Posted on 06/20/2015 7:58:55 AM PDT by Kaslin
“There is not a reason in the world why we cannot grow at a rate of 4 percent a year.” That’s what Jeb Bush said when he officially announced his presidential run in Miami last week. And right off the bat, most economists trashed the idea.
“It can’t happen and it’s never happened.” “Productivity is too low.” “The labor force is growing too slowly.” “Secular stagnation.”
They don’t call it the gloomy science for nothing.
But wait a minute. We have experienced relatively long periods of 4 percent or more economic growth. Following the Kennedy tax cuts, the economy averaged 5.2 percent yearly growth between 1963 and 1969. After the Reagan tax rates fully went into effect, alongside Paul Volcker’s conquering of inflation, the economy grew at 4.5 percent annually between 1982 and 1989. These were the “seven fat years,” so named by former Wall Street Journal editor Robert Bartley. And between 1994 and 1999, the Bill Clinton/Newt Gingrich economy increased 4.3 percent annually, after welfare reform, NAFTA trade, and cap-gains tax relief.
So we’ve got six-year, seven-year, and five-year periods -- all in recent memory -- when the American economy beat 4 percent. And for nearly all the post-World War II period, dating from 1947 to 2007 (before the meltdown), the U.S. economy actually grew at 3.4 percent annually. And 3.4 percent is not so far from 4 percent. It’s maybe only a few pro-growth policy changes away. Why wouldn’t we try?
So Jeb Bush’s 4 percent target is both aspirational and doable. It sets an important policy marker for the coming election. The whole GOP should adopt the target. Let the skeptics scoff. Positive solutions are grounds for optimism. And Americans will respond favorably to this kind of optimistic leadership -- which is sorely lacking today.
Now, the back story to the Jeb Bush 4 percent target starts in Dallas in 2010 at the George W. Bush Institute. Executive director James Glassman, a former undersecretary of state, was casting about for an economic agenda. And one of his board members, Jeb Bush, tossed out a centerpiece goal of 4 percent growth. It stuck.
Columnist and author Amity Shlaes (author of Coolidge and The Forgotten Man) was brought in by the institute to oversee a book called, naturally, The 4% Solution: Unleashing the Economic Growth America Needs. It was published in 2012.
“That term unleash is very important,” Jim Glassman told me, “because it simply means unleash the economy from government constraints.” Ironically, this past spring, a group of supply-siders -- including Art Laffer, Steve Forbes, Steve Moore, and myself -- founded the Committee to Unleash Prosperity. (I don’t think we remembered the original book title. Leave it as a coincidence.)
But the key theme here is our desperate need of a new batch of economic-growth policies. For nearly two decades we have grown at 2 percent yearly. That’s unacceptable.
Put supply-side tax reform at the center of a new growth agenda. Start with slashing the corporate tax, which falls most heavily on middle-class wage earners. Go to full cash expensing and a territorial system that would repatriate overseas profits. On the personal side, flatten the rates, broaden the base, and simplify the code. Make sure it pays more after-tax to work, invest, and take risks. Instead of raising taxes on capital, reduce or abolish investment taxes (which would contribute to a rebound in the soft productivity numbers).
But tax reform is not enough. We need pro-growth immigration reform to boost the lagging growth of the labor force. We need entitlement reform for welfare, food stamps, and disability, so that instead of paying people not to work, we incentivize people to rejoin the labor force.
Trade tariff reduction, now front and center in Washington, would also be important to a pro-growth agenda. Tariff cuts are tax cuts. They make businesses more competitive and provide more export markets. Meanwhile, consumers get the best-quality goods at the lowest prices anywhere.
Improving education with choice, charters, and vouchers is another much-needed pro-growth reform. So is ending Obamacare and replacing it with a privately driven, free-choice health-care system.
Finally, a better, more consistent, and more transparent monetary policy from the Fed that creates a reliable dollar would be a huge pro-growth reform.
Is 4 percent growth really possible? Sure it is. And it would help solve a lot of problems, including poverty, middle-class take-home pay, jobs, budget deficits, and on and on.
I’m not endorsing Mr. Bush at this point. But I am endorsing his 4 percent solution. If decisive policies can unleash innovation and entrepreneurship, get the economy out from under the government’s shackles, and provide a spirit of optimism, then all things are possible.
The whole history of America tells me so. Don’t tell me it can’t be done
Kudlow is a slavish sycophant to the globalist GOPe. If he says it’s raining, look out the window.
4 percent economic growth is inspiring and awesome! See, see...if Hillary is elected, then we’ll get 0%! Don’t you right-wing clowns want to settle for half a loaf for now? Sheesh!
You’re not going to get 4% growth in an economy based 70% on debt spending, and much of that on goods that are made elsewhere.
Plus, the whole concept of perpetual growth (at whatever percentage) is a myth. You can get sporadic periods of growth, but not perpetual growth.
I don’t want to grow at 4% if it means I have to turn over my country to a bunch of Mexicans.
Ain’t that the truth.
If only we had liberal Republicans running the executive branch in addition to Congress. Then we could become a socialist economic powerhouse as part of the TPP and TTIP.
That would be so different than what’s happening now with Obama and a liberal Republican Congress. /sarc
[Now, the back story to the Jeb Bush 4 percent target starts in Dallas in 2010 at the George W. Bush Institute. Executive director James Glassman, a former undersecretary of state, was casting about for an economic agenda. And one of his board members, Jeb Bush, tossed out a centerpiece goal of 4 percent growth. It stuck.]
Sigh. Where to start?
Oh wait, it won’t do any good anyhow.
After the Reagan ***tax rates*** fully went into effect, alongside Paul Volcker’s conquering of inflation, the economy grew at 4.5 percent annually between 1982 and 1989. These were the “seven fat years.
Democrats love of taxes have results poverty.
Kudlow loves the bubble machine.
I will NEVER vote to give my country to fraudulently documented foreigners.
That’s precisely what Jeb wants us to do.
Yes, Larry has been on board The Cheap Labor Express for some time.
The Leftists who dominate our alphabet agencies believe that saving the planet requires the USA to have a zero or even negative growth rate.
What did Bush's brother do during his eight years to root out and remove the hordes of them that Clinton left there - and what reason do we have to believe that Jeb would be any more aggressive in doing so?
Kudlow, not my favorite econ pundit.
Yes, we have had a lot of success before we started to export our factories and jobs. And we can have it again when we bring back all those factories and jobs. Bush, have you heard the trade sucking sound yet?
Why would our masters who want to save the planet want people to move to the most wasteful (by their standards) planet on earth? Why do they want to move manufacturing to countries which are the biggest polluters on the planet? They've gotten too arrogant and confident to even bother trying to sound sensible anymore.
Kudlow is a slavish sycophant to the globalist GOPe.
...
You said it so I don’t have to. His lips are always firmly attached to the butt cheeks of whoever is in power.
Despite your personal opinion on the author, what is wrong with establishing economic growth as a goal?
Every republican should be hitting this hard and at the very least agreeing that entitlement reform is a lynch pin.
Still, there is no reason for the economy not to grow at 4%/yr if the government actually chooses to get out of the way and incentivize growth.
Jeb is the LaRaza lobby. Tell that POS and his ilk to go down to mexico city, and run against neito.
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