President Donald Trump’s first State of the Union address was filled with several repeat claims about the economy, tax cuts and immigration that we’ve fact-checked before, as well as new false and misleading statements on auto plants, judicial appointments and development aid.
- Trump claimed credit for 2.4 million new jobs “since the election,” when more than a half a million of those jobs were created under then-President Obama.
- He claimed that wages are “finally” going up, when they’ve been on a generally upward trend since the 1990s.
- Trump boasted that the African American unemployment rate was the “lowest rate ever recorded” and that Hispanic unemployment was at the “lowest levels in history.” True, but both rates have been in steady decline for about seven years. And the recent Hispanic rate matches the record low in October 2006.
- Trump falsely said car companies have not built or expanded plants in the U.S. “for decades.” Two new assembly plants were announced and others expanded in the last nine years.
- The president said he had appointed “more circuit court judges than any new administration” in history. True, but appointments by Presidents Nixon and Kennedy had a greater impact since there were far fewer appellate court seats back then.
- Trump said the U.S. does “more than any other country … to help the needy, the struggling, and the underprivileged all over the world.” In raw dollars of development aid, it’s true. But as a proportion of gross national income, the U.S. ranked 22nd in 2016.
- The president wrongly said that the U.S. is “an exporter of energy to the world.” The Energy Information Administration estimates the U.S. won’t be a net exporter of energy until 2026.
- Trump again wrongly said that “we enacted the biggest tax cuts and reforms in American history.” There have been larger cuts as a percentage of gross domestic product and in inflation-adjusted dollars
- The president said the new tax law gives “tremendous relief for the middle class.” The middle quintile in terms of income gets an average tax cut of $930 in 2018, but the top quintile gets a little more than 65 percent of the tax cut benefits.
- Trump said cutting the corporate tax rate will “increase average family income by more than $4,000.” This is a rosy, long-term estimate from White House economic advisers based on questionable assumptions.
- Trump wrongly said the Diversity Immigrant Visa Program “hands out green cards without any regard for skill … or the safety of the American people.” There are both education or work experience requirements, and a background check for all who are selected.
- Trump said that “America has also finally turned the page on decades of unfair trade deals.” But the trade deficit that he promised to reduce has grown larger during his presidency.
- Trump said the U.S. is “restoring our … standing abroad.” But a recent Gallup Poll found “approval of U.S. leadership across 134 countries and areas stands at a new low.”
The president’s speech on Jan. 30 clocked in at an hour and 20 minutes (and 31 seconds), the third longest dating back to 1966, according to the American Presidency Project. That means there was plenty of time for repeat claims and some new twists on the facts.
Taking Too Much Credit
Trump claimed credit for creating 561,000 jobs that actually were added before he took office, and for starting a rise in wages that began years earlier.
Trump: Since the election, we have created 2.4 million new jobs, including 200,000 new jobs in manufacturing alone. Tremendous number. After years and years of wage stagnation, we are finally seeing rising wages.
It’s true that since October 2016, the month before Trump was elected on Nov. 8, the economy has added 2.37 million jobs, according to the latest numbers from the Bureau of Labor Statistics. But Trump didn’t take office until Jan. 20, 2017. The gain since Trump actually took office is 1.84 million.
In fact, as we reported earlier, the pace of job growth has actually slowed 12 percent during Trump’s first 11 months in office, compared with the preceding 11 months.
As for manufacturing jobs, the actual increase since Trump took office is 184,000 — not the 200,000 he said “we have created.”
It’s true that real, inflation-adjusted wages are rising under Trump — up 1.1 percent during his first 11 months.
But Trump went too far when he said they are “finally” going up. As we reported earlier, real wages have been on a generally upward path since the 1990s, and rose 4.1 percent during the Obama years.
Black and Hispanic Unemployment
As he has done numerous times recently, Trump boasted about record-low unemployment rates for black and Hispanic Americans. That’s accurate, but unemployment rates for African American and Hispanic Americans — as well as for all Americans — have been in steady decline for about the last seven years.
Trump: And something I am very proud of, African American unemployment stands at the lowest rate ever recorded. And Hispanic American unemployment has also reached the lowest levels in history.
Here’s a 10-year snapshot of unemployment rates by race and gender:
As we noted when Trump recently claimed the black unemployment rate is the lowest in recorded history “because of my policies,” the years-long downward trend in unemployment rates has continued under Trump, but at a slower pace than in recent years.
When Trump took office in January 2017, the black unemployment rate was 7.8 percent, the lowest it had been in nearly 10 years, according to the Bureau of Labor Statistics. Under Trump, it dropped a full percentage point to 6.8 percent in December. That’s the lowest rate since the bureau began regularly breaking out unemployment rates by race in 1972.
A similar drop of 1 percentage point was recorded during the same 11-month period in 2016. But even larger drops were recorded in each of the three years before that. The rate fell 1.9 percentage points in 2015, 1.5 percentage points in 2014 and 1.8 percentage points in 2013.
The gap between white and black unemployment remains largely unchanged under Trump. While black unemployment fell to 6.8 percent in December, the white unemployment rate that month was 3.7 percent. So the white rate is 46 percent lower than the black rate, about the same as the gap in December 2016.
The Hispanic unemployment rate dipped to 4.8 percent in June, October and November, matching a record low recorded in October 2006. The rate dropped by a full percentage point under Trump, from 5.9 percent in January 2017 to 4.9 percent in December. But again, despite remaining constant during 2016, the rate has been declining for years, going from 12.9 percent in December 2010 to 6.2 percent in December 2015.
Trump made a series of misstatements in talking about the auto industry.
Trump: Many car companies are now building and expanding plants in the United States — something we haven’t seen for decades. Chrysler is moving a major plant from Mexico to Michigan. Toyota and Mazda are opening up a plant in Alabama — a big one. And we haven’t seen this in a long time. It’s all coming back.
There is a lot to unpack here, but let’s start with the fact that the president is wrong when he says the U.S. has not seen the construction of new auto plants and expansion of existing ones “for decades.”
The Center for Automotive Research, a government-funded research group based in Michigan, tracks auto manufacturing investments in the U.S. Kristin Dziczek, the center’s director of the industry, labor & economics group, told us that most investments in recent years have been for “expansion and retooling of existing facilities.” But, she said, two new auto assembly plants were announced in the nine years before Trump took office.
For example, Volkswagen chose Chattanooga, Tennessee, as the hub of its U.S. manufacturing operations in 2008. Volvo announced its first U.S. plant in 2015, and BMW expanded its South Carolina facility as recently as 2016.
Trump was also wrong when he said, “Chrysler is moving a major plant from Mexico to Michigan.” In early January, Fiat Chrysler announced plans to move production of its heavy-duty trucks from Mexico to the United States, but the Mexico plant is expected to continue its operations and switch to a new vehicle line.
The president has gotten the facts wrong about Fiat Chrysler before, including in a recent tweet where he claimed Chrysler “is leaving Mexico and coming back to the USA.”
Trump is right that Toyota and Mazda have announced the construction of a joint auto assembly plant in Alabama. But it’s not clear how much credit Trump can claim.
In a press release announcing the new plant, Toyota said it has been negotiating a joint venture with Mazda for two years — ever since the two companies entered an agreement in May 2015 to partner on business ventures.
The $1.6 billion investment is part of a commitment that Toyota made in January 2017 before Trump took office to invest $10 billion in the U.S. over five years. At the time, Toyota President Akio Toyoda told reporters, “We’re always considering ways to increase production in the United States, regardless of the political situation.”
Circuit Court Appointments
Trump boasted that he has appointed “more circuit court judges than any new administration in the history of our country.” That’s technically true, though others have had a greater impact.
Trump calmed the worries of wavering conservatives during the campaign by promising that he would stack the courts with conservative judges. In his first State of the Union address, he boasted about his follow-through, saying that he had appointed more circuit court judges than any president in his first year.
Trump has appointed 12 judges to federal appellate courts across the country. The next most prolific presidents in their first years were Richard Nixon and John F. Kennedy, each of whom appointed 11.
But there were also far fewer judgeships in total during the Nixon and Kennedy administrations, so the impact of those appointments was bigger. When Kennedy took office in 1961, there were 78 seats on the appellate court bench. Today, there are 179 — more than twice as many.
Also, Trump has fewer obstacles to making judicial appointments than some of his predecessors, given the Republican majority in the Senate and a rule change instituted in 2013 that makes it easier to confirm judicial nominees. There are still 18 vacancies on the federal appellate court bench.
Helping Developing Countries
Trump misleadingly claimed the U.S. does “more than any other country — anywhere in the world — to help the needy, the struggling, and the underprivileged all over the world.”
In raw dollars of development aid, that’s true. But for development aid as a proportion of gross national income, a measure of a country’s wealth, the U.S. ranked 22nd in 2016.
According to the Organisation for Economic Co-operation and Development, the U.S. provided just under $33.6 billion in development aid in 2016, with Germany coming in second at nearly $24.7 billion.
As a proportion of gross national income, an economic measure that encompasses gross domestic product plus income earned by U.S. residents abroad, the U.S. ranked 22nd, between Portugal and Slovenia.
In 1970, the United Nations set a target for development aid for donors — 0.7 percent of a country’s GNI.
The U.S. didn’t meet that target in 2016. The $33.6 billion the U.S. provided made up 0.18 percent of the country’s GNI. But it’s not alone — most donors didn’t meet the target either.
Norway topped the list by providing 1.11 percent of its GNI in development aid in 2016. Five other countries also met the U.N. target — Luxembourg, Sweden, Denmark, Germany and the United Kingdom. The remaining 23 didn’t.
Not Yet Net Exporter of Energy
Trump was wrong when he said, “We are now, very proudly, an exporter of energy to the world.”
Not for another several years, we aren’t. We still import a good deal more energy than we export.
In its most recent Monthly Energy Review published Jan. 26, the U.S. Energy Information Administration reported that U.S. energy production accounted for only 91 percent of the energy it consumed during Trump’s first nine full months in office (February through October) as measured in terms of British Thermal Units, the standard measure of energy output.
It’s true that exports of energy are rising, due to the dramatic rise in U.S. production of crude oil and natural gas, a trend that began a decade ago. But EIA said last year, in its most recent annual projections, that the U.S. won’t become a net exporter of energy until 2026, if current trends continue.
That was the projection under EIA’s “reference case,” a most likely set of assumptions. EIA figured the U.S. might become a net exporter a few years sooner if the economy grows more slowly than expected, or energy prices are higher than expected, or there are unexpected technological breakthroughs in energy production. Or it might not happen at all if oil prices are higher than expected or if energy technology lags current expectations.
Trump would have been accurate to say, “We are on track to become an exporter of energy.” In eight years. Probably.
The president made several false and misleading claims about the tax legislation he signed into law on Dec. 22.
Size of tax cut. Republicans did not enact “the biggest tax cuts and reforms in American history,” as Trump said. The new tax law would cost $1.46 trillion over 10 years, according to the nonpartisan Joint Committee on Taxation. The Committee for a Responsible Federal Budget said that an even more expensive plan previously proposed by Trump would have only been the eighth largest tax cut as a percentage of gross domestic product, and it would have been just the fourth largest cut in inflation-adjusted dollars. CRFB said the tax cut in 1981 under President Ronald Reagan, at 2.9 percent of GDP, is the largest in history. “If President Trump wanted to pass a tax cut that exceeds the record 2.9 percent of the economy in 1981, it would cost roughly $6.8 trillion over ten years,” CRFB wrote.
Middle class relief. He claimed that “our massive tax cuts provide tremendous relief for the middle class and small businesses.” It’s true that the new tax law provides a tax cut, on average, for all income groups in 2018 and 2025, according to an analysis by the Tax Policy Center. Whether the cut is “tremendous” for the “middle class” is, of course, opinion. In 2018, the middle 20 percent of income earners (those earning between about $49,000 and $86,000 in expanded cash income) would get an average tax cut of $930, compared with what their tax bill would have been before the tax legislation was enacted. In 2025, the average cut for that group is $910.
And because these are average tax cuts for that income group, the actual tax cut for each person could be more or less than the average. Nearly 11 percent of those in the middle quintile will pay more in taxes in 2025.
Most of the tax benefits in the law go to those with high incomes. The top quintile gets a little more than 65 percent of the benefits of the tax cuts in 2018 and 2025.
By 2027, most of the individual income taxes are set to expire, though Republicans say a future Congress will extend them.
Increase in income. As he did repeatedly during the tax debate, Trump claimed that cutting the top corporate tax rate from 35 percent to 21 percent will “increase average family income by more than $4,000.”
And, as we have said, don’t bank on it.
The $4,000 pay raise is a long-term estimate based on rosy economic assumptions by the White House Council of Economic Advisers.
First, the CEA says the $4,000 income boost could happen in eight years if the economy grows at the robust annual rate of 3 percent to 5 percent. That is unlikely. The annual real GDP hasn’t increased by 3 percent since 2005 and by 5 percent since 1984, according to the Bureau of Economic Analysis.
The nonpartisan economic experts at the Congressional Budget Office and the Joint Committee on Taxation expect average annual growth to be less than 3 percent over the next 10 years, as we have previously written.
Second, the White House estimate assumes that cutting corporate tax rates largely benefits workers. It assumes that “over 70 percent of corporate taxes are paid for by the workers,” as Treasury Secretary Steven Mnuchin has said. But that figure is in dispute. The CBO and JCT put it at 25 percent with the rest being paid by owners of capital.
The Diversity Visa Program
While calling for an end to the Diversity Immigrant Visa Program, Trump inaccurately described it as “a program that randomly hands out green cards without any regard for skill, merit, or the safety of American people.” In order to be eligible for the lottery, applicants must have a high school education or two years of work experience, and if selected they must go through a vigorous safety background check, the same as all legal immigrants.
The Diversity Immigrant Visa Program uses a computer lottery system to randomly issue up to 50,000 immigrant visas each year — from the millions who apply annually from countries with low rates of immigration to the United States.
Trump has regularly botched the description of the program, mistakenly claiming that other countries are gaming the system to send the U.S. their “worst.” There’s no evidence of that.
It’s true that applicants do not need to meet the requirements for employment-based immigration visas, but Trump went too far with the claim that the diversity visa program hands out green cards “without any regard for skill … or the safety of American people.” Applicants must demonstrate that they have a high school education or its equivalent or “two years of work experience within the past five years in an occupation that requires at least two years of training or experience to perform.” In addition, if selected, applicants have to go through a background security vetting process.
“National security is our top priority when adjudicating visa applications,” a State Department official told us. “Every prospective traveler to the United States undergoes extensive security screening. No visa can be issued unless all concerns raised by the screening are fully resolved.”
Data from the Department of Homeland Security’s 2015 Yearbook of Immigration Statistics indicate that 32 percent of those who came through the DV program in 2015 were employed in management, professional and related occupations — a lower percentage than those who came via employment-based preferences (41 percent), but far higher than the percentage among those who came via family-sponsored preferences (12 percent) or among those who were granted green cards because they were immediate relatives of U.S. citizens (9 percent). The report also indicates that about 1 percent of DV immigrants were listed as unemployed. That’s far lower than the percentage of unemployed people among all green card recipients (5.1 percent).
Trump’s Trade Deficit
Trump said: “America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our nation’s wealth.” But the trade deficit that Trump promised to reduce grew instead.
The U.S. trade deficit was $50.5 billion in November 2017, according to the most recent Census Bureau figures. That’s the highest monthly deficit since 2012, and is up 3.5 percent from the deficit in January when Trump took office. As we wrote before, the U.S. imported nearly $465 billion more in goods and services than it exported during Trump’s first full 10 months in office. That gap was $48 billion, or 11.5 percent, higher than in the same period in 2016.
U.S. Image Abroad
During his speech, Trump twice boasted that the U.S. image abroad has improved under his leadership.
“As we rebuild America’s strength and confidence at home, we are also restoring our strength and standing abroad,” Trump said. He later said the U.S. has strengthened its “friendships all around the world.”
In fact, the U.S. image abroad has suffered under Trump, particularly among its allies.
Gallup Poll released a poll on Jan. 18 that found “the image of U.S. leadership is weaker worldwide than it was under his two predecessors.” The median approval of U.S. leadership fell to a “new low” of 30 percent, down from 48 percent in 2016, across 134 countries and areas, according to Gallup.
Last spring, a Pew Research Center survey of 37 countries reported “a global median of 49% hold a favorable view of the U.S,” down 15 percentage points from the end of the Obama presidency.
Among U.S. neighbors, Pew’s polling found 30 percent of Mexicans viewed the U.S. favorably, down by a full 36 percentage points under Trump, and only 43 percent of Canadians viewed the U.S. favorably, down 22 percentage points. Among NATO allies, the U.S. favorability rating dropped 22 points among Germans, 17 points among the French, 28 points among the Dutch, and 11 points among the British.
The only big improvement was in Russia, where 41 percent of Russians view the U.S. favorably, an increase of 26 points under Trump, according to Pew.
— with Mark Shtrakhman
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