A recent front page story in the Wall Street Journal opines that 3 percent economic growth isn’t achievable. It argues that 2 to 2.5 percent growth is the best we can do because of low labor force and productivity growth.
Who says America can’t grow faster? The long-term growth path for the U.S. economy from 1950 to 2000 is 3.3 percent. Now we can’t achieve even strive for a number below the average? Almost every year President Barack Obama forecast he would achieve more than 3 percent growth — but he never once got there. So the left says it must be impossible. Since they can’t figure out how to get growth, nobody can.
One big solution to faster growth is the Trump tax plan on which I worked with Larry Kudlow and now-Treasury Secretary Steven Mnuchin for Donald Trump during the campaign. We cut U.S. business taxes from the highest in the world at 35 percent to near the lowest at 15 percent. This will lure more jobs and businesses back to the United States. Apple CEO Tim Cook says the Trump tax plan could bring $250 billion of Apple profits back to these shores where it can be reinvested in Michigan, Ohio, California, and so on rather than Ireland, China, or Europe.
In the plan, we also simplify the tax system and we cut the taxes on 26 million small businesses, which create an estimated two-thirds of the new jobs in America. Without healthy, prosperous employers, you can’t have healthy, well-paying jobs.
This alone can boost economic growth by as much as one percentage point per year. That additional growth will generate about $3 trillion more revenue over the next decade.
The Journal says 3 percent growth is impossible (the Congressional Budget Office forecasts an anemic 1.8 percent growth for the next decade), because so many baby boomers are retiring that there aren’t enough workers to lift growth higher. That’s flat out wrong. We have at least 5 million Americans of working age population who aren’t working who could and should be on the job. One way to get them to work or work more hours is to cut tax rates. Tax cuts raise real after-tax wages, which makes work more rewarding. It happened in the 1980s after the Reagan tax cuts: huge gains in people entering the workforce, especially women.
The Trump tax cuts will also juice the economy by increasing the productivity of workers. The lower corporate and capital gains taxes reduce the tax burden on business investment. This means more computers, factories, fork lifts, trucks, planes, and high-tech equipment.
Tax cuts aren’t the only way to boost the growth rate and speed through the 3 percent barrier. We should also admit more skilled immigrants to replace the wave of retirees. It would also make sense to put work requirements on our $1 trillion a year welfare state. For the able-bodied, work should always be a condition of taxpayer aid. In the 1990s, we discovered as a nation this was the best way to lift the poor from poverty and for adults to get on the road to economic success.
In 1983, the economic growth rate during the first full year of the Reagan tax cuts eclipsed 8 percent and economists and politicians started yelping that the economy was churning so fast it was “overheating.” Now we are told we can’t grow a mediocre 3 percent? Trump had it right; 4 to 5 percent is the goal, and if liberals don’t believe it, then they should get out of his way and let him prove it.