 55 boxes.

US officials have said the North has suggested in recent years that it holds perhaps 200 sets of American war remains. Thousands more are unrecovered from battlefields and former POW camps.

The Pentagon estimates that about 5,300 Americans were lost in North Korea.

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BORDER WALL "“The wall is going up. It’s going up rapidly. We’re going to have over 400 miles of wall built by the end of next year... And we just won the lawsuit on the wall.”" - Donald Trump, Fox News interview.

Trump said at the Republican Party of Iowa annual dinner, “By next year, at the end of the year, we're going to have close to 500 miles of wall.”

THE FACTS:

He's being overly optimistic. It's unclear how Trump arrives at 800 km but he would have to prevail in legal challenges to his declaration of a national emergency or get Congress to cough up more money to get anywhere close. Those are big assumptions. And by far the majority of the wall he's talking about is replacement barrier, not new miles of construction.

So far, the administration has awarded contracts for 395 km of wall construction, but more than half comes from Defence Department money available under Trump's 15 February emergency declaration. On 24 May, a federal judge in California who was appointed by Obama blocked Trump from building key sections of the wall with that money. In a separate case, a federal judge in the nation's capital who was appointed by Trump sided with the administration , but that ruling has no effect while the California injunction is in place.

Even if Trump prevails in court, all but 27 km of his awarded contracts replace existing barriers.

The White House says it has identified up to $8.1 billion in potential money under the national emergency, mostly from the Defence Department.

Customs and Border Protection officials say the administration wants Congress to finance 330 km next year. The chances of the Democratic-controlled House backing that are between slim and none.

TRADE "“Right now, we’re getting 25 percent on $250 billion worth of goods. That’s a lot of money that’s pouring into our treasury. We’ve never gotten 10 cents from China. Now we’re getting a lot of money from China.”" - Donald Trump on 10 June.

In Council Bluffs, Trump said, “We're taking in, right now, billions and billions of dollars in tariffs, and they're subsidising product.”

THE FACTS:

He's incorrect. The tariffs he's raised on imports from China are primarily if not entirely a tax on US consumers and businesses, not a source of significant revenue coming into the country.

A study in March by economists from the Federal Reserve Bank of New York, Columbia University and Princeton University, before the latest escalation, found that the public and US companies were paying $3 billion a month in higher taxes from the trade dispute with China, suffering $1.4 billion a month in lost efficiency and absorbing the entire impact.

It's also false that the US never collected a dime in tariffs before he took action. Tariffs on goods from China are not remotely new. They are simply higher in some cases than they were before. Tariffs go back to the beginning of the US and were once a leading source of revenue for the government. Not in modern times. They equate to less than 1 percent of federal spending.

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"“Look, without tariffs, we would be captive to every country, and we have been for many years. That’s why we have an $800 billion trading deficit for years. We lose a fortune with virtually every country. They take advantage of us in every way possible.” " - Donald Trump, CNBC interview on 10 June.

THE FACTS:

Trump isn't telling the whole story about trade deficits.

When he refers to $800 billion trade gaps, he's only talking about the deficit in goods such as cars and aircraft. He leaves out services, such as banking, tourism and education, in which the US runs substantial trade surpluses that partially offset persistent deficits in goods. The goods and services deficit peaked at $762 billion in 2006. Last year, the United States ran a record $887 billion deficit in goods and a $260 billion surplus in services, which added up to an overall deficit of more than $627 billion.

The US does tend to run trade deficits with most other major economies. But there are exceptions, such as Canada (a nearly $4 billion surplus last year), Singapore ($18 billion) and Britain ($19 billion).

Mainstream economists reject Trump's argument that the deficits arise from other countries taking advantage of the United States. They see the trade gaps as the result of an economic reality that probably won't bend to tariffs and other changes in trade policy: Americans buy more than they produce, and imports fill the gap.

US exports are also hurt by the American dollar's status as the world's currency. The dollar is usually in high demand because it is used in so many global transactions. That means the dollar is persistently strong, raising prices of US products and putting American companies at a disadvantage in foreign markets.

FEDERAL RESERVE " “We have people on the Fed that really weren’t, you know, they’re not my people, but they certainly didn’t listen to me because they made a big mistake.” " - Donald Trump, CNBC interview.

THE FACTS:

Actually, most of the members on the Fed's Board of Governors owe their jobs to Trump.

In addition to choosing Jerome Powell, a Republican whom Obama had named to the Fed board, to be chairman, Trump has filled three other vacancies on the board in his first two years in office. Lael Brainard is the only Democrat on the board.

There are still two vacancies on the seven-member board. Trump had earlier intended to nominate two political allies, Herman Cain and Stephen Moore, but both later withdrew in the face of sharp opposition from critics.

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AUTOMAKERS "“All of the car companies... you know, long before I got here, we lost 32 percent of our car industry, our automobile manufacturing business, to Mexico.” " - Donald Trump, Fox News interview. "“Tariffs are a great negotiating tool, a great revenue producer and, most importantly, a powerful way to get... companies to come to the USA, and to get companies that have left us for other lands to come back home. We stupidly lost 30 percent of our auto business to Mexico.”" - Donald Trump, Twitter, 11 June.

THE FACTS:

He's incorrect that Mexico took 30 percent of the US automobile business in the years since the North American Free Trade Agreement took effect in 1994.

In 2017, 14 percent of the vehicles sold in the US were imported from Mexico, according to the Center for Automotive Research, a think tank in Ann Arbor, Michigan. Parts imported from Mexico exceed 30 percent.

"“If I put tariffs on, as an example, Mexico, you know what would happen? 25 percent. All the car companies would move back to the United States because they don’t want to pay the 25 percent.” " - Donald Trump, Fox News interview. "“If the Tariffs went on at the higher level, they would all come back.”" - Donald Trump, Twitter, 11 June.

THE FACTS:

He's wrong to assume that auto companies in Mexico would immediately move back to the US if there were a 25 percent tariff on Mexican-made vehicles and parts.

It takes three years or four years minimum to plan, equip and build an auto assembly plant, so there would be little immediate impact on production or jobs. Auto and parts makers are global companies, and they would also look to countries without tariffs as a place to move their factories. The companies could also just wait until after the 2020 election, hoping that if Trump is defeated, the next president would get rid of the tariffs.

“They're not going to invest in duplicative capacity in response to short-term policy incentives,” said Kristen Dziczek, a vice president at the Center for Automotive Research.

It is possible that some production could be shifted back to the United States. General Motors, for instance, makes about 39 percent of its full-size pickup trucks at a factory in Silao, Mexico, mainly light-duty versions, according to analysts at Morningstar. If the US imposed a 25 percent tariff on assembled automobiles, GM could shift some production to a factory in Fort Wayne, Indiana, that also makes light-duty pickups. But there are limits. That plant already is running on three shifts and is almost near its maximum capacity.

Tariffs on Mexico probably would cost auto jobs in the US, too, because Mexico would almost certainly retaliate with tariffs of its own. Tariffs on both sides would raise prices of vehicles, because automakers probably would pass the charges onto their customers.

Industry experts say higher prices would cause more buyers to shift into the used-vehicle market, cutting into new-vehicle sales. Tariffs could be higher than 25 percent because parts go back and forth across the border multiple times in a highly integrated supply chain.

Vehicles built in Mexico get 20 percent to 30 percent of their parts from the US, so the tariffs would drive up prices there. That would hit lower-income people hard because automakers produce many lower-priced new vehicles in Mexico to take advantage of cheaper labour. About 62 percent of US vehicle and parts exports go to Canada and Mexico, according to the Center for Automotive Research.

Tariffs would add $1,300 to $4,500 to the price of vehicles based just on the cost of parts, the Center estimated.

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