Much fast growth right around the corner

If Obama poli­cies are re­versed and tax rates are cut, growth is in­evitable

The Washington Times Daily - - OPINION - By Stephen Moore Stephen Moore is an eco­nomic con­sul­tant with Free­dom Works and se­nior eco­nomic an­a­lyst at CNN.

Ev­ery day there are le­gions of new econ­o­mists who dis­miss the Don­ald Trump eco­nomic agenda and his fore­cast of 3 per­cent growth as a wild-eyed fan­tasy. The con­sen­sus is that the econ­omy “can’t pos­si­bly grow at 3 per­cent” says The Wall Street Jour­nal. “Slow growth is the new norm, so get used to it,” writes Ru­cir Sharma, Mor­gan Stan­ley, chief global strate­gist at Mor­gan Stan­ley in For­eign Af­fairs mag­a­zine this month.

Ques­tion: Why does any­one bother to lis­ten to econ­o­mists any­more? The pro­fes­sion has be­come an em­bar­rass­ment and the most re­spected econ­o­mists have shown them­selves to have as much pre­dic­tive power on where we are headed as the gyp­sies who read tarot cards.

Al­most all of the eco­nom­ics pro­fes­sion — with a few, ahem, ex­cep­tions — bought into the Key­ne­sian idea that what would re­vive the econ­omy af­ter the Great Re­ces­sion of 2008-09 was mas­sive gov­ern­ment spend­ing “stim­u­lus.” The tril­lions of dol­lars of gov­ern­ment bor­row­ing here and abroad created a decade-long ane­mic re­cov­ery. The num­ber of jobs created un­der the

Obama stim­u­lus turned out to be fewer than the num­ber we would have had if the gov­ern­ment had done noth­ing — ac­cord­ing to the

Obama White

House’s own anal­y­sis. So we got

$9 tril­lion of debt with al­most noth­ing to pay for it.

Amaz­ingly, ev­ery Obama bud­get fore­cast that an­nual growth would reach 3.5 to 4.5 per­cent. Bullish growth was just around the corner (re­mem­ber Joe Bi­den’s “Sum­mer of Re­cov­ery” tour?) The chart shows the Obama fore­casts ver­sus re­al­ity.

We never got growth above 3 per­cent un­der Pres­i­dent Obama and the av­er­age growth was 2 per­cent end­ing at 1.6 per­cent. Re­al­ity was about 1.5 per­cent­age points be­low pro­jec­tion, which was about an 80 per­cent over­es­ti­mate of growth. Maybe we should have just hired the gyp­sies with tarot cards. Their pre­dic­tions couldn’t have been any worse.

So now the very peo­ple who made these pre­pos­ter­ous fore­casts are telling us 3 per­cent growth is a fan­tasy un­der Pres­i­dent Trump. Un­der their model, tax in­creases cre­ate 4 per­cent growth, but tax cuts can’t get us to 3 per­cent growth.

The ma­jor rea­son we are told we can’t get growth is that we have so many mil­lions of baby boomers re­tir­ing. But we have 100 mil­lion peo­ple over the age of 16 out­side the la­bor force to­day or un­em­ployed, and that’s a gi­ant la­bor pool to get work­ers from. Most of them are young, not old. This is a gi­gan­tic pool of work­ers to tap into if Wash­ing­ton would stop spend­ing $1 tril­lion a year pay­ing peo­ple not to work.

Another fal­lacy is that this long re­cov­ery means the econ­omy is due for a re­ces­sion. No. For much of Amer­ica this has been a long re­ces­sion, not a long re­cov­ery. We are suf­fer­ing from a se­vere growth deficit. The econ­omy is $3 tril­lion be­hind where it should be be­cause of the shal­low re­cov­ery. So the econ­omy is teed up for a boom not a bust.

How do we ig­nite that boom? Nearly ev­ery pol­icy dur­ing the Obama years was anti-growth — tax in­creases, min­i­mum wage hikes, Oba­macare, Dodd-Frank reg­u­la­tions, mas­sive debt spend­ing, the Paris Cli­mate Change ac­cord, an EPA as­sault against Amer­i­can en­ergy, mas­sive ex­pan­sions of pro­grams like food stamps and dis­abil­ity — and on and on. If Mr. Trump is able to to shift those poli­cies into re­verse — es­pe­cially by get­ting tax rates down, not up — 3 to 4 per­cent growth is eas­ily achiev­able and the eco­nom­ics pro­fes­sion will be proven dead wrong again.

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