The Imperial Presidency: Trump’s Double-Edged Sword
With even a cursory glance at President Donald Trump’s Twitter page it is clear to see he has an obsession with his image. Although the events of the day may influence his stream of consciousness style of tweeting, there are a few topics that have been mainstays since even the days of candidate Trump.
Among those is the economy. Constantly touted by the president himself and his supporters as the crowning achievement of his presidency, the record-breaking stock market and low unemployment rates are, in many ways, his ticket to reelection. While many Republican voters may be turned off by his wanton disregard for constitutional and professional norms, some may find reason to overlook these transgressions due to the growth of their portfolios.
In other words, they may be the latest proof in the staying power of President Clinton’s 1992 campaign mantra, “It’s the economy, stupid.”
It is undeniable that the economy is doing well. Even the main sticking point of the critics of the current state of the economy, that wage growth has lagged behind the growth of other economic indicators, is losing its punch. By and large, President Trump is afforded credit for this growth by the simple fact of him being in office during the peak of this growth.
This in itself is a reflection of the imperial presidency. Just as the power of the position has grown, so too has the idea that whatever happens under a president is the direct result of their efforts.
Clearly, this is a logical fallacy. Proximity does not imply causality in the absolute sense. And while many prominent thinkers and economists debate whether President Obama or President Trump deserves the lion’s share of credit for the current state of the economy, the real answer is likely to be unsatisfactory to those on both the left and the right.
The reality is that the economy is cyclical. Periods of expansive growth are followed by contractions, and so on. The goal of economic policymakers is to ensure that these cycles stay within normal ranges and that an economic slowdown feels more like a speed bump rather than a head-on collision.
Of course, the president plays a role in this policymaking. With the wrong decision, a leader can easily steer their country to the brink of collapse, as in the case of Venezuela under Maduro or Zimbabwe under Mugabe. But the notion that some presidents are endowed with a magic wand to bend the economy to their whims is misguided and harmful to a logical and fair evaluation of their performance.
….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?
— Donald J. Trump (@realDonaldTrump) August 23, 2019
Yet, however misguided, Trump has benefited greatly from this pervasive belief. As of August 2019, a majority of voters approve of his handling of the economy. This contrasts strongly with issues like foreign policy and the general direction of the country, for which a strong majority disapprove. In other words, the economy is keeping his presidency afloat.
Although the idea of the economy being a direct result of the president’s efforts has served this one well, that has certainly not been the case for all presidents. Perhaps none are quite so familiar with the opposite side of the coin than the 39th president, Jimmy Carter.
Much of the Carter presidency was defined by high inflation and high unemployment. The causes of which are many, with some of the more prominent being the energy crisis and rising inflation that had been a largely ignored problem for much of the 1960s and 1970s. Many argue that these conditions were due to events out of his control, and there is some truth to that.
This is not to say that President Carter should be absolved of all responsibility for the economy during his presidency. But it is important to recognize that, in the public’s desire to find a simple answer to their economic woes, it is far easier to blame it on one person than to take issue with the intangible, abstract conditions that truly caused the economic situation.
Indeed, this was likely and all the more frustrating to Carter due to his ultimately taking action to curb inflation and paving the way for future economic growth, or at least by proxy, with his appointment of Paul Volcker as Chair of the Fed in 1979. Volcker’s commitment to reducing inflation through controlling the money supply and his willingness to bear the immense economic costs of doing so was certainly beneficial for the long-term economic health of the country. But in the short-term, these policies threw the economy into multiple recessions before finally stabilizing.
So while these policies energized the economy for future years, they crippled Carter’s chances of reelection. And now, they serve as a key reminder of why there has historically been a divide between the activities of the Federal Reserve and political interests. What is good for the country is not always good for the current administration.
Good monetary policy must reflect that reality.
President Trump is keenly aware of this. As a result, he has taken to lashing out at Fed Chair Jerome Powell for, quite literally, doing what he should be doing. And his attacks have only become more intense and more direct as signs of an impending recession become more prominent. Conceivably, a series of cuts in interest rates could give the economy a boost to put off any downturn until after the 2020 election. But with the economy in its current state, doing so would hardly be sound monetary policy.
If the Fed were to go forward with such cuts, then when the economy truly turned sour, they would be left with a diminished ability to take action, as is currently the case in countries like Japan with negative or near-zero interest rates.
Fed Chair Powell seems to be resilient against President Trump’s criticism, refusing to give Trump the kind of large rate cut he desires. Yet, instead of President Trump acknowledging that he will not get the monetary policy of his dreams and giving the Fed its historical deference, he has doubled down on his criticism. The reason is simple. It’s his Plan B.
In the event of a recession striking before 2020, Trump will do anything and everything to direct blame from himself and his misguided trade war. This includes citing Fed Chair Powell as the boogeyman.
It is unclear, however, if this will be effective. Certainly, his core constituency will follow the direction of his attacks, but it remains to be seen whether his attacks will be enough to overcome the history of the imperial presidency.
To answer with a truism, he can’t have it both ways. It defies basic logic to be able to claim absolute responsibility for the economy when times are good and absolve yourself of that very responsibility when times are bad.
But that is what precisely what President Trump will attempt to try to do. And I, along with President Carter, will be watching.