The anti-Trumpers are wrong. Trump does deserve some credit for the soaring stock market.
As of Tuesday, the Dow Jones Industrial Average had scored record highs for nine days in a row; the gains are driving anti-Trumpers crazy. Though the president’s boasts are not always accurate, lapses the New York Times eagerly documents, his recent tweet celebrating the Dow passing 22,000 for the first time is on the mark.
“Business is looking better than ever with business enthusiasm at record levels. Stock Market at an all-time high. That doesn't just happen!”
Trump is correct: it doesn’t just happen. That doesn’t mean the liberal media will stand down from their incessant anti-Trump alarmism and admit that his pro-business policies might be boosting economic growth or doing the country some good.
Hence, recent pieces have dredged up other reasons for the gains in stocks, many of which are valid. Earnings gains have indeed been above expectations; there is vast monetary stimulus around the world, we see renewed growth in China and Europe and a weakening dollar; all those elements and more have played a role.
But, they are not the entire story.
Also powering the market forward: the Commerce Department is aggressively protecting U.S. steel makers against dumping, labor officials are no longer bending the rules to help unions organize, the sage grouse and people’s jobs are both to be protected, trial lawyers won’t be a protected class and so on. But even that is not the whole story. Here’s what the liberal media never told Americans: business leaders were afraid of the Obama White House.
They were afraid because the economy and job creation were never uppermost in the Obama agenda, and he used regulators and regulations to punish companies that were not on board with his program. Just ask JP Morgan’s Jamie Dimon, who went from being Obama’s favorite banker to being targeted in 8 different investigations, all because he dared challenge the president’s draconian anti-growth banking rules and criticized the White House for its “constant attack on business.”
Or ask the management of Ally Financial, which was fined $98 million in late 2013 by the Consumer Financial Protection Bureau for having discriminated against minority customers. Ally, as an indirect auto lender, had never collected data as to the race of its customers, and no data was supplied to support the CFPB’s accusation; the company agreed to the settlement because it needed access to a government lending program and because it feared the just-unleashed CFPB.
That shake-down is by no means unique. CEOs are just now coming forward to complain about the millions they were required to donate to favorite Obama causes, in order to get out from under White House scrutiny. Under the Holder Justice Department, banks and other companies accused of misdeeds were forced to fund organizations like National Council of La Raza, the National Community Reinvestment Coalition and the National Urban League. So far, Congressional investigators have discovered $3 billion in payments to “non-victim entities”; critics claim that such handouts are unconstitutional and illegal, in that they circumvent Congress’ power of the purse. The practice has been abandoned by Attorney General Jeff Sessions.
Liberals may consider those penalties and investigations justified, and applaud the coerced funding of leftist social programs. But they cannot argue the approach bolstered business confidence, or was good for the economy. Mitt Romney was trashed for saying that “corporations are people,” but he was correct. It is not amorphous tax-paying entities that choose to hire new workers or build new plants. Those decisions are made by people.
Those people – CEOs -- are critical to our country’s economy, whether they are managing a giant corporation or a small business. To expand, they have to take risks, which they will do only if they are optimistic about the future. The election of Donald Trump produced a surge of confidence and optimism across the board, which is showing up in the stock market.
A recent survey of 400 CEOs by accounting giant KPMG found “Fifty-four percent are “highly confident” in U.S. economic growth in the next three years, up from 23 percent a year ago.” Maybe more important: 92 percent view the U.S. as the “top market for new growth,” while last year only 37 percent thought that was true. Other surveys show similar trends; small business optimism soared to a 12-year high in the months after the election, while by March consumer sentiment had hit a 16-year high.
That optimism is partly because the White House is busily rolling back Obama’s oppressive regulation tsunami. A couple of weeks ago the Office of Management and Budget detailed the progress to date, listing 860 pending rules that were being suspended or withdrawn.
Andrew Ross Sorkin, writing recently in the Times, disputes the impact of deregulation, noting that not a single CEO had credited looser oversight for their earnings gains on their regular earnings calls with analysts. But in the National Association of Manufacturers’ latest surveys, four out of five members say Trump’s “actions on regulation are headed in the right direction.” Sorkin further notes that economist Douglas Holtz-Eakin estimates that Trump’s regulation roll-back will not save $890 billion, which is their cumulative annual compliance costs but only perhaps boost GDP by only $225 billion. Sorkin seems unmoved that almost $1 trillion of costs was levied on the economy through Obama’s rules.
Sorkin also (rightly) points out that the market cannot be trading on tax reform since that hasn’t yet passed. But, the administration is pushing for the right kind of changes in our corporate tax code, with lower taxes and an end to taxing profits earned overseas and then repatriated. A win on taxes, which is still possible, would move the market even higher.
Overall, Sorkin and other doubters are missing the point. Despite the White House melodramas and the failure to fix Obamacare and notwithstanding continued all-out resistance, this White House has sent a strong signal to the business community: we are on your side. That posture has encouraged hiring and investment from U.S. firms, and from around the world. And, that is driving the stock market.
To quote President Trump, “That didn’t just happen.”