The Trump administration’s regulatory rollback has ignited business and consumer optimism, driving economic growth at pace few anticipated. Having passed tax reform, Republicans are looking to pick up the pace by further encouraging businesses investment, cutting taxes for working and middle-class families, and eliminating the perverse incentives that drive our businesses, jobs and dollars to other nations.
While Democrats are mired in their disingenuous mantra on tax breaks for the rich, Republicans have focused their tax reform efforts on exactly the right goal: economic growth that benefits everyone. There was a time when Democrats understood the difference. As President Kennedy described it, economic growth is that tide that lifts all boats, putting the lie to the notion that class warfare is either desirable or inevitable.
The key to meaningful economic growth is business investment. During President Obama’s tenure, the regulatory state expanded, taxes increased and investment declined, hobbling economic growth and leading to predictions of prolonged stagnation. As recently as March, Obama administration economist Jason Furman was predicting a decade of GDP growth of “around 2 percent a year.” In May, Larry Summers, another former Obama economist, was comparing a belief in the Trump administration’s forecast of 3 percent GDP growth to believing “in tooth fairies and ludicrous supply-side economics.”
They were wrong. As the Trump administration deregulates at an historic pace, it is no coincidence that business optimism is hitting historic highs, driving both increased investment and greater GDP growth. Our economy grew 3.1 percent in the second quarter of this year and 3.2 percent in the third. It was the first time we’ve had two consecutive quarters of 3 percent or better GDP growth since 2014, and these were the first two full quarters under President Trump.
In could have been even better. President Trump’s Council of Economic Advisers projected that the economy would have experienced third quarter GDP growth of 3.9 percent if it weren’t for a pair of devastating hurricanes. The future is also looking brighter. The New York Federal Reserve, clearly not a bastion of conservative economic thought, recently raised its estimate of fourth quarter GDP to around 4 percent.
By encouraging business investment, the Republican tax reform bill will further accelerate economic growth and productivity. The bill has everything to do with incentivizing new investment by allowing businesses to retain more of the monies they earn, encouraging them to bring funds they’re holding overseas back to the United States, and allowing them to write off 100 percent of their investments in plants and equipment in the year they invest, further lowering their near-term taxes.
If CEOs believe in their businesses, and most do, they will invest. When businesses invest, they create jobs and competition for employees. When employers compete for workers, wages go up. When workers compete with each other for jobs, wages stagnate or decline, as they did in the Obama era. It isn’t rocket science.
By encouraging U.S.-based business investment the Republican tax bill will generate economic growth, creating more jobs and putting upward pressure on wages. In other words, this bill will benefit working and middle-class Americans by reinvigorating that economic tide that lifts all boats, leading to a more participatory American economy and broad-based prosperity.
We are already seeing the impact. Major U.S. employers including AT&T, Bank of America, Boeing, Wells Fargo, Fifth-Third Bancorp, Comcast NBC Universal and Sinclair Broadcasting are variously committing to special bonuses and pay hikes. Wells Fargo and First Third Bancorp are increasing their minimum wages, without government compulsion, to $15 an hour.
The investment dollars will also flow, resulting in more growth, more jobs and higher wages. Boeing announced “immediate commitments for an additional $300 million in investments that will move forward as a result of the new tax law.” AT&T committed to invest an additional $1 billion in the United States in 2018. Comcast announced that it would spend $50 billion over the next five years investing in infrastructure adding “thousands of new direct and indirect jobs.”
With predictions of Armageddon, Democrats appear to be in a panic. They are. But it isn’t the failure of President Trump’s economic policies they fear. Rather, it is their inevitable success.
This article originally appears on The Hill on December 26, 2017