Introduction to the Issue
President Trump has fired Dr. Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), allegedly for manipulating the monthly jobs report for political purposes. Dr. McEntarfer is a distinguished economist with a PhD from Virginia Tech and has worked at the U.S. Treasury, the Bureau of the Census, and the Council of Economic Advisers. She was confirmed as BLS Commissioner by the U.S. Senate.
The Bureau of Labor Statistics and Its Importance
The BLS is an independent department under the Department of Labor Act, established in 1888. It has spent 141 years providing essential, unbiased economic data on the performance of the economy, including the number of new jobs added, the nation’s unemployment rate, and the Consumer Price Index (CPI), which measures inflation. The agency is staffed by over 2,000 dedicated professionals.
The Reason Behind Dr. McEntarfer’s Firing
The reason behind Dr. McEntarfer’s firing has nothing to do with her personal actions. The BLS simply issued its routine labor report, which showed that the economy added only 73,000 jobs in July and revised the job numbers for the two prior months, adding 258,000 fewer jobs than previously reported. This revision was larger than normal due to lags in data collection, partly caused by Congress’ underfunding of the BLS.
The Inconvenient Truth About Employment Growth
A chart from the NY Times shows that monthly employment changes are highly variable, and employment growth is currently slow, which may signal a recession. The President doesn’t like these facts and has invented his own, claiming on Truth Social that "The Economy is BOOMING under ‘TRUMP.’"
The Consequences of Firing Dr. McEntarfer
Firing Dr. McEntarfer and replacing her with a political lackey could lead to understating inflation, which would depress financial markets, reduce real Social Security benefits, and raise everyone’s taxes. Lenders may add a risk premium to interest rates, causing interest rates to rise, and major declines in bond and stock markets. This would reduce consumer spending and lead to fear of under-indexation of Social Security benefits and bracket creep.
Do Tax Cuts in the Big, Beautiful Budget Bill Make Recession Fears Silly?
Republican members of Congress claim that the Big, Beautiful Budget (BBB) bill represents the largest tax cut in American history. However, a chart from the Joint Committee on Taxation shows that the modifications to the Tax Cut and Jobs Act are small, and the BBB bill is neither big nor particularly beautiful. In fact, it eliminates healthcare coverage for roughly 17 million Americans.
The Impact of the BBB Bill on Taxation
The BBB bill does not represent a significant tax cut for most Americans. The black bars in the chart show the average taxes paid in 2027 under existing tax rules, while the colored bars show the average taxes paid under the BBB. The difference is very small, and for the poorest one-fifth of Americans, the BBB represents a tax hike.
Conclusion
The firing of Dr. Erika McEntarfer and the potential manipulation of economic data could have severe consequences for the economy and the American people. The Big, Beautiful Budget bill does not represent a significant tax cut, and its elimination of healthcare coverage for millions of Americans is a serious concern. It is essential to prioritize accurate and unbiased economic data to make informed decisions about the economy and the country’s future.
