Trump's big bet to pull the U.S. out of economic stagnation

The White House is celebrating seven years of policies that Democrats say saved the country from complete economic collapse. But Republicans in general and GOP presidential front-runner Donald Trump in particular insist that with much more economic success like that, the country will be broke.

Last week, President Barack Obama visited a battery factory in Jacksonville, Fla., to celebrate the seventh anniversary of his $830 billion stimulus plan. He made much of the 4.9 percent unemployment rate, citing it as proof his policies saved the economy.

“If we don’t talk about why it is that things got better, then we may end up pursuing policies that’ll make things worse,” Obama said. “It’s not to argue that everything’s perfect, but if we don’t recognize the progress we’ve made and how that came about, then we may chase some snake oil and end up having policies that get us back in the swamp.”

But a new report by the Bureau of Economic Analysis shows what many Americans already feel in their hearts and their bank accounts: The recovery has not been as successful as Obama claims. According to the report, the nation’s economy has now gone an unprecedented 10th straight year without even a 3 percent growth in the GDP. Historically, GDP growth averages about 3.25 percent per year. During the Obama administration, for every dollar the economy has grown, the national debt has grown by $2.30.

Peter Morici, economics professor at the University of Maryland, warned the forecast doesn’t look good, either.

“The big problem? America is not growing fast enough, so the government has to borrow to do the things we need,” he said.

Bad trade deals also have hurt the economy, Morici said. Donald Trump’s campaign promise to right trade wrongs attracted Republican voters even before his tough stance on immigration. In addition to promising to cure the nation’s trade ills, Trump also has garnered support among GOP voters with his tax plan. He wants to lower corporate tax rates, which are among the highest in the world.

“It’s a big cut from 35 percent down to 15, so that could be a little bit controversial but that’s been one of the issues where you’ve seen bipartisan support,” said Brian Brenberg, business professor at The King’s College.

Trump’s proposed tax cuts for individuals would lower rates for many to below where they were during the George W. Bush presidency.

“He’s taking our seven brackets that we have today, compressing them down to four, including a zero percent rate on the first $25,000 of income for individuals and $50,000 for married couples, so that’s a huge, huge tax cut,” Brenberg said.

Some say Trump’s tax plan would do a lot to keep jobs in the United States and create new ones. But others argue it also will reduce federal revenues by nearly a trillion dollars over 10 years, adding to the $19 trillion national debt. Brenberg believes it’s a big gamble.

“He’s been talking about 5 to 6 percent economic growth,” Brenbeg said of Trump. “That’s two to three times what we’ve seen in recent memory, so really he’s asking for growth that I’m just not sure is possible in this era, but he needs that in order to pay for the tax cuts.”

Listen to Jim Henry’s report on the economy on The World and Everything in It.