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Like Ronald Reagan, Trump Believes in Average Americans and “Supply-Side Economics” – And It’s Working

Supply-side economics

Something strange and extraordinary is happening to the US economy – behind the scenes.  Professionals in government, media and academia see it – but no one wants to say it.  “Supply-side economics,” once called Reaganomics, is again working. 

Many years ago, when working in Ronald Reagan’s first-term White House, I watched extraordinary things start to happen.  New thinking emerged on national security issues, geopolitics and most immediately, economic policy.  Old ways got severely questioned, new ideas boldly tested.  Stunning things began to happen – and now, they are again.

Based on reduced corporate, individual and capital gains tax rates, which were implemented in late 2017; a sustained reduction of federal regulatory burdens on employers; and continuing low interest rates, the US economy has taken off – and is on a trajectory to continuing growing.

In addition to sustained high growth, the lowest unemployment in 50 years (across all demographic groups and regions), an unexpected turnaround in labor productivity, labor force participation, corporate investment, and wages – we have low inflation.  But something else is afoot. 

The decision of President Trump’s economic team to adopt a Reagan-like economic approach, trusting average Americans – not the federal government – to pull the US economy out of the eight-year Obama slump, was daring.  It has unleashed American confidence in the economy – confidence again in ourselves.

The term “supply-side economics” goes back 40 years.  In 1981, relying on academic work by Nobel Laureate Milton Friedman, Economic Policy Board member Arthur Laffer, Wall Street Journal associate editor Jude Wanniski, and pro-growth members of Congress like Jack Kemp, Newt Gingrich, and Democrat Phil Gramm, Ronald Reagan and Director of Office of Management and Budget (OMB) David Stockman, convinced Congress to pass the 1981 tax cuts.   That began the avalanche.

At the same time, faithful to tenets of free enterprise, private entrepreneurship, belief that leaving earned dollars with taxpayers produces more, and the Laffer Curve – which says lower tax rates boost economic growth and raise federal receipts – Ronald Reagan offered smaller federal budgets and a regulatory rollback.

The effect under Reagan, even struggling to rebuild US defense and bring down the Soviet Union, was higher sustained economic growth, reduced unemployment, controlled inflation, and the end of Jimmy Carter’s “stagflation” and recession. 

Today, Trump’s embrace of supply-side economics – bold and unwavering – is producing similarly startling results.  US growth in January 2017 stood at 1.8 percent.  By July 2017, growth was on a rip – at 3.0 percent. 

By July 2018, growth had drifted, then leapt to 4.2 percent, and the next quarter 3.4 percent.  Some thought tapering tax cuts at the end of 2018 would cut US growth, productivity and unemployment in 2019, and growth did slow to 2.2 percent in the final quarter of 2018.

But then, whoa!  The first quarter of 2019 – which most US economists expected to be questionable, was anything but.  Trump’s supply-side approach, Reagan-like gamble on “We, the People,” or average American workers and businesses, paid off.

First quarter 2019 numbers are all in – and they are stunning.   The US economy notched 3.2 percent growth, beating all but Administration expectations.  After years of liberal economists labor productivity would fall or slow, we saw a 3.6 percent labor productivity growth rate.  The Wall Street Journal reported the news Thursday, under the banner “U.S. Worker Productivity Advances at Best Rate Since 2010.”  That means, contrary to expectation, more people are reentering the labor market, labor efficiency and investment are rising, and inflation is likely to stay low, which means interest rates likely will too.

Then came the Wall Street Journal’s Friday (5/3) headline: “Jobless Rate Falls to Lowest in Nearly 50 Years…”  What do we have in total?  As a result of Trump’s corporate, individual and capital gains tax cuts, reduced federal regulation, and pressure to reduce spending, we have sustained high growth in 2019, record unemployment, stunningly high labor productivity (confounding economists who predicted the reverse), high labor force participation (ditto), and high corporate reinvestment – feeding into future labor productivity, higher wages, lower inflation.

Most of all, Trump’s supply-side economics – reminiscent of Ronald Reagan’s bold faith in the American people – has opened the floodgates of confidence in ourselves, our decisions, not government control. 

To the big point, Trump’s decision – spurred by Trump White House economists like Larry Kudlow, once Ronald Reagan’s Deputy Director of OMB – has elevated federal revenue, stretching out timelines for saving federal entitlements, lowering deficit growth, and giving America a chance to regain balance in an era of mass debt. 

Specifically, the Congressional Budget Office projects that the deficit for 2019 at $75 billion less than one year ago.  The cumulative deficit from 2019 to 2028 is projected to be $1.2 trillion less.  The federal debt remains enormous, but Trump’s daring embrace of supply-side economics puts one in mind of Reagan.  Once again, it is working.  Time to say so.

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Read more articles by Robert B. Charles

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Pat

I believe in Trump I also believe Nancy Pelosi should keep her mouth shut and be thought a Fool instead of opening it and proving she is one.

Paul W

Of course it’s working. It always does. Unlike 1984, however, we have a DNC that has gone full blown Marxist and they want to sabotage the economy to force government dependency on people. I can only hope and pray that the average Joe is awake to the evil that the left is planning, And it isn’t just political philosophical differences…IT IS EVIL. Anti-Constitutional, treasonous EVIL!

ROBYN WELLS

As long as we have moronic, Do nothing democrats, we will always have the negative naysayers. They don’t deserve to represent the people because they do nothing for America.

Drue

President Trump is first, a businessman. He understands how our economy works. The Demorats need to follow or get out of the way. And start legislating instead of looking under rocks for evidence against the President that is not there. It would really help if they would get on board with the President on the immigration issue and get the wall built. Memo to Demorats: Stop shooting yourselves in the foot! You only look more foolish to the citizens.

General Patton

God Bless America——-Reagan and Trump have been right——–less government and taxes work. Most important——-the Cultural Marxisr Democrats will never get it!

PopPopB

President Trump ( Republican ) is doing all this as he said he would do, the Dems are so upset they are trying to get ride of him instead of working for the people as they said they would. I for one will never vote Democrat again

Frank S.

This is good news, but I still don’t see anyone dealing with the deficit spending and the massive national debt. Reagan grew the national debt by about $2 trillion (over 8 years) in spite of growing the economy, though a lot of that was trying to fix a depleted military (thank you Jimmy), much like what Trump must spend to fix today’s military after Obama’s disastrous presidency. At the end of the day we MUST drastically curb domestic spending and reform the huge entitlement programs (Social Security /Medicare). Instead we get all these Democratic wannabe presidents who want to spend their way into the Oval Office. Two weeks ago I asked my congressman (a freshman Freedom Caucus Republican) about the deficit spending and national debt, and he said no one in D.C. is working these two issues. We need to halt the insatiable spending appetite of the federal government. It… Read more »

Chuck

Amazing what happens when you keep the government out the market place. When are people (educated) going to learn Keynesian economics is dead? The Pelosi’s, Schumer’s, and Ocazio-Cortez’s of this world need to learn this.

des

President Trump yes, Congress NO!
the demos and rhinos don’t like being proven wrong and will do anything to mess things uo

Cliff

Thank God for President Trump, he gets it and is working for THE PEOPLE, the DUMOCRATS ARE OBSTRUCTORS, all they do is cause problems get rid of DEMOCRATES and the USA will do fine…. TRUMP FOR PRESIDENT IN 2020.

Elaine

If I remember correctly when Bill Clinton became President, we had a surplus and a choice to pay off the national debt. It was decided not to pay the debt but to use the surplus elsewhere; look how far into debt we are now.
Obama said he would reduce the debt, but he was responsible for growing it at a record rate. The money was not used here, it was given to other counties as he decimated our Military and did away with the Space Program, which is why we are so deeply in debt having to rebuild.

Emmett

To be a Dem is to be a Dummy. Plenty of proof on their party.

Keith H

Yes this is Great. President Trump is doing wonderful for the economy. Awesome !! But, if Conservatives can’t speak there mind because big tech is suppressing free speech. And the Dumocrats are inacting red flag laws to indiscriminately take ours guns. While they are sending freaks and pedophiles into our schools to perv out our children. And not to mention, that Clinton crime family is still running free !!! Plus nothing has been done about voter fraud, George Soros the Nazi Jew Killer is in control of most of the voting machines now along with DARPA. And our borders are being overrun by new America hating Dumocrat voters. So excuse me if I’m not to optimistic about our future. Trump has to act now, or it won’t matter if those Satan lovers get back in office. They will kill the economy in their first 100 days !!!!! Then they will… Read more »

Michael cozzi

That’s a great President Trump is doing the best he can

Carl Curtis

The only way the democratic socialist (nice name for communist) have left is to pull the trigger on the shotgun and hope some sticks. They have no chance except to litigate in the courts and hope something shows up. They are losers and I used to be one of them. (UGH)

Rexford O Ames

We are indeed a curious nation. We are so diversified. We stumble, Pick your selves up and do. What confounds me, is that this economic growth is good for all Americans, but still have the democrats, as a whole, wanting to destroy their own success?

Carol

This article brings good news but until we get government spending under control, all this growth just gets washed under all the debt over all our heads!!! And with the uneducated but indoctrinated coming out of our education system, how many will vote in a socialist come 2020?

Ted Moore

So for some reason the Democratic Socialist party is going to run on socialist ideology, or Biden’s tired reinstatement of Obama’s anti growth agenda? Wow!! I guess it’ll be up to the American people to decide, pro growth, pro American policies over total destruction of our Republic. I pray President Trump is re-elected with a mandate to continue his agenda.

dino

I feel that President Trump does care about the real AMERICA,not the fake country that the democ RATS are fighting for.

Phyllis Poole

Let’s ask for the Fair Tax now instead
Of the IRS. It is a tax on what is purchased like most states have.
It would. Finally make all illegal businesses
Pay taxes like drugs , sex businesses , betting, the really rich who are in congress!
It has no taxes for low income. Food
Etc There is a site to ck it out and. Join.