90 Miles From Tyranny : The Mojo of Trumponomics

Thursday, May 31, 2018

The Mojo of Trumponomics

T.S. Eliot famously wrote that April is the cruelest month, but when it comes to America’s fiscal picture, nothing could be further from the truth about this past April. The latest government numbers confirm that last month was a blockbuster for growth, federal revenues, and deficit reduction.

One of the key principles of Trumponomics is that faster economic growth can help solve a multitude of other social and economic problems, from poverty to inner-city decline to lowering the national debt.

We’re not quite at a sustained elevated growth rate of 3 percent yet, but the latest economy snapshot tells us we are knocking on the door. The growth rate over the last four quarters came in at 2.9 percent, which was higher than any of the eight years of Barack Obama’s presidency.

Halfway through this current quarter, which began on April 1, the Atlanta Federal Reserve estimates growth at 4 percent. If that persists through the end of June, we will have reached an average growth rate of 3 percent under President Donald Trump.

Not bad, given that nearly every liberal critic trashed the president’s campaign forecast of 3 percent to 4 percent growth as an impossible dream.

Economists such as Larry Summers, Obama’s first chief economist, gloomily declared that we were mired in a new era of “secular stagnation” and that 3 percent growth was unachievable. Paul Krugman of The New York Times said it was more likely we would see flying cars than 3 percent to 4 percent growth.

Now for the even better news. We are already starting to see a fiscal dividend from Trump’s tax, energy, and pro-business policies. The Congressional Budget Office reports that tax revenues in April—by far the biggest month of the year for tax collections because of the April 15 filing deadline—totaled $515 billion, which was a robust 13 percent rise in receipts over last year.

MoneyWeek reports that the $218 billion monthly surplus (revenues over expenditures) this April was the largest ever, with the previous record being $180 billion in 2001. (April is always the one surplus month.)

Here’s the simple lesson: more growth, more tax revenue.

But there’s another lesson, and it is about how wrong the bean counters in Congress were who said this tax bill would “cost” the Treasury $1.5 trillion to $2 trillion in lost revenues over the next decade.

If the higher growth rate that Trump has already accomplished remains in place, then the impact will be well over $3 trillion of more revenue and thus lower debt levels over the decade. Putting people to work is the best way to...Read More HERE

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