Democrats and their media allies are celebrating a report from Goldman Sachs concluding that the economy would be worse off under a second Trump administration than under Kamala Harris.
Given that voters consistently rate Donald Trump more highly than Harris on their respective handling of the economy, this was a breakthrough for the left. Never mind that the much-hyped report concluded that the election of Harris and a Democratic “sweep” would result in only a “very slight boost” to 2025 GDP. Or that the reasons for the Harris edge are unpalatable, unsustainable and, essentially, idiotic.
Sorry, Goldman Sachs, but any leader who has specialized in increasing regulations, plans to significantly hike taxes, routinely bashes Big Business for profiteering and wants to break up America’s leading companies, like Google, can possibly foster a positive environment for growth.
The Goldman Sachs analysts argue that Trump’s tariffs on imported goods will raise costs to consumers, which could “help spur an economic slowdown” and “likely cost the gross domestic product about 0.5 percent in growth, a negative headwind that would persist throughout 2025.” So, one year’s minor impact. (Not to mention that 60 percent of U.S. CEOs in a recent survey think a recession is imminent, if not already underway.)
Meanwhile, the folks at Goldman Sachs see Trump as likely to oversee a slowdown in illegal immigration. To them, this means lower job growth. “Under a President Harris, job growth would be 10,000 a month higher than if Trump wins with a divided government and 30,000 higher if the GOP controls the White House and both chambers of Congress.”
I have written in the past about the Biden-Harris economy teetering on a wobbly foundation of excessive federal spending and illegal immigration. Astonishingly, the Goldman Sachs analysts propose that the U.S. cannot grow satisfactorily unless the migrant floodgates remain open. This is extremely odd, given that our country had been managing quite well for years before Biden and Harris threw the floodgates open.
The excitement about the Goldman report was brief, perhaps because the media decided the central economic booster — unpopular ongoing illegal immigration — was not going to sit well with voters. Or maybe it was because investors remembered that last year, Goldman had confidently predicted $100 per barrel oil by Election Day (today’s price is $69 per barrel).
Hey — everyone makes mistakes.
Or maybe the report died quietly because everyone with a pulse knows that Trump’s policies are better for businesses than those few that Harris has volunteered, and that prosperous companies hire and invest, while those battling a hostile government do neither.
Trump has proposed to lower the corporate tax rates to 20 percent from 21 percent; at times he has even mentioned a lower number. Critics on the left claim that the Trump tax cuts only benefitted big corporations and the wealthiest Americans, and swelled our budget deficits, but that is simply not true. When businesses pay less to Uncle Sam, they can pay more to workers and spend more on research and innovation.
Not only did the 2017 tax cuts boost growth, according to a report released last spring by the House Budget Committee, but they also raised revenues. “The Trump tax cuts resulted in economic growth that was a full percentage point above CBO’s forecast, and federal revenues far outpaced the agency’s predictions,” the report says. “In fact, under Trump tax policies in 2022, tax revenues reached a record high of nearly $5 trillion, and revenues averaged $205 billion above CBO predictions for the four years following implementation of the law.”
The committee also noted that the poverty level fell to its lowest rate in 50 years and unemployment rates for minorities and those without a college degree hit all-time lows. In addition, the report states “real median household income rose by $5,000, and wages went up by nearly 5 percent. Americans earning under $100,000 saw an average tax cut of 16 percent. And while the tax burden on low-income families went down, the top one percent saw their share of federal taxes go up.”
One way to assess how the economy might prosper under another Trump term is to look at business and consumer confidence levels, which were higher under his presidency than under Joe Biden’s.
The Small Business Confidence Index issued by the National Federation of Small Businesses rose in July to 93.7, posting its best performance since 2022. However, as the association notes, the July tally marked the “31st consecutive month below the 50-year average of 98.”
Small-biz confidence was similarly depressed during Barack Obama’s presidency. When Trump took office in 2017 it stood at 93.9. At the end of his first year in office, it reached 105.8 and stayed above 100 until COVID hit. Despite that disaster, confidence bounced back, ending at 101.4 in November 2020.
After Biden’s election it sagged again. It has never since risen above 100.
How about consumer confidence? That too, was markedly higher under Trump than under the Biden-Harris administration, despite the enormous handouts given to citizens and non-citizens alike by this spendthrift White House.
In August, the University of Michigan index stood at 67.9, even as Americans became more optimistic about inflation subsiding. The high point under Biden-Harris was 88.3 in April 2021, before inflation took off and also before the catastrophic pullout from Afghanistan revealed the depths of White House incompetence.
Under Trump, optimism was consistently above 90, topping 100 on several occasions, until COVID hit, but even then it fell to levels substantially above those experienced under much of the Biden-Harris term.
Some enterprising reporter should ask the Harris campaign, and the analysts at Goldman Sachs, and all the press blasting the Trump presidency: If Trump’s policies were so terrible, why do so many people think they were better off during his presidency? Why were small-business owners and consumers consistently more upbeat than they have been during the Biden-Harris years?
Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company.