The Economy Under President Trump

I am not an economist, but I have learned over the years to listen to the people with the best track records on analysis. One of those people is Stephen Moore, who posted an article at The Wall Street Journal yesterday.

The article reports:

Liberals are tripping over themselves to explain why the economy has performed so much better under Donald Trump than it did under Barack Obama. The economy has grown by nearly 4% over the past six months, and the final number for 2018 is expected to come in at between 3% and 3.5%. The U.S. growth rate has doubled since Mr. Obama’s last year in office.

When Mr. Trump was elected, many Democratic pundits predicted an economic and stock-market meltdown. Then the economy started surging and they abruptly changed their tune, arguing that Mr. Trump was simply riding a global growth wave. That narrative was shattered when U.S. growth kept steaming ahead even as global growth—especially in China and Germany—stalled.

The people who predicted an economic crash if President Trump was elected are now saying that the tax cuts have given us a ‘sugar high’, and the market will crash when the sugar wears off. That makes about as much sense as President Obama taking credit for the move toward American energy independence.

The article continues:

The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

The article concludes:

Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.

When you decrease taxes and regulations on businesses, we all gain. That combination, if allowed to continue, will bring us continued economic growth.

We Might Take Them Seriously If They Practiced What They Preach

The Washington Free Beacon posted an article yesterday about some recent actions by Senator Bernie Sanders. It seems that according to the Federal Election Commission, Senator Sanders spent nearly $300,000 for private jet travel in the final stretch of his campaign for re-election to the Senate.

The article reports:

Air travel is one of the biggest sources of greenhouse gas emissions, with some estimations saying that the aviation industry accounts for about 11 percent of transportation-related emissions in the country. The environmental impact is greatly magnified in cases of private flights, which carry far fewer people per trip than commercial jets.

Sanders claims on his website that “climate change is the single greatest threat facing our planet” and puts the blame chiefly on the growing rate of emissions being produced by the transportation sector.

“Global climate change is real, it is caused mainly by emissions released from burning fossil fuels and it poses a catastrophic threat to the long-term longevity of our planet,” he writes. “The transportation sector accounts for about 26 percent of carbon pollution emissions.”

The Sanders campaign told the Washington Free Beacon it purchased “carbon offsets” to balance out emissions produced on the trip.

“The campaign purchased carbon offsets from Native Energy to support renewable energy projects and invest in carbon reduction projects to balance out the emissions produced on this trip,” Jones said in an email.

The Washington Free Beacon was unable to identify payments made by the campaign to the environmental group. Jones says the purchase will appear in the campaign’s next filing.

So let me get this straight–it’s okay to have a ginormous carbon footprint as long as you are rich enough to buy carbon credits. Meanwhile, all of us little people are supposed to go broke paying ever increasing prices for energy caused by regulations to lower carbon emissions put on us by people who have no intention of curtailing their carbon emissions. Seems a little unfair to me.

Ugly Rears Its Head In The House Of Representatives

Sometimes dumb ideas come from Republicans as well as Democrats. I am about to illustrate that fact. Yesterday Representative Ted Deutch of Florida introduced H.R. 7173 into the House of Representatives. The bills description is, “To create a Carbon Dividend Trust Fund for the American people in order to encourage market-driven innovation of clean energy technologies and market efficiencies which will reduce harmful pollution and leave a healthier, more stable, and more prosperous nation for future generations.” Never trust the government to create a trust fund–remember the Social Security Trust Fund–it was robbed during the 1960’s (by the government that created it).

Let’s talk about this trust fund for a moment.

The bill states:

“A carbon dividend payment is one pro-rata share for each adult and half a pro-rata share for each child under 19 years old, with a limit of 2 children per household, of amounts available for the month in the Carbon Dividend Trust Fund.”

Do you really want the government commenting or being involved in any way with how many children you have in your family?

The Hill posted an article yesterday about the bill. The article included the following:

…the bill would charge companies when they produce or import fossil fuels like coal, oil and natural gas, based on their expected greenhouse gas emissions.

But instead of using the money to pay for health or community projects, the new bill would distribute it to the public. Its backers say those “dividends” would offset the increased costs from the carbon tax, like higher utility and gasoline bills, for about 70 percent of households.

Dividend funds would be handed out by the Treasury Department under the bill, based on the number of people in a household.

“It’s transparent and easily trackable. You know where the money is going. It protects the American family so that families are not adversely impacted. Dividends would protect most families from cost increases,” Ben Pendergrass, senior director of government affairs at Citizens’ Climate Lobby, told The Hill.

“The market signals should still be there to guide things like fuel efficient cars and dividends protect people who can’t make that transition immediately.”

The bill would also prohibit the federal government from regulating greenhouse gas emissions from the sectors that are taxed, unless the taxes aren’t effective after 10 years. That is an effort to attract support from Republicans, who are nearly united in opposition to Environmental Protection Agency climate regulations.

Rooney focused on the economic benefits of the bill, saying in a statement Wednesday that the revenue carbon neutral fee is good policy and a way “to support emerging alternate sources of energy.”

This bill is a really bad idea. It paves the way for more government intrusion into our private lives and takes more money from Americans. America has cut its greenhouse gas emissions without crippling our economy. We are quite capable of doing so in the future without stifling economic growth and creating even bigger bureaucracies.

 

The Consequences Of Not Understanding Economics

I am not an authority on economics. I am, however, a person who watches what goes on around me and sometimes learns lessons from what I see. Some economic principles are obvious enough to be learned that way.

In 2013, Forbes Magazine posted an article quoting a statement by then-President Obama on the subject of economic freedom. Economic freedom was not something President Obama believed in. President Obama acted on his belief that economic freedom was not a good thing, and the American economy suffered during his presidency.

The article quotes a speech President Obama gave in Kansas:

there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes–especially for the wealthy–our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.

Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.

Well, have we tried this theory? A little history is in order here.

The article reminds us:

I pick 100 years deliberately, because it was exactly 100 years ago that a gigantic anti-capitalist measure was put into effect: the Federal Reserve System. For 100 years, government, not the free market, has controlled money and banking. How’s that worked out? How’s the value of the dollar held up since 1913? Is it worth one-fiftieth of its value then or only one one-hundredth? You be the judge. How did the dollar hold up over the 100 years before this government take-over of money and banking? It actually gained slightly in value.

Laissez-faire hasn’t existed since the Sherman Antitrust Act of 1890. That was the first of a plethora of government crimes against the free market.

…Obama absurdly suggests that timid, half-hearted, compromisers, like George W. Bush, installed laissez-faire capitalism–on the grounds that they tinkered with one or two regulations (Glass-Steagall) and marginal tax rates–while blanking out the fact that under the Bush administration, government spending ballooned, growing much faster than under Clinton, and 50,000 new regulations were added to the Federal Register.

The philosophy of individualism and the politics of laissez-faire would mean government spending of about one-tenth its present level. It would also mean an end to all regulatory agencies: no SEC, FDA, NLRB, FAA, OSHA, EPA, FTC, ATF, CFTC, FHA, FCC–to name just some of the better known of the 430 agencies listed in the federal register.

Even you, dear reader, are probably wondering how on earth anyone could challenge things like Social Security, government schools, and the FDA. But that’s not the point. The point is: these statist, anti-capitalist programs exist and have existed for about a century. The point is: Obama is pretending that the Progressive Era, the New Deal, and the Great Society were repealed, so that he can blame the financial crisis on capitalism. He’s pretending that George Bush was George Washington.

Please follow the link to read the entire article. It accidentally explains the reasons the economy has prospered under President Trump. I also strongly recommend reading The Creature From Jekyll Island by G. Edward Griffin for the story behind the creation of the Federal Reserve System.

 

 

Quite Often There Is A Reason For Protocols And Procedures

The Hillary Clinton private email server scandal is old news. However, there is a new aspect of this story that has just recently come out.

Yesterday The Daily Caller posted an article about the Chinese hacking into Hillary Clinton’s email server.

The article reports:

  • A Chinese-owned company penetrated former Secretary of State Hillary Clinton’s private server, according to sources briefed on the matter.
  • The company inserted code that forwarded copies of Clinton’s emails to the Chinese company in real time.
  • The Intelligence Community Inspector General warned of the problem, but the FBI subsequently failed to act, Texas Republican Rep. Louie Gohmert said during a July hearing.

Wow. The Chinese had all of our classified correspondence from the State Department in real time. That is scary.

The article reports the timeline:

Two officials with the ICIG, investigator Frank Rucker and attorney Janette McMillan, met repeatedly with FBI officials to warn them of the Chinese intrusion, according to a former intelligence officer with expertise in cybersecurity issues, who was briefed on the matter. He spoke anonymously, as he was not authorized to publicly address the Chinese’s role with Clinton’s server.

Among those FBI officials was Peter Strzok, who was then the bureau’s top counterintelligence official. Strzok was fired this month following the discovery he sent anti-Trump texts to his mistress and co-worker, Lisa Page. Strzok didn’t act on the information the ICIG provided him, according to Gohmert.

Gohmert mentioned in the Judiciary Committee hearing that ICIG officials told Strzok and three other top FBI officials that they found an “anomaly” on Clinton’s server.

The former intelligence officer TheDCNF spoke with said the ICIG “discovered the anomaly pretty early in 2015.”

“When [the ICIG] did a very deep dive, they found in the actual metadata — the data which is at the header and footer of all the emails — that a copy, a ‘courtesy copy,’ was being sent to a third party and that third party was a known Chinese public company that was involved in collecting intelligence for China,” the former intelligence officer told TheDCNF.

“The [the ICIG] believe that there was some level of phishing. But once they got into the server something was embedded,” he said. “The Chinese are notorious for embedding little surprises like this.”

As if this were not discouraging enough:

London Center for Policy Research’s vice president of operations, retired Col. Anthony Shaffer, told TheDCNF that Clinton’s server was vulnerable to hacking.

“Look, there’s evidence based on the complete lack of security hygiene on the server. Fourteen-year-old hackers from Canada could have probably hacked into her server and left very little trace,” Shaffer said. “Any sophisticated organization is going to be able to essentially get in and then clean up their presence.”

For a list of the federal laws that may have been violated in setting up the private server go here.

It is difficult to create a totally hack proof server, but had Hillary used her proper email address and government servers, it is much less likely that the Chinese would have been able to obtain the classified information that flowed through the State Department during her tenure. The rules and regulations regarding email by government bureaucrats are there for a reason. Although I have my theories as to why she ignored them, by ignoring them she put national security issues of America at risk. That is not acceptable.

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.

Bringing Efficiency Into Federal Employment

Yesterday The Washington Times posted an article about President Trump’s recent executive orders to change civil service regulations.

The article reports:

“These executive orders will make it easier for agencies to remove poor-performing employees and make sure taxpayer dollars are more efficiently used,” Mr. Bremberg said.

The move will promote efficiency, save taxpayer dollars and create better work environments for “thousands of employees who come to work each day and do a great job,” said another official.

as expected, unions objected loudly. The article reports some of the reasons for the reforms:

Office of Personnel Management data shows federal employees are 44 times less likely to be fired than a private sector worker once they’ve completed a probationary period.

A recent Government Accountability Office report showed that it takes between six months and a year to remove a federal employee for poor performance, followed by an eight-month appeals process.

The National Affairs blog posted the following this spring:

Even President Franklin Roosevelt, a friend of private-sector unionism, drew a line when it came to government workers: “Meticulous attention,” the president insisted in 1937, “should be paid to the special relations and obligations of public servants to the public itself and to the Government….The process of collective bargaining, as usually understood, cannot be transplanted into the public service.” The reason? F.D.R. believed that “[a] strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable.” Roosevelt was hardly alone in holding these views, even among the champions of organized labor. Indeed, the first president of the AFL-CIO, George Meany, believed it was “impossible to bargain collectively with the government.”

Many of our current civil service policies are the result of the unionization of government workers. It is time for that practice to end. Government workers are paid very well and should be subject to the same rules as the rest of the workforce. Unions should not be able to collective bargain with people whose political campaigns they help finance.

Freeing Americans From Red Tape

This was posted at One America News today:

The article reports:

President Trump touts his administration’s advanced progress on deregulation, saying for every one new regulation — 22 are eliminated.

From the White House Thursday, the president said this will allow the U.S. to build and create more jobs.

President Trump said checking on unlawful regulations means “defending Democracy” and “draining the swamp.”

In a symbolic “cutting of red tape,” the president compared a short stack of papers representing regulations from the 1960’s to that of a tall stack of papers symbolizing today’s regulations.

President Trump has stated that his goal is to get the stack of regulations smaller than the stack from 1960.