4.1% Economic Growth: It Happened … And It Will Last
President Obama was the only president in American history to never reach 3-percent growth for any year. His average growth for his entire eight years in office was 2 percent per year, which was the worst performance by any President since Herbert Hoover.
Liberal Democrat economists became apologists for Obama, claiming America could no longer grow at the 3-percent to 4-percent average it had throughout most of the 20th Century.
They said Obama’s 2 percent was the “new normal,” America could no longer do any better, and America was going to have to get used to it. When candidate Trump claimed his economic policies would produce economic growth at 4 percent, they laughed at him and said that couldn’t be done anymore.
Surprise! The Commerce Department’s Bureau of Economic Affairs reported last week that the economy grew 4.1 percent in the second quarter.
That resulted from the Trump/Congressional Republican tax reform/tax cuts, which cut taxes for all taxpayers, from the poorest to the richest, including corporations and other businesses, and Trump’s persistent deregulation, slashing unnecessary regulations and their costs by more than any other President in history.
These were the same policies that produced the booming economic recovery under President Reagan, ultimately lasting for 25 years, from late 1982 to late 2007. President Kennedy’s tax cuts, which were the model for Reagan, produced the booming growth of the 1960s.
But “progressive” Democrats disparaged Trump’s achievement, saying it was only a short-term sugar high from the tax cuts that wouldn’t last. That only reveals the awful truth that today’s Democrats (and their leaders Schumer, Pelosi, Sanders, Warren, Obama), unlike Kennedy Democrats, don’t understand economic growth and what policies produce it.
Economic growth is not produced by tax cuts giving people more money in their pockets to spend. Welfare gives more money to people in their pockets to spend. But welfare does not produce booming economic growth.
Tax cuts produce booming growth when they involve reductions in tax rates, like Trump’s Republican tax cuts for workers and businesses, and Kennedy’s Democrat tax rate cuts. Those rate cuts give people incentives for pro-growth activities, like savings, investment, business start-ups, business expansion, job creation, risk-taking, entrepreneurship and work.
Once those rate cuts are adopted, they continue to perpetuate those pro-growth incentives, producing the investment that creates jobs and raises wages. Which is why investment has been booming under Trump, the opposite of Obama, who pursued the opposite policies of Trump, Reagan and Kennedy, raising rates for virtually every major federal tax.
Everyone “manning the oars” — a larger, energized workforce motivated by reduced tax rates enabling them to keep more of what they produce, higher wages, more and better job opportunities — and a business community investing, expanding and creating new wealth, is what produces economic growth.
That is why the rate cuts under Reagan and Kennedy produced booming growth lasting for years. And that is why the Trump rate cuts produced booming growth that will last for years as well.
That booming growth is vital also because it means the tax rate cuts will lead to higher — not lower — revenues, closing or eliminating deficits from the tax cuts, just as it did for Kennedy and Reagan. We are already seeing those same results from the Trump/Republican tax cuts.
CBO originally reported that the Trump tax cuts would reduce federal revenue by $1.5 trillion over the first 10 years.
But Mike Solon reported in the Wall Street Journal on July 30 that CBO now projects that the faster economic growth under President Trump has “already added $1.3 trillion in new revenue to the 10-year revenue projection.” This “single largest growth-driven revenue gain” in history “will offset 88 percent of the estimated 10-year cost of the tax cut.”
Say goodbye to the now outdated fake news that Trump’s Republicans are going to run trillion dollar annual deficits just like Obama’s Democrats did. Obama’s deficits doubled the national debt in his eight years, which means he added more to the national debt than all other Presidents in American history combined, from George Washington to George Bush.
Trump’s booming economic growth is why black unemployment under Trump is now the lowest in history, Hispanic unemployment under Trump is the lowest in history, Asian unemployment under Trump is the lowest in history, and unemployment for women is the lowest in 65 years, since 1953, soon to be the lowest in history too.
That is why Trump is now leading the most inclusive economic policies in history, again the opposite of Obama.
Former restaurant CEO Anthony Puzder observed in the Journal on July 17 that “72 percent of manufacturers are increasing wages and benefits, and 77 percent are hiring,” and that “in March the number of job openings exceeded the number of people actively looking for work,” for the first time in history, per the Bureau of Labor Statistics.
Those jobs and wage increases are part of the benefits of tax reform for the middle class and working people, besides the direct tax cuts averaging $2,000 per family. But not one Democrat voted for those tax cuts benefitting the middle class and working people.
Instead, Democrats are now campaigning to reverse those tax cuts, raising taxes and taking those jobs and pay raises away. Which is why only low information voters will be voting Democrat in these midterm elections. (906 words).
Lew Uhler is Founder and Chairman of the National Tax Limitation Committee and Foundation. He was a contemporary and collaborator with both Ronald Reagan and Milton Friedman in California and across the country.
Peter Ferrara teaches economics at Kings College in New York City and serves as a Senior Fellow at the Heartland Institute and at NTLF. He served in the White House under Presidents Reagan and George H.W. Bush.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.