Trump, Congress must deliver on the economy
LABOR Day, while technically a union-centered holiday, is more broadly observed as a day to celebrate American workers and the economic dynamism of the United States. Past presidents understood that.
Calvin Coolidge presided over one of this country’s greatest economic expansions, a time of rapidly rising prosperity that benefited Americans from all economic strata.
In a 1924 speech, Coolidge said, “I cannot think of anything characteristically American that was not produced by toil. I cannot think of any American man or woman preeminent in the history of our nation who did not reach their place through toil. I cannot think of anything that represents the American people as a whole so adequately as honest work. We perform different tasks, but the spirit is the same. We are proud of work and ashamed of idleness.”
He added, “The door of opportunity swings wide open in our country. Through it, in constant flow, go those who toil. America recognizes no aristocracy save those who work. The badge of service is the sole requirement for admission to the ranks of our nobility.”
Coolidge understood that government had core functions to perform, but unlike some of his successors in the White House, Coolidge also understood that overreaching government creates obstacles that prevent people from reaping the benefit of their honest labor.
“I want to see our institutions more and more humane,” Coolidge said. “But I do not want to see any of the people cringing suppliants for the favor of the government, when they should all be independent masters of their own destiny. I want to encourage business, that it may provide profitable employment. I want to see jobs hunting for men, rather than men hunting for jobs.”
Between 1923 and 1929, Coolidge cut government spending, cut taxes and generated budget surpluses. He cut the number of income tax brackets from 50 to 23. He cut the top rate from 58 percent to 25 percent (with the 25 percent rate applying to those with incomes that were the 2013 equivalent of $1.3 million or more). Coolidge cut the rate for the bottom bracket, which kicked in at the equivalent of $53,706 in 2013 dollars, from 4 percent to 1.5 percent. That means the federal income tax burden was slashed 62.5 percent for the typical worker.
The combination of a fairer tax system and restrained government spending ignited a boom. GDP growth averaged 3.5 percent during Coolidge’s presidency.
Ronald Reagan, who admired Coolidge, pursued a similar economic agenda as president. In a Sept. 4, 1981 radio address, Reagan discussed his pursuit of tax cuts, regulatory restraint and a strong dollar and summarized his agenda as follows: “Let me make our goal in this program very clear: jobs, jobs, jobs, and more jobs.”
As with Coolidge, Reagan understood the reality that economic policy was not about abstract numbers, but about giving people the chance for self-dignity through honest labor.
“We built this great nation, built it to surpass the highest standards ever imagined, through the hard work of our people,” Reagan said. “I would match the American worker against any in the world. The people whose labor fuels our industry and economy are among the most productive anywhere.
“But too many Americans don’t have a job, and too many Americans who do, don’t have the tools they need to compete. Past, stagnated policies have made it too difficult to modernize and too risky to expand. Our people, our workers, have cried out for change, and in the last seven months have achieved an historic reversal of the failed policies of an era gone by. We returned to the principles
We built this great nation, built it to surpass the highest standards ever imagined, through the hard work of our people. I would match the American worker against any in the world. The people whose labor fuels our industry and economy are among the most productive anywhere.”
—Ronald Reagan
that made us great.”
Reagan’s policies, like those of Coolidge before him, ignited an economic boom. Real economic growth averaged 3.2 percent during the Reagan years, median wages increased, and unemployment fell. Reagan’s policies fostered 92 months without a recession, and the American economy grew by about one-third in real inflationadjusted terms.
Today, Americans face an economy that resembles the pre-Reagan version — an economy held back by “stagnated policies” throughout the Obama administration. Barack Obama is famously the only president in the postWorld War II era to never preside over a single year in which the national GDP increased by 3 percent.
Obama’s defenders blame that on the severity of the national recession that hit in 2008, the year Obama was elected president. Yet severe recessions have typically been followed by strong recoveries. If anything, the wheels were greased for stronger-than-average GDP growth in the first few years after the recession ended in 2009. Instead, Obama presided over the weakest recovery in modern times, and his policies deserve much of the blame.
Under President Obama’s leadership, the labor force participation rate declined. The rate was 65.7 percent the month Obama was inaugurated in 2009, and then fell to a 38-year low of 62.4 percent by September 2015. The rate rebounded from that bottom by only three-tenths of a point by the end of Obama’s presidency.
The Obama administration declared “recovery summer” was underway in 2010. But, by the end of the administration, liberals insisted eight years was not enough time for their policies to generate meaningful, positive impact.
The voters tired of such excuses, and Donald Trump was elected president because many people thought he offered the best opportunity for change. Trump has delivered much on deregulation, but the verdict is still out on tax policy.
Coolidge noted in his 1924 address, “To my mind America has but one main problem, the character of the men and women it shall produce. It is not fundamentally a government problem, although the government can be of a great influence in its solution. It is the real problem of the people themselves. They control its property, they have determined its government, they manage its business. In all things they are the masters of their own destiny. What they are, their intelligence, their fidelity, their courage, their faith, will determine our material prosperity, our successes and happiness at home, and our place in the world abroad.”
Trump and the Republican Congress must deliver and unleash economic growth. If they don’t, the voters retain the right to install new management. As Coolidge noted, Americans still control their own destiny. Note: A version of this editorial first ran on Labor Day 2016.