The U.S. economy is clearly shifting into a lower growth gear and many economists are ramping up their recession forecast for the second half of this year. So far, through the first 10 weeks of this year, GDP growth has slumped to a wobbly 1.2 percent, according to the Atlanta Federal Reserve Board.
What the economy needs now is a pick-me-up. Where will the adrenaline come from? Clearly not more government spending. That only increased inflation to nearly 10 percent, which is a 15-pound millstone around the neck of the economy.
Government spending should be cut by 10 percent across the board to stop the flow of “free money” injected into the economy by President Joe Biden and House Speaker Nancy Pelosi (D-Calif.). Thank God that their plan for another $5 trillion smorgasbord failed in the Senate.
We need to juice the supply side—i.e., the productive private half of the economy—to get more production of goods and services.
Reagan did that in 1981 and launched the go-go ’80s that pulled us out of the last major stagflation in the late 1970s under Jimmy Carter.
Donald Trump did the same thing with his controversial 2017 tax cut—which NO Democrat in Congress voted for.
What were the results?
The portion of Americans who fell below the poverty line declined to the lowest level ever recorded in 2019. The Census Bureau reported that median household income shot up to above $65,000, an increase of $5,000 in three years and double the gains from the past decade. Real incomes are falling under Biden because of the stampede of higher prices.
By the way, almost all of the benefits were most pronounced for minorities, notably blacks and Hispanics, who saw the lowest levels of poverty and unemployment in 50 years. Not bad.
Since the Trump policies worked like a lucky charm, why not make these policies permanent? Many of the Trump tax cuts are set to expire starting as early as next year. That would be the equivalent of a tax INCREASE for U.S. families that are already struggling with high gas and food prices.
Larry Kudlow, a former Trump economist and now a Fox Business host, says that “the Trump tax cuts worked even better than we expected.”
He’s right and it wasn’t luck. Getting the cost of government off the backs of our workers is the best way to increase production and employment. That’s also the best way to lower prices at the store.
