Much to celebrate on this Labor Day
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 pre-eminent 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, he 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. 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 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 inflation-adjusted terms.
Today, 20 months into the Donald Trump administration, Americans are again enjoying a strong economy after eight years of malaise during the Barack Obama presidency. It really has been a remarkable turnaround.
Obama was the only president in the post-World War II era not to preside over even one year in which the national GDP increased by 3 percent. It’s true he inherited big problems following the Great Recession of 2008, but severe recessions had typically been followed by strong recoveries. That didn’t happen, and his policies deserved much of the blame.
Under 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 threetenths 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.
Trump was elected because many people thought he offered the best opportunity for change. And that’s proven true. As a result of deregulation and the largest tax cut package since Reagan, the economy is humming – growing by 4.2 percent during the second quarter. The unemployment rate is the lowest it’s been in nearly two decades. Hundreds of thousands of people who had given up looking for work have returned to the job hunt. And Trump’s announcement last week of a trade agreement with Mexico sent the stock market climbing (the S&P 500 is up more than 33 percent since Election Day 2016).
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 have delivered economic growth to the people. They would be wise to drive that point home relentlessly between now and November, when Americans once again take control of their own destiny by voting in midterm elections.