An Interesting Take On Tariffs

Real Clear Politics posted an article today titled, “Why Trump’s Tariffs Won’t Cost Consumers a Nickel.” I’m not sure I totally agree with that, but the ideas behind the statement were interesting.

The article states:

Critics also contend that President Trump’s tariffs will inevitably lead to higher prices for consumers.  We’ve heard this before. They said aluminum tariffs would spike the cost of a six-pack. But soda and beer prices have remained flat.

Now Walmart has joined the chorus. But we have no more reason to believe officials there than other boys who cried wolf. To understand why, let’s review how tariffs work, and how specifically the president’s tariffs work.

…Tariffs aren’t imposed on the final retail price the way a sales tax is. They are also not imposed on the wholesale price. They are not even imposed on what the importer pays at the dock when the goods enter the U.S.  The duties are imposed on an even lower price than that – and that’s a scandal in itself.

Let’s say Black & Decker wants to sell a line of toaster ovens with a $60 retail price in the U.S.  It goes to a Hong Kong middleman who deals with Chinese manufacturers. The Hong King middleman pays his cousin at a Chinese toaster oven factory $10 for toaster ovens. Black & Decker agrees to pay the Hong Kong middleman $20 for the toaster ovens, and picks them up off the boat in Long Beach, Calif.

Let’s say there’s a 10 percent tariff on toaster ovens from China. (There isn’t.)  The tariff would only be $1 because it’s calculated on what the Hong Kong middleman (says he) paid his cousin at the toaster factory – the first sale — not what Black & Decker pays to take delivery at the port – what’s known in the jargon of the trade world as the last sale. 

As a result of this accounting flim-flam, Hong Kong middlemen and the importers who love them are getting rich while taxpayers are getting hosed for untold billions of dollars the U.S. Treasury is not collecting.

The article concludes with information that shows the wisdom of what President Trump is doing:

And here’s the beauty part, how the tariffs are designed to hurt China: The Trump tariffs target items available from sources outside China.  Buy from a supplier outside China, avoid the tariff.

President Trump’s surgical strike tariffs are sending companies a clear message: Do business anywhere but China.  

And the message is getting through. Companies no longer see China as a safe space.  China needs a continued influx of foreign investment to feed its economic growth, and the president’s trade policy encourages companies to look elsewhere.

This is the reason it is good to have a businessman in the White House instead of a politician.

The Economic Problem With Green Energy

Townhall posted an article today about the impact of green energy on the middle and lower class.

The article reports:

Liberals love to talk about helping the poor and the middle class, and they are obsessed with reducing income inequality. So why is it that across the country they are pushing one of the most regressive taxes in modern times?

I am talking about the fad “green” initiative in states such as California, Arizona and New Jersey that require local utilities to buy expensive renewable energy. These renewable energy standards require that utilities to buy expensive wind and solar power. They then pass these costs onto the poor and working class who get stuck paying the tab.

In Sacramento, California, the legislature is speeding ahead with one of the most absurd proposals of modern times by mandating 100 percent renewable energy by 2045. This would mean no coal, no natural gas and no nuclear power.

Meanwhile in Arizona, voters will decide on a ballot initiative funded by billionaire Tom Steyer that would increase renewable mandates to 50 percent over the next decade or so.

The article concludes:

Low-income households spend at least four to five times more out of their incomes in energy costs than do millionaires. For a family with an income of $40,000 or $50,000, an extra $500 a year in costs means less money for school supplies, day care, a family vacation or health insurance.

All of this is so unnecessary. If wind and solar are truly the energy sources of the future — with reliability and low costs — let the market determine that. Why do they need mandates and billions of dollars of federal subsidies to make them work? This is an experiment of imposing high costs on American small businesses, farms and families to pay off wealthy green energy investors. Could anything be more illiberal than this?

One of the benefits of the economic growth the Trump administration has created is the resurgence of the middle class–it is growing instead of shrinking (as it did under President Obama). The middle class is the strength of our republic–it is the only bulwark we have against the misguided proponents of socialism. When the middle class realizes the impact socialism will have on them, they oppose it. Unfortunately the students in our high schools and colleges are not getting that message. Using green energy as an excuse to increase the poverty levels is not a good idea. It is not a surprise that the people proposing the increase of green energy are the people least likely to be impacted by it.

Winning

Yesterday The Conservative Treehouse reported the following:

The National Federation of Independent Business (NFIB) just released another survey.  The Small Business Optimism Index has soared to 108.8 in August; that’s an all-time record in the survey’s 45-year history, topping the July 1983 highwater mark of 108.  This incredible surge in economic outlook began with the era of President Donald J Trump.

The article includes the following chart:

Wow.

The article further reports:

According to the release:

“At the beginning of this historic run, Index gains were dominated by expectations: good time to expand, expected real sales, inventory satisfaction, expected credit conditions, and expected business conditions,” said NFIB Chief Economist Bill Dunkelberg.

“Now the Index is dominated by real business activity that makes GDP grow: job creation plans, job openings, strong capital spending plans, record inventory investment plans, and earnings. Small business is clearly helping to drive that four percent growth in the domestic economy.”

  • 26% of companies plans to increase employment.
  • 38% of companies have current job openings.
  • 34% of companies consider this a good time to expand.
  • 34% of companies expect the economy to improve.

Economic policies make a difference.

This chart shows some other areas of progress:

This is President Trump’s recovery. If you would like this recovery to continue, I suggest you elect Republicans to Congress in November. If you elect Democrats, they will quickly end the tax breaks and other policies that have resulted in this exceptional economic growth.

About That Recovery

Yesterday The Wall Street Journal posted an article illustrating the timeline of the economic growth our country is currently experiencing. The article deals with the recent claims by former President Obama that he is responsible for the current economic growth and that the growth began under his leadership. In February 2018 The Washington Times reminded us that Obama Democrats told us that what looked like long-term stagnation under President Obama’s economic policies, with growth stuck at 2 percent on average for his whole eight years in office, was the New Normal that the American people were going to have to get used to, the best we could do now.

The Wall Street Journal reports:

Milton Friedman was the first economist to notice a pattern in American economic history: The deeper the recession, the stronger the recovery. The economy has to grow even faster than normal for a while to catch up to where it would have been without the recession. The fundamentals of America’s world-leading economy are so strong that the pattern held throughout the country’s history.

Until the past decade. The 2008-09 recession was so bad, the economy should have come roaring back with a booming recovery—even stronger than Reagan’s boom in the 1980s. But Mr. Obama carefully, studiously pursued the opposite of every pro-growth policy Reagan had followed. What he got was the worst recovery from a recession since the Great Depression.

Before Mr. Obama, in the 11 previous recessions since the Depression, the economy recovered all jobs lost during the recession an average of 27 months after the recession began. In Mr. Obama’s recovery, dating from the summer of 2009, the recession’s job losses were not recovered until after 76 months—more than six years.

The article concludes:

Obama apologists argued America could no longer grow any faster than Mr. Obama’s 2% real growth averaged over eight years. Slow growth was the “new normal.” The American Dream was over. Get used to it. Hillary Clinton promised to continue Mr. Obama’s economic policies. America’s blue-collar voters rose up.

The recovery took off on Election Day 2016, as the stock market communicated. Mr. Trump’s tax cuts and sweeping deregulation—especially regarding energy—fundamentally changed course from Mr. Obama. These policies have driven today’s boom, increasing annual growth to more than 3% within six months and now to over 4%.

Will Democrats ever figure out what policies create jobs, economic growth and rising wages? If not, they’ll wake up some Wednesday morning to find they have been routed in a fundamental realignment election, in which they have permanently lost the blue-collar vote—once the backbone of their party.

The truth is in the numbers. All of us need to be aware that what former Presidents say about today’s economic growth may not be true. Economic policies make a difference, and President Trump has illustrated that.

When You Wish You Could Eat Your Words

In June 2016, then President Obama made the following comment about then candidate Donald Trump:

“When somebody says like the person you just mentioned who I’m not going to advertise for, that he’s going to bring all these jobs back. Well how exectly are you going to do that? What are you going to do? There’s uh-uh no answer to it. He just says. “I’m going to negotiate a better deal.” Well how? How exactly are you going to negotiate that? What magic wand do you have? And usually the answer is, he doesn’t have an answer.

President Obama stated many times that the manufacturing jobs lost to Americans weren’t coming back. He is now faced with the problem that the policies of the Trump administration have brought many of those jobs back. He is also trying to take credit for the economic growth under President Trump. I am not sure how many people are willing to believe that. However, there is something that does need to be mentioned here.

President Obama said that manufacturing jobs were not coming back to America. In a sense that was a true statement–if Hillary Clinton had become President, manufacturing jobs were not coming back to America. So what would a President Hillary Clinton have done differently that would have prevented those jobs from coming back to America? Let’s look at the things that determine where a corporation manufactures its product–a low cost of doing business–things like the cost of energy, taxes, wages, etc., economic stability–the idea that taxes will not substantially increase the year after relocation (another reason to make the tax cuts permanent as soon as possible), reasonable business regulations, a dependable, conscientious workforce, and infrastructure that provides a reliable way to move a product. Hillary Clinton would not have cut taxes, cut regulation or increased energy production to bring the price down. Hillary Clinton’s economic policies would not have attracted businesses to America.

The economic growth we are seeing is the result of policy changes made since President Trump took office. In November, Americans have to make a choice. Do they want our current economic growth to continue or do they want to go back to President Obama’s economy? A vote for a Republican is a vote for the Trump economy, a vote for a Democrat is a vote for the Obama economy. We have a choice.

Charts Tell The Story

John Hinderaker posted an article at Power Line today about the impact the economic policies of President Trump have had on the State of Minnesota. The focus of the article is the economic impact of the tax cuts.

The article includes the two following graphs:

The article also includes the following news from the Labor Department:

American wages unexpectedly…

Unexpectedly!

…climbed in August by the most since the recession ended in 2009 and hiring rose by more than forecast, keeping the Federal Reserve on track to lift interest rates this month and making another hike in December more likely.
Average hourly earnings for private workers increased 2.9 percent from a year earlier, a Labor Department report showed Friday, exceeding all estimates in a Bloomberg survey and the median projection for 2.7 percent. Nonfarm payrolls rose 201,000 from the prior month, topping the median forecast for 190,000 jobs.

As I have previously stated, why is good economic news unexpected during a Republican administration and expected by the media during a Democrat administration?

The conclusion of the article reminds us what will happen in the Democrats take control of Congress:

A Democratic Congress never would have passed the Tax Cuts and Jobs Act. In fact, not a single Democrat voted for it. And Hillary Clinton never would have signed it. The progress the U.S. economy has made since Donald Trump took the helm from the hapless Barack Obama is an ongoing rebuke to the Democrats’ anti-growth policies. This is one reason the Democrats are so anxious to regain control over the House in November. With the House in Democrat hands, they won’t be able to repeal the Tax Cuts and Jobs Act, but they will be able to guarantee that no more pro-growth, pro-worker legislation will be enacted. They will focus on impeaching President Trump instead.

If you don’t like the current economic growth, vote Democrat and it will stop.

Economic Growth For The Second Quarter

The Conservative Treehouse posted an article today about the revised economic figures for the second quarter. It is always amazing to me that under a Republican President when the revisions come, they are higher than the original estimates and under a Democrat President when the revisions come, they are lower than the original estimates, but I guess that’s the way it is.

At any rate, this is the chart of growth from the article:

The article had some further observations about the current economy:

1) The upward revision to nonresidential fixed investment was mostly accounted for by investment in software. (2) Imports, which are a subtraction in the calculation of GDP, were revised down. Within goods, the downward revision was widespread, the largest contributor was petroleum.

In addition to presenting revised estimates for the second quarter, today’s release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance. Wages and salaries are now estimated to have increased $122.5 billion in the first quarter of 2018, an upward revision of $0.4 billion.  (source data)

The article also notes that President Trump’s economic policies have benefited Main Street as well as Wall Street.

The article concludes:

The economic models of the entire last generation+ are based on the assumptions of continuing globalist economics which advances, and has advanced, the interest of Wall Street over Main Street. They were driving a “service-driven economy” message.

Simultaneous to domestic capital investment inside the U.S., the ability of our nation to provide goods and services to meet the economic expansion, means less reliance on imported materials, goods and/or services. We are making more of our own stuff; exporting at a larger rate; and importing less – specifically due to the energy independence strategy within the larger Trump policy.

Every granular policy is like a small part in a larger machine. Each individual part of the MAGAnomic policy is working to compliment the larger objective.

We needed a businessman in the White House. Our current politicians don’t seem to understand economics.

The Impact Of President Trump’s Economic Policies On Working Ameicans

Yesterday The Daily Signal posted an article about the impact of President Trump’s economic policies on average Americans.

The article highlights the story of Tom Condon, a factory worker for 28 years, employed by Jamison Doors.

The article reports:

Before the election of President Donald Trump, John T. Williams, chairman and chief executive officer of Jamison Doors, said the policies of the federal government “had not been kind to us.”

“The economy has not been good to us and we’ve had a pretty rocky road,” he told The Daily Signal.

But since Trump became president, “the business climate changed in a significantly positive way.”

“Now not all of it could be attributed to the election,” Williams explained, “but the general attitude seemed to change because of the prospect of fewer regulations in tax reform and a generally positive attitude toward businesses and building the economy.”

Condon, and two other factory workers The Daily Signal spoke with, agreed.

“We got a good bonus this year,” said Condon. “We appreciate that. And the way the company talks, in the future we can look forward to those pretty regularly.”

Economic policies matter.

The article explains the impact of the tax cuts:

Because of tax reform passed by Congress and signed by Trump just before Christmas, the company is expanding, investing in new equipment and making plans to open a new factory.

Workers are personally benefiting, too. Condon, along with the rest of the company’s estimated 150 full-time employees in the United States, already has received two bonuses related to tax reform this year.

“Passage of the tax reform was important because it provided more money that could be used to grow our business and improve our business,” Williams said. To share in the benefits of that, Williams gave two special bonuses to everybody who’s on the payroll, each time equal to a week’s worth of salary.

In January, House Minority Leader Nancy Pelosi described those benefits as “crumbs.”

“The bonus that corporate America received versus the crumbs that they are giving workers to kind of put the schmooze on is so pathetic,” she said.

But for workers like Condon, those bonuses are meaningful. Married for 44 years, Condon has a son and a daughter to care for, both with cerebral palsy. Twice a year, the family goes on vacation to Deep Creek Lake in western Maryland. This year, thanks to the bonuses Condon received, he’s able to rent a bigger, nicer house, and able to extend the vacation by a few days.

The American people will decide in November whether or not they want to keep this economic growth going.

The Jobs Report Came Out Today

The jobs report came out today. The number I watch, and I am waiting to see change is the Workforce Participation Rate. That number is holding steady at 62.9. That is not a great number, but it is an okay number. That number reached 66 during some of early 2008, but has generally been in the 63 or 64 range most of the time since then. The other numbers on the report are really good.

CNS News is reporting the numbers today:

The Labor Department’s Bureau of Labor Statistics says a record 155,965,000 people were employed in July, the 11th record-breaker since President Trump took office 19 months ago.

“Our economy is soaring. Our jobs are booming. Factories are pouring back into our country, they coming from all over the world. We are defending our workers,” President Trump told a campaign rally in Pennsylvania on Thursday.

BLS said the economy added 157,000 jobs in July (compared with a revised 248,000 in June).

The unemployment rate edged down to 3.9 percent, as the number of employed people reached new heights, and the number of unemployed persons declined by 284,000 to 6,280,000 in July. 

Among the major worker groups, the unemployment rates for adult men (3.4 percent) and Whites (3.4 percent) declined in July. The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), Blacks (6.6 percent), and Asians (3.1 percent), showed little or no change over the month. The unemployment rate for Hispanics hit a record low of 4.5 percent, down from last month’s record 4.6 percent.

There was also good news for wage-earners–in addition to the tax cut, hourly wages went up:

In July, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $27.05. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent.

This growth is the direct result of the policies of President Trump–the combination of deregulation, tax cuts, and domestic energy development has resulted in economic growth.

 

What Did He Do?

CNBC announced today that economic growth for the second quarter of 2018 was 4.1 percent. That is the fastest pace in nearly four years. So exactly what did President Trump do to help the economy come out of the slump it has been in? First let’s look at some history.

In March 2017 The New York Post reported the following:

With Thursday’s final revision of fourth-quarter GDP growth to 2.1 percent from its previous 1.9 percent level, President Obama is the only president since Herbert Hoover to not have guided the US economy to 3 percent growth in any year he was in office.

…Obama’s best year, as far as growing the economy, was 2015 when it grew 2.6 percent from 2014 — after growing 2.4 percent that year from 2013.

To understand the roots of the rapid economic growth, we need to look at some of the things President Trump has done since taking office.

In April of 2018, The Daily Caller reported:

In celebration of Earth Day, The Daily Caller News Foundation takes a look at the biggest climate regulations and agreements President Donald Trump’s administration has put on the chopping block, unshackling U.S. businesses from burdensome regulations and curtailing former President Obama’s climate legacy.

Here is a list of some of the regulations that ended or were changed:

Environmental Protection Agency administrator Scott Pruitt would sign a proposed rule to repeal the CPP (Clean Power Plan), he announced on Oct. 10, 2017. Undoing the rule will save Americans $33 billion in compliance costs, despite the previous administration claiming it would only cost $8.4 billion and save millions through public health benefits, EPA officials estimated.

…Trump signed an executive order on February 28, 2017, calling for a review of the plan (Waters of The United States). On June 27 of that year, Pruitt would repeal the rule, he announced. The EPA is now in the process of reissuing the order but with a more clear definition of “waters of the U.S.” meant to lower compliance costs to businesses and minimize intrusion to private property.

…In December 2017, Obama utilized a provision in the Outer Continental Shelf Lands Act to prohibit offshore drilling in large portions of the Atlantic and Arctic Oceans. Enacted during the waning days of his presidency, the move was meant to cement the former president’s environmental legacy.

Just four months later, Trump signed an executive order undoing all of this. The “America-First Offshore Energy Strategy” — Trump signed on April 28, 2017 — is an executive order that makes millions of acres of federal waters available for offshore drilling and exploration. Vice President Mike Pence referred to the order as a job creator and “an important step toward American energy independence.”

You get the picture. This was a very targeted approach–first you free businesses from over-regulation by the government, then you help America become energy independent (which is also a good idea for security reasons). Then to top it off, you pass a tax cut to allow American taxpayers to keep more of the money they earn.

Just for the record, Forbes reported in October 2017, America had reduced its carbon emissions. It is possible to limit both regulations and carbon emissions.

These are the strategies that have caused the rapid growth in the American economy. They are common-sense strategies that anyone could have implemented. The obvious question now is why didn’t someone do this before? We need to remember that businessmen solve problems and politicians talk about problems and calculate votes. It has become increasingly obvious that a President who is a businessman will do more good for America than a President who is a politician.

Small Business Growth Was Killed Under Dodd-Frank

On Friday, Investor’s Business Daily posted an editorial about the impact of the Dodd-Frank Bill on the growth of small businesses in America.

The editorial reports:

A new study released by the National Bureau of Economic Research (NBER), the quasi-private think tank that serves as the referee for deciding U.S. upturns and downturns, shows the damage done by Dodd-Frank to small businesses was severe.

The study, “The Impact of the Dodd-Frank Act on Small Business,” by economists Michael D. Bordo and John V. Duca, goes a long way toward explaining why GDP growth under Obama was a mere 2%, a full third slower than the long-term average.

It’s based on a long-term and well-known dynamic. Small businesses grow faster than large ones, and account for over two-thirds of all U.S. jobs growth. Dodd-Frank’s damage was substantial and persistent.

The editorial explains how the regulations impacted small businesses:

Dodd-Frank made making loans to large companies far more attractive. They did so by new compliance rules that treated small and startup loans as inherently more risky than big-business loans.

In economic terms, Dodd-Frank increased the fixed cost of making a loan to smaller companies. So banks simply stopped lending to them. Overnight, businesses that once had lines of credit lost them. Many closed. Startups could get nothing.

This may sound like a wonky debate, but it isn’t. Dodd-Frank’s destructive lending restrictions destroyed millions of jobs and kept entrepreneurs from creating thousands and thousands of new, wonderful businesses.

And it also explains why, with a few deft strokes of his presidential pen, cutting both regulations and taxes sharply, President Trump has been able to offset Dodd-Frank’s growth-killing rules and restored 3% growth to the economy.

The cutting of regulations and the tax cuts created the economic atmosphere that has resulted in stunning economic growth in the past year. Now if the Federal Reserve will be very careful as it raises interest rates to reasonable levels, we should be able to come out of the slump we were in during the Obama administration smoothly.

The Positive Economic News Continues

Yahoo News is reporting today that jobless claims expectantly fell last week. (Why was it unexpected–the trend has been going downward for a while?) Because of this, the Federal Reserve is expected to raise interest rates next week to keep the economy from overheating. I have mixed emotions about this. We do have to get back to reasonable interest rates, but it seems as if the federal reserve also has a habit of overreacting and slowing down (or speeding up) the economy a little too quickly.

This is a chart of interest rates starting in approximately 2008 taken from trading economics:

As you can see, the rates were kept very low during the Obama Administration in order to avoid an economic crash. Ideally, the Federal Reserve will raise them very slowly so as to protect the economic growth we are currently seeing.

Yahoo News reports:

The dollar was trading lower against a basket of currencies. Prices for longer-dated U.S. Treasuries rose marginally and stocks on Wall Street were mixed. The labor market is considered to be close to or at full employment. Nonfarm payrolls increased by 223,000 jobs in May and the unemployment rate dropped to an 18-year low of 3.8 percent.

The jobless rate, which has declined by three-tenths of a percentage point this year, is now at a level where the Fed projected it would be by the end of this year.

The number of people receiving benefits after an initial week of aid increased 21,000 to 1.74 million in the week ended May 26. The four-week moving average of the so-called continuing claims dropped 13,250 to 1.73 million, the lowest level since December 1973.

…The strong job market conditions were also underscored by the publication on Thursday of the Labor Department’s Contingent and Alternative Employment Arrangements survey, which showed 1.3 percent of U.S. workers in May 2017 held jobs they considered temporary or did not expect to last beyond a year.

That is a decline from 1.8 percent in February 2005 when the government last conducted a similar survey.

When self-employed individuals and independent contractors were included, the share of workers was 1.6 percent in May 2017, down from 2.3 percent in February 2005. Most contingent workers were under the age of 25.

The Labor Department will publish its Contingent Worker Supplement report in September. It is expected to shed light on the so-called gig economy.

Like him or not, President Trump is a successful businessman who understands how economics works. It might be a good idea in the future to elect businessmen to the presidency instead of politicians.

Who Benefited From The Tax Cuts?

On Friday, Investor’s Business Daily posted an article about the Trump Tax Cuts.

The article reports:

The numbers are now in. According to Congress’ nonpartisan Joint Committee on Taxation (JCT), the rich are now paying a higher share of federal taxes after enactment of the Republican tax reform plan than before.

For 2017, before tax reform, the JCT estimates those earning $1 million or more a year paid 19.5% of all federal taxes, counting income taxes, payroll taxes, and excise taxes. But for 2018, after tax reform, the committee estimates that these same millionaire taxpayers will pay 20.4% of all federal taxes.

The biggest relative tax cuts resulting from the tax reform are for those making less than $50,000 a year. Their share of federal taxes fell from 4.4% to 3.8%, a tax cut of 14%.

Indeed, the committee estimates that the federal tax burden went up for all taxpayers now making over $200,000 a year, from 49.8% before tax reform, to 51.3% this year after tax reform. You have to go down to those making between $100,000 and $200,000 a year to find taxpayers paying a lower share of federal taxes, from 29% of the federal tax burden last year to 28.8% this year.

But how could that be? The fundamental reason is the economic growth effects of tax reform.

Higher economic growth means increased wages, jobs, employment and income. As the economy grows, the share of taxes paid, especially by those earning higher incomes who still pay much higher tax rates under our so-called “progressive” tax code, goes up as well.

This is the Democrats’ biggest nightmare. That is the reason they opposed the tax cuts and tried to use the media to turn the American people against the idea of tax cuts. I believe that in the 2018 mid-term elections, we will see the Democrats attempt to campaign on the idea that the tax cuts were ‘tax cuts for the rich,’ but if American voters choose to be informed, they will recognize the lie in that statement.

The article reports more bad news for Democrats campaigning in 2018:

Those same economic effects of the tax reform amount to economic liberation for the poor, working people and the middle class. After 8 years of economic stagnation under the neo-socialist policies of Obamanomics, the rising wages, jobs, employment and income under the long overdue Trump Republican economic recovery are making America great again for those with low and moderate incomes.

Top economists estimate wages for average middle-class families are increasing by $4,000 a year due to tax reform. That’s in addition to direct tax cuts of $2,000 a year for middle class families.

These economic effects are why we now see the lowest unemployment rates among blacks in American history. And despite the lies of the Democrat fake news media, the lowest unemployment rates among Hispanics in history as well.

And these economic effects are why Trump/Republican economics is now resonating among blacks and Hispanics culturally as well, from young black Millennials like Candace Owens to hip-hop stars like Kanye West.

As John F. Kennedy stated, “A rising tide lifts all the boats.'” We have watched the tax cuts (and the ending of some over regulation) do just that. John Kennedy would probably not be welcome in today’s Democrat party. That is a shame. In spite of his questionable activities regarding women, I believe he would have been a reasonable President had he lived.

The Economic Impact Of Tax Cuts

First of all, let’s take a short walk down memory lane to a Washington Post article from November 20, 2017.

The article explains how the Democrats plan to use the tax cut plan in the 2018 mid-term elections:

The goal of the ads will be to hit two messages. The first is that the GOP changes to the tax code themselves would be enormously regressive, showering most of their benefits on the wealthy while giving crumbs to working- and middle-class Americans or even raising their taxes. The second is that these tax cuts would necessitate big cuts to the safety net later — the ad references $25 billion in Medicare cuts that could be triggered by the GOP plan’s deficit busting — further compounding the GOP agenda’s regressiveness down the line.

Geoff Garin, a pollster for the Democratic super PAC Priorities USA, tells me that his polling shows that this combination alienates working-class whites, particularly Obama-Trump voters. “They are fundamentally populist in their economic views, and they find big breaks to corporations and the wealthy especially heinous when the flip side of that means cutting Medicare and Medicaid,” Garin said.

That was the original plan. Now lets look at an article posted yesterday in The New York Post about the results of the tax cut plan.

The New York Post reports:

We are already starting to see a fiscal dividend from Trump’s pro-business tax, energy and regulatory policies. The Congressional Budget Office reports that tax revenues in April — which is by far the biggest month of the year for tax collections because of the April 15 filing deadline — totaled $515 billion. That was good for a robust 13 percent rise in receipts over last year. ‎

…But there’s another lesson, and it’s about how wrong the bean counters were in Congress who said this tax bill would “cost” the Treasury $1.5 trillion to $2 trillion in most revenues over the next decade. If the higher growth rate Trump has already accomplished remains in place, then the impact will be well over $3 trillion of more revenue and thus lower debt levels over the decade.

Putting people back to work is the best way to balance the budget. Period.

The article concludes:

No one thought that Trump could ramp up the growth rate to 3 percent or that his policies would boost federal revenues. But he is doing just that — which is why all that the Democrats and the media want to talk about these days is Russia and Stormy Daniels.

I want to go back to the original Democrat statements about the damage the tax cuts would do to the economy. Did they really believe that or do they simply want more of our money under their control? Either way, it doesn’t say good things about them–either they don’t understand economics (see the Laffer Curve) or they lied. Obviously they have to continue lying if they want to use the tax cuts as part of their mid-term election campaign–they have already stated that they want to rescind many of the tax breaks that have resulted in the recent economic growth.

If you are inclined to vote on pocketbook issues, the only choice in November is to vote for Republican candidates for Congress.

Pro-growth Or No-growth

Guy Benson posted an article at Townhall today about the impact of the Trump Tax Cuts on the American economy. As has been pointed out by anyone with a brain, any deficits in Washington are caused by a spending problem–not by a lack of tax revenue.

The article includes a chart showing revised economic growth estimates based on the growth that has already occurred because of the tax cuts:

The Congressional Budget Office (CBO) now projects 156.8 million jobs in America by year-end 2027—2.6 million more jobs than in its June 2017 Budget and Economic Outlook. CBO attributes an average of 1.1 million additional jobs over the next 10 years to the recently enacted Tax Cuts and Jobs Act.

On April 10, I posted an article detailing the Democrats plan to roll back the tax cuts and increase both personal and corporate taxes. That will bring us back to the slow economic growth we experienced under President Obama. The Republicans need to make sure that the American voters understand that–a vote for a Democratic Congressman is a vote for economic slowdown.

Economic policies do have consequences. That has become very obvious in the past year or so.

Bringing An Out-Of-Control Agency Under Control

On April  5, Steve Forbes posted an article at Investor’s Business Daily. The article deals with the changes being made at the Environmental Protection Agency under the leadership of Scott Pruitt.

The article states:

It should come as no surprise how the man who is boldly redirecting the EPA — a once rogue agency that operated far beyond its constitutional authority — is now the subject of routine attacks from liberal news outlets and activists who want him fired. Scott Pruitt has taken his job as EPA Administrator seriously and has done more to reinstate the EPA’s true, core mission than any of his modern-day predecessors.

Pruitt’s sharp focus is correct — to restore contaminated lands, safeguard our nation’s air and water, and do so by respecting real science rather than the ideologically driven fake science of his predecessors. He is demonstrating that we can both have a cleaner environment and greater economic growth and job creation. Contrary to the extreme environmentalist, prosperity and a safer environment can go hand-in-hand.

As Scott Pruitt observes, our nation can be, “pro-growth, pro-jobs and pro-environment.”

That is a statement of a concept that has been lost by the environmental movement in recent years.

The article concludes with the accomplishments of the EPA under Scott Pruitt’s leadership:

And the notion that enforcement under Scott Pruitt’s EPA is lacking is just plain wrong. In fiscal 2017, EPA collected $1.6 billion in administrative and civil judicial penalties. That figure is higher than any of the previous ten years of EPA enforcement operations, excluding fiscal 2016.

President Trump and Administrator Pruitt rightfully believe we can protect our environment without saddling American factories, manufacturing plants and energy operations with billions in unneeded regulatory costs while offering no way to measure any improvement to the environment or our quality of life.

By halting burdensome, often duplicative regulations, Pruitt’s EPA can focus on measurable environmental protection, guided by peer-reviewed science without hurting consumers or Americans looking for skilled jobs in the energy or manufacturing sectors.

Perhaps the most important change of all, Pruitt’s EPA is now operating under the proper rule of law and staying true to its mandate and defined authority by respecting facts rather than ideological fiction. The days of a rogue, agenda driven EPA are over. Pruitt is the right man for the job and it’s no wonder the radical left is screaming for his ouster.

Hopefully Mr. Pruitt will be able to stand firm and remain to complete the job he has begun.

Economic Policies Have Consequences

The really good news is that the labor force participation rate has increased from 62.7 in January percent to 6.3 percent in February. It’s a small increase, but it is moving in the right direction.

According to Townhall:

The rate of layoffs in the U.S. fell again in late March and dropped to the lowest level since 1973. Initial U.S. jobless claims declined by 12,000 to 215,000 in the seven days ended March 24,

…Economists surveyed by MarketWatch had forecast claims to total 230,000. The more stable monthly average of claims dipped by 500 to 224,500…The revisions erased the previous low in jobless claims, a reading of 210,000 last month that would have been the lowest since 1969. But no matter. Layoffs in the U.S. is extremely low, as reflected by a 4.1% unemployment rate that is the smallest in 17 years…The labor market is so strong that it’s even drawing back in people who’ve been out of the workforce for years. And it doesn’t show any sign of letting up. The economy added 313,000 new jobs in February and economists predict another solid gain of around 200,000 in March.

Like him or not, Donald Trump is an experienced businessman who understands economics. I am not happy with the spending that is currently going on in Washington, but I suspect that will be dealt with in due time. Until then, President Trump’s economic policies have improved the lives of many Americans.

The Democrats have already stated that they want to repeal the policies that are causing the current economic growth. If they are elected in the House and Senate in November, they will do that. This is something to consider when voting.

Please follow the link above to read the entire article. It lists some of the specific companies who have passed their tax savings on to their employees. That is good news.

The Laffer Curve At Work

Yesterday CNS News reported that during the month of January (the first month the Trump tax cuts were in effect), the federal government ran a surplus.

The article reports:

January was the first month under the new tax law that President Donald Trump signed in December.

During January, the Treasury collected approximately $361,038,000,000 in total tax revenues and spent a total of approximately $311,802,000,000 to run a surplus of approximately $49,236,000,000.

Despite the monthly surplus of $49,236,000,000, the federal government is still running a deficit of approximately $175,718,000,000 for fiscal year 2018. That is because the government entered the month with a deficit of approximately $224,955,000,000.

The article also reports some of the history:

Over the last twenty fiscal years, going back to 1999, the federal government has run surpluses in the month of January 13 times and deficits 7 times. Six of the Januaries in which the federal government ran deficits overlapped President Barack Obama’s time in office—including January 2009, the month Obama was inaugurated, and the Januaries in 2010, 2011, 2012, 2014 and 2016.

If you are not familiar with the Laffer Curve, it is a financial theory that the website the balance describes as follows:

The Laffer Curve is a theory that states lower tax rates boost economic growth. It underpins supply-side economicsReaganomics and the Tea Party’s economic policies. Economist Arthur Laffer developed it in 1979.

The Laffer Curve describes how changes in tax rates affect government revenues in two ways. One is immediate, which Laffer describes as “arithmetic.” Every dollar in tax cuts translates directly to one less dollar in government revenue. 

The other effect is longer-term, which Laffer describes as the “economic” effect. It works in the opposite direction. Lower tax rates put money into the hands of taxpayers, who then spend it. It creates more business activity to meet consumer demand. For this, companies hire more workers, who then spend their additional income. This boost to economic growth generates a larger tax base. It eventually replaces any revenue lost from the tax cut.

This is an illustration of how the Laffer Curve works:

As you can see, there is a point where taxes reach a high point and the amount of revenue generated from taxes goes down. That is not a coincidence–that is what tax attorneys get paid for. One of the reasons we need to make the tax code simpler is that we need to take away the complexities that allow people to hide income and avoid taxes. I believe that was one of the goals of the Trump tax plan. It remains to be seen whether or not that goal was achieved.

One Way Tax Rates Influence The Economy

Yesterday The Washington Free Beacon posted an article about the impact of corporate tax rates on entrepreneurship. The article notes that as the corporate tax rate increases, the number of start-up companies decreases.

The article reports:

Entrepreneurship is negatively impacted by higher corporate tax rates, according to a study from the Federal Reserve.

“While there are many actions governments may take to affect entrepreneurship, few are as important or contentiously debated as the setting of tax policy,” the paper explains. “Taxes are viewed by many as the primary lever elected officials have at their disposal to change the business environment, promote growth, and encourage innovation.”

The study looked at counties that had changes to their state corporate, personal, or sales tax rates and how entrepreneurial activity was affected compared with those counties that had no changes to tax rates. The study defines entrepreneurs and startups as those that are two years old or younger.

“We find that increases in corporate tax rates have a statistically and economically significant negative effect on employment among startup firms,” the study explains. “Specifically, for every one percentage point increase in the corporate tax rate employment in startup firms declines 3.7 percent.”

…”Tax liability reduces economic profits, restricting the set of potential entrepreneurs whose likely profits exceed entry costs,” the study explains. “Tax policy affects labor demand via the dependence of firm-level labor demand on other production or revenue factors.”

The study also points to previous research that finds self-employment is affected by how complex the tax code is. Corporate tax rates reduce research and development and new product development.

If this study is accurate, we are going to have substantial economic growth in America as the corporate tax cut begins to take effect. Like him or not, President Trump is a businessman, and a rather successful one. I suspect he was already aware of the relationship between corporate taxes and start-up companies.

Just for the record, I was talking to someone last night who has been a Trump supporter since he announced his candidacy. She said something to me that I think is very astute–“Trump had to be the candidate–we needed a mud wrestler to fight the Democrats. The other Republican candidates wouldn’t do it.” That is an amazing (and true) statement.

Laws Have Consequences

The tax reform bill is expected to boost America’s economy, but it is becoming that the ending of excessive government regulation is also spurring economic growth.

One America News is reporting today that the changes in fracking laws have not only resulted in lower energy costs for Americans, but have also led to increased interest in building power plants.

The article reports:

The shale boom caused an oil price crash in 2014 as many sought fields to produce natural gas.

Now, despite competition from solar and other alternative energy sources, electricity producers are building near natural gas sources to save on fuel.

These gas-fired power plants are capable of powering more than eight million homes each.

Invenergy and Calpine Corporation are among the companies building the plants, which are scheduled to be opened between 2018 and 2020.

Some critics speculate the shale boom will not last as discoveries of new reserves were the fewest on record in 2017.

Actions have consequences.

What Economic Equality Really Looks Like

Today Breitbart posted an article about aspects of the Trump economy that have not been widely reported.

The article cites 7 economic facts:

  1. Latino Unemployment Hits Record Low
  2. Black Unemployment Rate Hits 17-Year Low
  3. Real Economic Growth
  4. Soaring Economic Optimism
  5. Booming Stock Market
  6. Unemployment Rate Hits 17-Year Low
  7. Manufacturing Jobs Boom

Regardless of his imperfections, Donald Trump is a businessman. He understands how money works and how economies work. His knowledge (and common sense on the part of many of the people around him) have turned around our economy.

The article reminds us:

After an unexpectedly high growth rate of 3.3 percent in the third quarter of 2017 (and that is with two devastating hurricanes), projections for the fourth quarter have edged into the magic number of 4 percent.

…So far in 2017, a full 171,000 manufacturing jobs have been created. Moreover, the manufacturing unemployment rate is just 2.6 percent, the lowest ever recorded.

In July 2013, CNS News reported:

During just the years that President Barack Obama has been in office (2009 through 2012), average annual growth in real GDP has been only 1.075 percent.

The 1.075 percent average annual growth in real GDP under Obama equals less than a third (31.57 percent) of the 3.405 percent average annual growth in real GDP the United States saw in the last two decades of the last century.

The 1.775 percent average annual growth of GDP in the twelve years since the beginning of this century, equals only 52 percent of the 3.405 percent average annual growth in real GDP the country saw in the last two decades of the last century. 

In the first two quarters of this year, the beginning of President Obama’s second term, real GDP has grown at an annualized rate of 1.1 percent and 1.7 percent.

In October 2017, The Balance posted a chart showing GDP growth by year. This is a portion of that chart:

Leadership and economic policy matter.

President Trump’s Economy

Today The Daily Signal posted an article showing four aspects of economic growth under President Trump.

This is their list:

1. Growth Gets Closer to 4 Percent  –  remember when President Obama said that we would not see growth of 3 percent again (that is probably true under Democratic economic policies).

2. Stock Market Hits Record Highs – this is important because many working Americans have 401k retirement accounts. This helps all of those Americans–not only the ‘rich.’

3. Companies Are ‘Coming Back Fast’ – part of this is due to pending lower corporate tax rates and part of this is due to the continued low cost of energy as America moves toward energy independence.

4. Healthy Consumer and Employer Confidence –  optimism can be contagious, and President Trump understands that and projects optimism.

If the Republicans in Congress would cooperate and pass tax reform, we will all be even better off.

Talking Points vs Reality

Investor’s Business Daily recently posted an editorial about the impact of President Trump’s proposed tax cuts. The editorial notes that the Democrats sudden concern for deficits is a bit disingenuous after the impact President Obama had on the deficit during the past eight years. The editorial also notes that President Trump’s tax plan will not increase the deficit, but will probably decrease the deficit due to the economic growth created by lowering taxes.

The editorial includes the following chart:

The editorial explains:

According to the Congressional Budget Office, the House tax bill would boost deficits over the next 10 years by a total of $1.4 trillion. The added interest on the debt would kick that up to $1.7 trillion.

That looks like a lot of money. Except that equals just a 17% increase in total deficits projected over the next decade.

And that increase is a wild exaggeration, since it doesn’t allow for any extra economic growth from the GOP‘s pro-growth tax cuts — a premise that even some honest liberal economists don’t believe. The actual deficit boost, if there is any, will be far smaller than what the CBO says.

But let’s accept the CBO’s numbers as gospel truth.

Look more closely at the data and you see that what’s driving deficits ever upward isn’t the Republican tax cuts. It is out-of-control spending.

Over the past 50 years, despite all the myriad changes in tax laws, revenues as a share of GDP have remained remarkably close to the average: 17.4%.  In fiscal year 2017, which ended in September, the share was 17.3%. In Bush’s last in office, it was 17.1%. When Bill Clinton took office in 1991, it was 17.3%.

What happens if the Republican tax plan goes into effect? According to the CBO, taxes as a share of the economy in 2027 will be … 17.9%.

That’s right. Even with an allegedly budget-busting tax cut, the federal government will claim a greater share of the nation’s economy in 2027 than it does today, and that share will be above the average for the previous 50 years.

The only reason deficits continue to climb over the next decade is because federal spending is going up at an unsustainable rate.

The editorial concludes:

But the bigger problem is that any reasonable attempt to rein in any of the entitlement programs is met by fierce and unrelenting opposition from all those Democrats who now claim to worry about deficits. They will viciously demagogue any Republican who dares to propose real reforms of these programs, and then brag about any resulting election victories.

So, the next time you hear Democrats pretend to be deficit hawks, ask them what their plan is to bring entitlement spending under control.

 

The Trump Economy

There are no guarantees in the economy. There are certain things that the government can do that historically have aided growth and certain things that the government can do that have inhibited growth. We have history as our guide as to what works, but sometimes people have a political bias that tends to ignore history.

Real Clear Politics posted an article today about the Trump economy. The article was written by Stephen Moore. The economy is not booming, the workforce participation rate is still too low for it to be considered booming, but it is definitely improving. The title of the article is, “Why the Left Has Been So Wrong About the Trump Boom.”

The article reports:

Time magazine‘s cover story for the week of Nov. 6 is a classic. It blares: “The Wrecking Crew: How Trump’s Cabinet Is Dismantling Government As We Know It.” The New York Times ran a lead editorial complaining that team Trump is shrinking the regulatory state at an “unprecedented” pace.

Meanwhile, last week the stock market raced to new all-time highs; we had another blockbuster jobs report with another fall in the unemployment rate; and housing sales soared to their highest level in a decade.

The article at Time magazine fails to recognize that those two facts are related.

The article at Real Clear Politics further notes:

But so far the Trump haters have missed the call on the economy‘s trajectory. Doubly ironic is that the same Obama-era economists who are trashing Trump’s increasingly realistic forecast of 3 percent growth are the ones who predicted 4 percent growth from the Obama budgets. Obama never came anywhere near 4 percent growth, and at the end of his second term, the economy grew at a pitiful 1.6 percent.

Under Obama, free enterprise and pro-business policies were thrown out the window. What was delivered was the weakest recovery from a recession since World War II, with a meager 2.2 percent average growth rate. Middle America felt it, which is why Trump won these forgotten Americans.

One reason that economist Larry Kudlow and I and others assured Donald Trump that 3 to 4 percent growth was achievable was that Trump could capitalize on the underperformance of the Obama years. Under Obama, business investment fell almost two-thirds below the long-term trend line — thanks to higher taxes on investment. Now, partly in anticipation of the tax cut, business spending keeps climbing.

The article at Real Clear Politics concludes:

Maybe the liberal economists and their shills in the media should show some humility. They should acknowledge they were dead wrong about how much Obamanomics was going to grow the economy and about how Trumponomics would crash the economy and the stock market. Or better yet, maybe the rest of us should all just stop listening to them.

The other conclusion that can be reached is that the free market works every time it is allowed to work. Government interference has a very negative impact on economic growth. We need to send President Obama’s economic advisors and a good number of Congressmen back to school to study basic economics.

The Numbers Are Good, But They Need To Be Better

The American economy is slowly improving. It is not racing along, but it is improving. Investor’s Business Daily recently posted an editorial explaining that although we have a 4.1 percent unemployment rate, we are not yet at full employment. As the article explains, there are other numbers that need to be considered when looking at the economy.

The editorial reports:

But look at the numbers more closely and you see that we are far from full employment.

First, the 0.1 percentage point decline in the unemployment rate in October was almost entirely the result of the fact that 968,000 dropped out of the labor force that month.

That’s right, for every new job created, nearly four people left the labor force.

The broader measure of unemployed — which combines those actively searching for a job with those working part time but want to work full time or are “marginally attached” to the labor force — show the jobless rate to be 7.9%.

And the IBD-TIPP poll shows that there’s likely even more slack than that. The October survey — which asks those polled whether they or anyone in their household is looking for work — shows that the share of job seekers is currently above 10%. This number, by the way, has consistently tracked higher than either of the BLS’s two measures.

Here’s another way to look at it. Back in December 2000, the unemployment rate was 3.9%. But that month, the labor force participation rate — the share of the population that’s either working or looking for a job — was 67%.

The current rate: 62.7%.

If the labor force participation rate were the same today as it was in 2000, the official unemployment rate would be more like 10%.

The 10% unemployment rate would be better than what the actual rate has been in recent years, but obviously, it is not good.

The editorial concludes:

There is clearly still a need for pro-growth policies to get millions of workers sitting on the sidelines back to work.

Those pro-growth policies need to begin with the passage of President Trump’s tax proposal followed by a complete repeal of ObamaCare. If the Republicans in Congress want to be re-elected, they need to do both. It is time to put away the fear of a political outsider succeeding as President and begin to work together to move the country forward.

An article on

An article on the website of the JFK Library includes the following paragraph:

The president finally decided that only a bold domestic program, including tax cuts, would restore his political momentum. Declaring that the absence of recession is not tantamount to economic growth, the president proposed in 1963 to cut income taxes from a range of 20-91% to 14-65% He also proposed a cut in the corporate tax rate from 52% to 47%. Ironically, economic growth expanded in 1963, and Republicans and conservative Democrats in Congress insisted that reducing taxes without corresponding spending cuts was unacceptable. Kennedy disagreed, arguing that “a rising tide lifts all boats” and that strong economic growth would not continue without lower taxes.

I wonder if John Kennedy would be welcome in today’s Democratic party.