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 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.