'The Moment of Truth' — It Will Involve More Than Just Taxes - The American Spectator | USA News and Politics
‘The Moment of Truth’ — It Will Involve More Than Just Taxes
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“Now comes the moment of truth,” President Donald Trump told a Missouri audience on Wednesday.

By a partisan 52-48 split, the United States Senate voted on Wednesday to allow debate on tax reform. This came in spite of a strange effort by the New York Times editorial board urging its Twitter followers to contact on-the-fence Republicans, even providing office phone numbers, to “reject a tax bill that hurts the middle class & the nation’s fiscal health.” The vote that went against the Times paved the way for the moment of truth — the vote — perhaps as early as today.

Flanked by Christmas trees and pointing to a red-and-green “Merry Christmas” sign 750 miles west of where the Senate gave him an early gift, the president expressed hope that the passage of his tax legislation marks “the beginning of the next great chapter for the American worker.”

The tax bill, through simplifying the code, lowering corporate rates from 35 to 20 percent, doubling the standard deduction, and much else, likely works as if not “rocket fuel,” as Trump imagines, then at least steam for the economy, which obviously helps the American worker. But something else, something overlooked, said by the president on Wednesday likely makes a bigger difference for the labor force. He promised to “work on health care” after taxes.

Surely cutting the top individual rate from 39.5 percent to 38.5 percent, as the Senate bill decrees, does not catalyze growth in the manner of “rocket fuel.” Fixing our broken health care system does.

In 1981, when Ronald Reagan slashed the top individual rate from 70 to 50 percent — and dropped it to 28 percent five years later — the federal government certainly acted as a weight on the shoulders of American workers. Now, 36 years later, the cost of health care plays the same role as onerous government did back then.

Ronald Reagan lifted one weight. Donald Trump’s challenge involves lifting another, made heavier, though not created, by his predecessor.

Federal spending as a percentage of GDP registered about 20 percent when Reagan took office, roughly where it stands today. Health care spending totaled less than one-tenth of GDP when Reagan took office. It encroaches, rather swiftly, upon one-fifth of GDP today. In those 36 years, its portion of the economy more than doubled.

Americans spend on average more than $10,000 per person on health care. This impacts the federal budget. This impacts state budgets. This impacts employer budgets. Most importantly, this impacts personal and family budgets.

Americans spend more on medical-related expenses than every other country in the world, save three — China, Germany, and Japan — spends on everything. We now spend about $3.5 trillion on health care. If we lived the longest, healthiest lives, one might call this money well spent. But we don’t — we rank twelfth in life expectancy among the twelve wealthiest nations — and this gargantuan expense makes our economy unhealthy, or at least not as vigorous as it would otherwise be.

It comes as no coincidence that as health care devoured more of our economy, our economy appeared devoured. In the 21st century, annual GDP growth eclipsed three percent in just two years. In postwar 20th-century America, those two boom years made for blah years. Our economy struggles under a new normal. To unleash it, the times — the 1980s is long gone — call for different solutions. The country, not just politicians but citizens, needs to find ways to make health care more affordable — as the formal title of the Obamacare legislation promised.

The tax bill represents a step in the right direction for the economy. But contrary to the president’s assertion on Wednesday, the next great chapter for the American worker really begins when Washington addresses health care spending.

Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of five books.

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