November 2017 Tax Cut Will Lead to Trump Victory in 2020
The House’s adoption of the Senate budget resolution sets the stage for a YUGE Trump second-term victory in 2020. This congressional action allows for the passage of a $1.5 trillion tax cut—and that will lead to record job creation and robust economic growth. Republicans in the House and Senate must come together over the next three weeks and pass major tax cut legislation so the United States can once again be the leading economic engine of the world.
Since Donald Trump was elected, the Dow Jones Industrial Average has added more than 5,000 points. Last week, it closed above 23,000 for the first time. That’s over a 30% increase, which directly benefits pension and retirement plans all over the country. To put that in dollar terms, the total U.S. stock market has increased in value by over $5 trillion since the election.
The stock market is pricing in the growth-friendly policies Donald Trump campaigned on, and its strength can only be maintained if tangible legislation to roll back taxes, regulations and bureaucracy is enacted.
The Trump stock rally would never have happened had Hillary Clinton been elected, or if Republicans had lost the Senate.
The Congressional Budget Office (CBO) reports that the U.S. economy averaged 3.2% growth from 1950 to 2016. However, during the Obama presidency, the U.S. averaged only 1.4% growth. The CBO projects that with the current high tax rates, the economy would average only 1.9% growth over the next decade.
Why should the country accept such poor growth expectations? To truly make this country great again, we must get back to sustained 3%+ GDP growth, and this is only possible by fundamentally revamping the current tax code.
At the heart of the President’s tax reform is a cut in the corporate rate from one of the highest in the world at 35%, to a much more competitive 20% rate. This tax cut will allow companies to keep more of their earnings, which can be used to hire additional workers, invest in new equipment, and compete better globally.
We must remember that these tax cuts will produce economic growth—growth that in turn will raise revenue for the Treasury. The private sector creates wealth, and taxes are only generated by the production of economic wealth.
As an example, let’s compare two jobs. One job is a private sector engineer who explores and ultimately extracts natural gas to reduce our dependence on foreign oil. The other is a government bureaucrat who writes paper regulations to make gas exploration more expensive and difficult. It is not hard to see that the latter job does nothing to grow the economy, and that entire salary is dependent on the private sector. President Trump has already begun to roll back these “paper-pusher jobs” created under Obama, whose only function was to create more red tape and impose utopian policies.
President Trump is fighting to unshackle the American economy after years of economic stagnation and bureaucratic growth.
Once the battle for tax reform is over, we must remember that the larger war is far from over. We need to keep the country moving in the right direction. President Trump has proposed a four-point program of tax reform, regulatory reform, energy reform and trade reform to make the United States the best place in the world to live, work and do business. Combine those four elements and economic growth will take off.
If Republicans can pick up seats in the midterm elections and enact his agenda to “Make America Great Again,” President Trump will need a new slogan in 2020. Maybe it should be “Keep America Great.”
And we will look back at November 2017 as the month President Trump won his second term.
-- Hal Lambert, Policy Advisor at America First Policies