Right On: Tax cuts and deregulation sure beat the Obama economy

Composite stock image, St. George News

OPINION — It works every time. It worked for President Kennedy. It worked for President Reagan. And it worked for President Clinton.

Cutting federal taxes spurs economic growth every time it’s been done since World War II. And oh, by the way, government tax receipts have grown as a result, covering the so-called “cost” of the tax cuts.

The Commerce Department reported the economy grew at an annual rate of 4.1 percent in the second quarter. The Republican one-two punch of deregulation and tax reform has started to percolate through the economy.

The Atlanta Federal Reserve Bank’s GDPNow model is predicting 4-5 percent growth in the third quarter and 4 percent for the year. Other economists expect growth closer to 3 percent for the year.

Shaking off the shackles of Obama’s uber-regulatory administration, business leaders are dusting off expansion plans and investing in plant and equipment, computers and software. Those investments will pay salaries and dividends – literally and figuratively – in years to come.

Trump and the Republicans have been at the helm for five quarters. Growth has been 40 percent higher during that stretch than the Obama eight-year average.

As usual, government has been the biggest beneficiary of this growth. The nonpartisan Congressional Budget Office projects that $1.3 trillion has been added to its 10-year federal revenue projections as a result of the tax cuts. That’s almost 90 percent of the tax cut and the resulting growth has just begun.

State and local governments can expect an additional $600 billion thanks to the Republican tax cuts.

Strong growth is the fastest way to raise tax receipts.

Liberal economists had given up on economic growth. Democratic politicians and the liberal media echoed the theme. They said our tired old economy could not expect growth above the 2.1 percent average that Obama managed over his eight years.

“Trump’s budget assumes 3 percent annual growth. That’s extremely unlikely,” the former chairman of Obama’s Council of Economic Advisors scoffed.

And a Los Angeles Times headline read, “If Trump thinks he can get more than 3% economic growth, he’s dreaming.”

The liberal Committee for a Responsible Federal Budget joined the chorus. “To get to 2.1 percent, 2.2 percent, 2.3 percent – that would be a tremendous feat.”

Democratic apologist and Princeton professor Paul Krugman lowered the bar even farther for what we could have expected with a Hillary Clinton administration. “What the economy could produce at full employment has declined from around 3.5 percent per year in the late 1990s to around 1.5 percent now,” Krugman said

And yes, that’s the same Paul Krugman who explained in July 1996 that “the United States cannot look forward to growth at a rate of much more than 2 percent over the next few years.” Several months later President Clinton signed a dramatic cut in capital gains taxes that Krugman and Democratic politicians called a “tax cut for the rich.” Economic growth averaged 4 percent for the next three years.

Like Obama, these prominent economists believe government’s task is not to help the economy grow but to redistribute existing economic output. Obama raised taxes 14 times so he’d have more to redistribute. As a result, his eight years in office saw the slowest recovery on record from a major recession.

These results were completely predictable. Rather than looking for work, millions found life on the dole was not so bad. Only now in the Republican economic recovery are we beginning to lure these folks back into a workforce that, for the first time on record, has more job openings than unemployed workers.

Republicans have shown that the problem was not our workers but our government. Economic stagnation is not fate but a political policy choice.

Having blown it on economic growth forecasts, Democrats now claim that Republican tax cuts will cause sky high budget deficits.

Democrats have only themselves to blame for coming deficits. Entitlement program costs – Social Security, Medicare, Medicaid, Obamacare, student loans and the rest – are ballooning into the stratosphere faster than the CBO’s forecast of income tax revenues. That would have been true with or without the Republican tax cuts.

Another myth dispelled by the growth renaissance is that corporate tax cuts benefit only rich shareholders.

Since the tax cut, the Labor Department reports that worker bonuses have hit the highest level ever recorded. The Commerce Department reports that wages and salaries are up 2.8 percent over a year ago, highest in the last 10 years and 25 percent faster than under Obama.

A 2016 study in Tax Notes found that about 50 percent of all domestically-owned stock is held in individual retirement accounts and pension plans. Another 17.6 percent of shares are held by nonprofits and life insurance companies. A rising stock market benefits a sizeable majority of Americans.

Economist Arthur Laffer notes the following:

Lowering taxes and decreasing regulation has had powerful effects on growth over long periods of time. Taxes have a very important impact on employment, jobs, output and growth. An economy quite simply cannot be taxed into prosperity. The tax cuts signed by Trump stand in stark contrast to the tax increases under Obama.

Pro-growth Democrats in Congress voted for the Kennedy, Reagan and Clinton tax cuts. Sadly, they were not to be found when tax reform was on the table last fall.

Will our booming economy bring them out of their Trump Resistance hiding places? Or will Resistance Democrats find themselves hoping for a recession by 2020?

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews

Copyright St. George News, SaintGeorgeUtah.com LLC, 2018, all rights reserved.

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6 Comments

  • Carpe Diem August 9, 2018 at 3:31 pm

    Hey, this guy is a rocket scientist, no fair!

  • Utahguns August 9, 2018 at 4:02 pm

    I still haven’t found the connection where the democrats move on banning drinking straws has positively affected the GDP yet….

  • Jeannette August 9, 2018 at 8:33 pm

    It’s so nice to see “happy news” being printed. Too bad some of the other news sources won’t report the good. I know this is an opinion, but what a contrast to the negative news who are supposed to be news but are pure opinion!

    Thank you, Mr. Sierer!

  • Red2Blue August 9, 2018 at 9:30 pm

    Yes! The new agenda has added $2 TRILLION that helps bolster the lie of a great economy. A big bill is coming and deregulation – watch the sky turn brown and drink up that shit water! Fools. Its coming…

  • uprightandmovingforward August 10, 2018 at 8:34 am

    St George News keep asking Howard Seirer to write stuff and ban Ed Kociela. Unfortunately, Ed’s liberal agenda is political pollution. Nice to see the truth come out. Thanks Howard Seirer!!!!

  • BEN August 10, 2018 at 3:58 pm

    You navy guys and gals know about steering an aircraft carrier – the captain needs to start thinking about where he wants to put the boat long before he gets there. The US economy is even bigger and more cumbersome; the economic boom that short-sighted enthusiasts credit to the Trump administration actually dates from the Obama administration. In fact, we are extremely lucky that we had an administration in 2009 intelligent enough to jump in and steer the boat in the right direction. If you don’t believe how bad it can be, then wander down to the Ivins veterans home, find a wrinkled old white-haired guy and ask him about the Great Depression, and the decade it took us to rebuild our economy from scratch. That was basically the same story, speculators and their well-paid congressmen rocking the economy up and down so they could make tons of money at public expense. Next time will we be so fortunate? I hope y’all have your food storage in good shape.

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