The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

The Election Of Donald Trump Signaled A Change

Donald Trump became America’s President despite long odds. Hillary Clinton was considered to be the President-elect by almost everyone up until we actually voted. So what happened? Many Americans are looking past the news the mainstream media has been feeding them and looking around. They have reached the point where they are choosing to believe what they see rather than what they are being told. As the middle class of America struggled under the Obama administration, those in the bureaucracy increased in number and prospered. The richest counties in America are adjacent to Washington, D.C. That is not a coincidence. The political and media elite are looking out for their own interests while ignoring the well being of their fellow countrymen. Those countrymen elected Donald Trump. Those feelings are not unique to America. They recently erupted in France.

The Wall Street Journal posted an article yesterday about the recent riots in France. The straw that broke the camel’s back was the drastic increase in the gasoline tax, but that was the straw–the issue is much bigger.

The article reports:

Nothing reveals the disconnect between ordinary voters and an aloof political class more than carbon taxation.

The fault line runs between anti-carbon policies and economic growth, and France is a test for the political future of emissions restrictions. France already is a relatively low-carbon economy, with per-capita emissions half Germany’s as of 2014. French governments have nonetheless pursued an “ecological transition” to further squeeze carbon emissions from every corner of the French economy. The results are visible in the Paris streets.

President Emmanuel Macron and his Socialist predecessor François Hollande targeted auto emissions because they account for about 40% of France’s carbon emissions from fuel combustion compared to 21% in Germany. But this is mainly because France relies heavily on nuclear power for electricity. Power generation and heating account for only 13% of French emissions, compared to 44% across the Rhine. French road-transport emissions were a mere 0.4% of global carbon emissions in 2016, when overall French emissions were less than 1%.

Yet Paris insists on cutting more, though transport emissions are notoriously hard to reduce. Cleaner engines or affordable hybrids have been slow to emerge. Undeterred, Mr. Macron pushed ahead with a series of punitive tax hikes to discourage driving.

If you still believe that the climate change movement is about climate, I would like to share the following from a previous rightwinggranny article:

Green For All acknowledges the need to disrupt the current economy, because we understand that our current economy was based upon human trafficking, the exploitation of labor, and violent racism,” according to the group’s website. “We are safe enough to be invited into spaces where power-building groups are not, and radical enough to push a deeply justice-based agenda in those spaces. We are radical enough to partner with grassroots organizations when other national groups are turned away, and enough of an ally to offer resources and support in those spaces.”

In case you were wondering, a deeply justice-based agenda means that the United Nations would be in charge of all political and economic activities of its members. There would be a movement toward socialism and a great loss of the freedoms we enjoy in America and in other western countries. The French were right to revolt.

Putting Politics Before The Welfare Of Americans

Yesterday Investor’s Business Daily posted an editorial about the coming Congressional session. The title of the editorial is, “Market Turmoil Shows Why Trump’s Pro-Growth Policies Must Continue.”

The editorial explains:

Kudlow (President Trump’s top economic advisor, Larry Kudlow) tried to calm the waters. “Corrections come and go,” he told reporters at the White House. “I’m reading some of the weirdest stuff how a recession is in the future. Nonsense. Recession is so far in the distance I can’t see it. Keep the faith. It’s a very strong economy.”

Let’s be clear. Economic forecasts have been overly pessimistic for most of the Trump administration, with actual results consistently coming in “unexpectedly” higher than forecast. And Kudlow is right. There’s no sign of a recession on the horizon.

The editorial points out the indications of a strong economy and the steps needed to keep it strong:

Unemployment is at 50-year lows. Wages are growing at the fastest rate since the financial crisis. There are a million more job listings than officially unemployed people. Productivity grew 2.2% in the third quarter, after jumping 3% in the second quarter — the fastest growth rate in four years. Small business optimism and the IBD/TIPP Economic Optimism Index remains at record highs.

After eight long years of sluggish growth under President Obama, the economy has been booming.

Still, the Fed has been raising interest rates, and as we’ve pointed out repeatedly in this space, the risk is always that they will go too far, too fast, and crash the economy. The trade war with China is taking its toll. And the economic expansion is old. The last recession ended 113 months ago, making this the second longest in the post-World War II era.

Which is all the more reason for the federal government to continue wringing every bit of growth-inhibiting policies out of the system. For his part, Trump needs to get a trade deal in place with China when he meets with President Xi Jinping at a G-20 summit later this month. And he needs to continue to deregulate where he can.

Unfortunately the Democrats in Congress have little interest in continuing the policies that have resulted in the current economic growth. They will make every effort to roll back the tax cuts and increase the size and spending of the federal government. Hopefully their efforts will not be successful.

The Economic Numbers From October

First of all, the following chart is found at the Bureau of Labor Statistics website. It shows the Workforce Participation Rate in recent years.

The number 62.9 is not a great number, but it is a step in the right direction.

Below is a chart posted at the Bureau of Labor Statistics website showing the unemployment rate for October.

The fact that the unemployment rate remained steady as the labor participation rate increased is good news for Americans. It means that there is continued growth in the job market.

Today The Wall Street Journal posted more good economic news:

Strong hiring and low unemployment are delivering U.S. workers their best pay raises in nearly a decade.

Employers shook off a September slowdown to add 250,000 jobs to their payrolls in October, above monthly averages in recent years, the Labor Department said Friday. With unemployment holding at 3.7%, a 49-year low, and employers competing for scarce workers, wages increased 3.1% from a year earlier, the biggest year-over-year gain for average hourly earnings since 2009.

…The share of Americans in their prime working years, between 25 and 54, who are working or looking for work rose to the highest rate since 2010 last month, at 82.3%.

President Trump touted the figures in a tweet Friday, just days before midterm elections that will decide control of Congress. “Wages UP! These are incredible numbers,” Mr. Trump said.

Employers have added to their payrolls for a record 97 straight months.

This is the Trump economy. The Federal Reserve is beginning to raise interest levels to more normal levels, which may slow down the growth of the economy, but keeping interest rates at artificially low levels is not a good long-term strategy. We still have a need to control our spending and get the national debt under control, but strong economic growth and a lessening of the need for welfare programs should begin that process. There will be some adjustments along the way–low interest rates will no longer be keeping the stock market artificially high and rising interest rates may slow the housing market, but raising interest rates will also help bring us back to a more balanced economy.

If the Republicans hold Congress, the economic growth will continue. If the Democrats gain control of the House of Representatives, we will be in for a very bumpy economic ride.

Sometimes The Facts Just Don’t Agree With The Spin

Investor’s Business Daily posted an editorial yesterday about some assertions made by former President Obama in a recent speech.

The editorial notes:

In a speech at a rally in Nevada, Obama claimed that the current economic boom has nothing to do with Trump’s economic policies.

“By the time I left office,” he said, “wages were rising, uninsurance rate was falling, poverty was falling. And that’s what I handed off to the next guy. So when you hear all this talk about economic miracles right now, remember who started it.”

Well, who did start it?

The editorial explains:

GDP growth was decelerating throughout 2016. Household income was flat. The unemployment rate was flat. The stock market was flat.

And, “by 2016, wage growth began to taper off quickly,” notes the American Action Forum’s Ben Gitis.

Even The New York Times, which has been gamely trying to grant Obama credit for the current boom, now admits that 2016 was an “invisible recession.”

“There was a sharp slowdown in business investment, caused by an interrelated weakening in emerging markets, a drop in the price of oil and other commodities, and a run-up in the value of the dollar,” it explained.

Slow Growth Expected

By the end of 2016, pundits and economists were widely predicting a new era of slow economic growth. Why? Because for eight years under President Obama’s leadership, the economy struggled to even top 2% annual growth. It never reached 3%. And every single year GDP growth missed the forecasts by Obama’s own economists.

So for Obama to claim that he handed Trump a thriving economy is 100% pure poppycock.

What’s more, Obama and other liberal Democrats insisted in 2016 that if Trump were elected, he’d send the economy into a tailspin.

There is a definite difference between words and results. Former President Obama can claim all the economic success he wants, but the numbers simply do not back him up.

Things To Notice

On October 15, The Wall Street Journal noted:

The U.S. government ran its largest budget deficit in six years during the fiscal year that ended last month, an unusual development in a fast-growing economy and a sign that—so far at least—tax cuts have restrained government revenue gains.

The deficit totaled $779 billion in the fiscal year that ended Sept. 30, up 17% from $666 billion in fiscal 2017, the Treasury Department said Monday. The deficit is headed toward $1 trillion in the current fiscal year, the White House and Congressional Budget Office said.

Deficits usually shrink during economic booms because strong growth leads to increased tax revenue as household income, corporate profits and capital gains all rise. Meantime, spending on safety-net programs like unemployment insurance and food stamps tends to be restrained.

In the last fiscal year, a different set of forces was at play as economic growth sped up. Interest payments on the federal debt and military spending rose rapidly, while tax revenue failed to keep pace as the Republican tax cuts for both individuals and corporations kicked in.

What you just read is totally misleading. The statement that ‘ tax revenue failed to keep pace as the Republican tax cuts for both individuals and corporations kicked in” is absolutely false. The two major parts of the problem are Congress’ lack of ability or willingness to cut spending and the fact that when the federal reserve raises interest rates, it increases the interest the government pays on the current debt, thus increasing the deficit. As far as the tax cuts are concerned, the facts are quite different from what The Wall Street Journal reported.

On October 16, Investor’s Business Daily reported:

Critics of the Trump tax cuts said they would blow a hole in the deficit. Yet individual income taxes climbed 6% in the just-ended fiscal year 2018, as the economy grew faster and created more jobs than expected.

The Treasury Department reported this week that individual income tax collections for FY 2018 totaled $1.7 trillion. That’s up $14 billion from fiscal 2017, and an all-time high. And that’s despite the fact that individual income tax rates got a significant cut this year as part of President Donald Trump’s tax reform plan.

True, the first three months of the fiscal year were before the tax cuts kicked in. But if you limit the accounting to this calendar year, individual income tax revenues are up by 5% through September.

Other major sources of revenue climbed as well, as the overall economy revived. FICA tax collections rose by more than 3%. Excise taxes jumped 13%.

The only category that was down? Corporate income taxes, which dropped by 31%.

Overall, federal revenues came in slightly higher in FY 2018 — up 0.5%.

Spending, on the other hand, was $127 billion higher in fiscal 2018. As a result, deficits for 2018 climbed $113 billion.

The underline is mine.

It’s the spending, stupid! We need a Congress that will curb spending and a Federal Reserve that will move slowly.

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.