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February 27, 2017

Five Cheers For Trump's CPAC Comments On Economic Policy And Tax Reform

  Forbes.com

President Donald Trump gets five cheers for his economic policy comments made during his speech at the 2017 Conservative Political Action Conference (CPAC).

Of course, he didn’t restrict himself to talking about the economy—he never does—and many may disagree with both the substance and tone of those other comments.

But the president is pushing some much-needed economic policy changes, and if he succeeds his changes should boost the U.S. economy out of its eight long years of Obama economic malaise.

Here’s what Trump said to receive five cheers.

First Cheer: “Another major promise is tax reform. We’re going to massively lower taxes on the middle class, reduce taxes on American business and make our tax code more simple and much more fair for everyone, including the people and the business.”

Can I get an amen?

Tax reform is long, long overdue, and Trump may not be able to do it all at once. He should at least begin with the 35% corporate income tax rate—the highest in the developed world. Trump wants to lower it to 15%; House Republicans are talking 20%. In this case, the bolder the better.

Many of the problems Trump wants to fix—such as revitalizing domestic manufacturing, discouraging companies from offshoring jobs, reducing or ending corporate inversions and repatriating most of that $2.5 trillion in U.S. assets sitting in foreign banks—would be achieved with a 15% tax rate.

A 15% tax rate could cost the government some revenue, but spurring the economy is more important than a balanced budget. Besides, reports indicate that Trump is considering major spending cuts that could “pay for” the tax cuts.

Second Cheer: “I want regulation, I want to protect our environment, I want regulations for safety, I want all of the regulations that we need and I want them to be so strong and so tough, but we don’t need 75% of the repetitive, horrible regulations that hurt companies, hurt jobs, make us noncompetitive overseas with other companies from other countries, that we don’t need.”

Absolutely! The Left creates a false—indeed, deceitful—narrative that free market proponents want to eliminate all regulations. Wrong. Business activity needs some basic rules, just as sporting events do, and both need a referee to ensure fair play.

However, the Left sees rules and regulations as a way to pre-determine preferred outcomes, rather than to enhance real competition.

For decades—but especially the past eight years—the federal government has been on regulation-creating steroids. Paring them back won’t be easy because vested interests benefit from them. But draining the regulatory swamp will make it easier and more prosperous to innovate and start businesses.

Third Cheer: “We have authorized the construction, one day, of the Keystone and Dakota Access pipeline.”

No economy thrives—or even survives—without energy. Just as important, no country is secure without energy.

Without the energy industry, the Obama economy would have been even worse than it was—and lasted longer.
The U.S. has become a net natural gas exporter, thanks to hydraulic fracturing, or “fracking.” And it could become a net crude oil exporter in the next five-plus years—again, thanks to fracking.

It is hard to overstate the significance of these changes. Since the mid-1970s, when U.S. foreign policy was held hostage to foreign governments that could shut off our oil, Congress wanted to move toward energy independence. But it appeared the only way to achieve that goal was with renewable energy.

Today we have the skills and technology to extract so much gas and crude oil that prices are low and supply is high. Both pipelines are part of much-needed infrastructure enhancements that will help guarantee abundant energy supplies, low prices and energy security.

Fourth Cheer: “It’s time for all Americans to get off of welfare and get back to work.”

The welfare rolls increased dramatically under Obama. Some of it was due to the recession, but that ended in July 2009—six months into his tenure. Under normal recoveries, the rolls would soon begin to decline. Not under Obama. Most welfare programs remained historically high for years. And the president was thrilled that Obamacare put millions of Americans on Medicaid, which is a means-tested welfare program.

House Speaker Paul Ryan’s “A Better Way” welfare reform requires people to work to receive benefits—hopefully any type of means-tested benefit for the nondisabled.

The U.S. unemployment rate is low, in part because so many people have dropped out of the workforce. Having more people working creates economic growth. The two things needed to encourage people to reenter the workforce are (1) a strong economy, which not coincidentally increases wages, making it more attractive to work and (2) removing disincentives to work, which welfare can be.

Fifth Cheer: “You don’t realize that, they [the White House doors] were closed. They’re now wide open and they’re open for people doing business for our country and putting people to work.”

It was liberal Apple co-founder Steve Jobs who told Obama “you’re headed for a one-term presidency,” referring to the president’s anti-business policies. Jobs was wrong about the politics but right about the policies. As NBC’s Chuck Todd pointed out in his book, The Stranger, the president and White House were highly insulated, disdaining outside experts. Trump, by contrast, has been listening to a wide range of people, both supporters and others, including business leaders.

Whatever else Trump does, if he holds true to these five promises, he has a good chance of creating the strongest U.S. economy we’ve seen in decades.


 

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