Washington Goes Supply-Side
by Larry Kudlow“Stop the bad stuff” is what John Boehner told a bunch of us at breakfast a few weeks before the election. That’s how he defined the GOP mission. Now he’s Speaker.
And now there’s an opportunity for both ends of Pennsylvania Avenue to move in the direction of a supply-side economic growth model to reduce chronic unemployment and really get the economy moving again.
You can’t govern from the House alone. Boehner knows that. But he also knows that you can stop the redistribution, the big spending, the overregulation, the tax hikes, and the war against business and investors.
The economy is picking up this new political vibe. Economic growth has shifted to 4 percent from 2 percent (even though the Fed hardly acknowledges this). And just in the last six weeks, indicators of better jobs and business confidence have been springing up everywhere.
The economic upturn probably started late last summer, but it has picked up steam since the elections. Car sales, ISMs, small-business confidence, and brisk holiday retail sales — the indicators all look good.
And what’s helping light things up? Low-tax-rate clarity. Stopping the pork-barrel, earmarked, omnibus spending bill. And now the potential undermining of Obamacare. Plus, the hope for broad-based spending limits, and even a corporate tax cut touted by Obama and hopefully the new House Republicans. Trust but verify. And right now I’m willing to trust.
If Obamanomics has been replaced by Tea Party Reaganomics 2.0, the revived Gipper approach is at heart an economic growth message — operating through free-markets, not government. And it’s not simply budget bean-counting either.
Cut-and-grow seems to be the new House GOP mantra. And that’s fine, as long as the cut part includes corporate tax cuts to grow the economy and complement the hoped-for spending cuts. Growth is essential to the GOP political future, as well as the nation’s health and wealth.
Over at the other end of Pennsylvania Avenue, Barack Obama won’t be the first liberal to move in the direction of supply-side growth incentives, especially lower tax rates. Think John F. Kennedy and Bill Clinton. Then and now, the motives are undoubtedly political. Fine. It’s the results that count.
Just today, the White House announced that Obama will speak before the Chamber of Commerce in order to improve relations with business. This is good. Next thing you know he’ll be speaking at a Tea Party event.
And it looks like the president is Clintonizing his White House staff. He’s probably bringing in businessman and former Clinton Commerce secretary Bill Daley to be chief of staff. And he might pick former Clinton economic chief Gene Sperling to replace Larry Summers.
Bill Clinton was a liberal who got mugged in the midterm elections, and he changed his stripes on the economy and taxes. And now we may be seeing Obama make the same transformation. But I repeat my own mantra: trust but verify.
And there’s no smooth sailing ahead for the GOP. They’ll have to fight tooth and nail over the EPA carbon assault and the Obamacare health takeover if they’re to stop these monumental economy and job killers.
But stocks and the dollar are rising, and gold is falling. These markets are affirming the shift in politics and policy. We are moving toward the supply-side. That’s good. Haven’t been there in a while.
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29 Comments
It is time to shear the sheep and trim all the waste.
The Liberal Illusion . . .
September 21, 2010
Dear Mr. Obama,
As I’ve said before I’m a born and bred capitalist. Born, because I was fortunate enough to be born an American, and bred because I was fortunate enough to have parents that worked hard to make sure I could survive, and if at all possible thrive. Not so with you, but that is another story. Regardless, one of the false notions that you seem to labor under is that business and entrepreneurs will not respond to asinine regulatory or tax policy. Speaking from my own local experience you are absolutely wrong.
Case in point. My local GM dealer is gone. Washed away by CAFE standards, lucrative Union contracts, and the hold up by your administration accomplished against the bond holders. To add insult to injury you used the public treasury to buy used cars that still had useful life, with a treasury I remind you that has no money, other than what hostile foreign powers will lend us. Also, I’ve got lots of houses near me I’d like to buy and fix up, maybe sell them, and make a profit. I’m a handy guy. The fly in the ointment here is that I can’t predict what I’ll be forced to do at point of sale or the point of a government gun – so I do nothing. In addition, there is piece of property near me that is a prime spot for a home style burger joint, it is near a school, alcohol license is not an issue for me, but the law is. First, the liability of opening those doors to even serve my first burger is insurmountable. Then, there are the employees, and the burden that the state of New York and Federal government puts on the business owner. Again before I’ve even invested a dime my idea is dust.
You see people are smart. That is why you construct these laws so that small business can’t be started in the first place unless they are visible enough to tax, track, and abuse through never ending attack of regulatory agencies, such that they don’t want to hire anyone even if they can get more profit out of the choice; essentially the unknown risk of government far exceeds any benefit reaching for that next piece of business is worth. So my money sits, and my pile shrinks due to inflation, and no reward for saving other then survival. This is what creates the “beans and hot dog” environment that that government worker was eluding to at the CNBC town hall.
I understand a pinko like your self thinks that one day I’ll wake up and forget all of this and go pursue my dreams, but keep dreaming. I’m rational and so is anyone with money. “A fool and his money are soon parted” and there is nothing more foolish than Big Government with a printing press in charge of a welfare state with open borders! You see, I know that a government agent, a tax authority, a regulator, union official, or “obamacare” is just waiting to destroy me. So why open my doors, on an individual basis, in the first place? Someone once asked me why do corporations give to both parties – I told them straight out – protection money. Who do they need protection from? The government. Who do they pay? The government. Do you understand now why I’m writing more now than ever? I’m tried of the racket and so are the American people.
On November 2, 2010 we will, at least for a time, put it to a stop. If those newly elected join with you in the government mafia, well, we will just have to do this all over again in 2012, 2014, 2016 . . . again, you may own the clocks, but we’ve got the time.
Respectfully,
Joe Doakes
ps. We stopped you, now we have to kick you out of office:)
Do you remember the American dream? A dream that all individuals are created equal, hard work can prevail, and no challenge is too great.
These beliefs are still alive and thriving in the American people, but Washington is working tirelessly to stomp them out. Washington politicians would have you believe that you aren't capable enough to make your own decisions, that hard work shouldn't precede success, and that instead of finding solutions, we should find out, as the President said, "Whose a#! to kick."
Well, I remember the American dream, and I believe you understand the repercussions if we allow that dream to be eroded by an out-of-control, Washington. That is why it is urgent that all Americans Remember what polices are best for US. They can call US names, but our ideas win every time with the public at large. Just look at the results of the last election.
What would Ronald Reagan do?
Ronald Reagan, on the state of the economy. Everything he did worked for all American's. It was his version of no child left behind, but it should be stated abetter as no American left behind.
Economic Recovery: President Reagan's Address to Congress on the Economic Recovery Program – 4/28/81 http://www.youtube.com/watch?v=7T-7BnFo5ao
2/4/1986 http://www.youtube.com/watch?v=ZIWkQbXSetM&fe....
This one is the reality and results of his polices.
You judge for yourself. What an awesome, intelligent man! He was the best President of The United States of America in my lifetime. His only "agenda" was to keep our country FREE, STRONG AND TO REMAIN THE GREATEST COUNTRY that ever was and ever will be. God bless his soul, and his ideals are still alive and well!
"The time is near at hand which must determine whether Americans are to be free men or slaves."
George Washington
This growth will only hold true if the drilling ban is lifted and we strive to become more energy independent. And that does not include jousting at wind generators, jumping on the solar energy bandwagon or using our grain to manufacture more ethanol. We need to use that coal, natural gas, petroleum, and even the methane layers located off shore. Secondly we most definitely need some more deregulation to bring industry back home. I suggest a 15% income tax on corps and a 12% tax on small businesses. Now that would be some positive stimulation.
That will require getting rid of most of congress in 2012. I can live with that.
But will it be soon enough? Or is it already too late?
The more the Conservative policies take hold, the more credit Obama will claim. That will, unfortunately, lead to his re-election. So be it. We have many dunces voting.
But, if the Country is on track and doing well, I don't care who the President is.
I only want Obama to SHUT UP !!
Rose colored glasses much! Settle down Mr. Kudlow, Barry is a hardcore ideologue, make a deal with the devil, the best you’ll do is drop the temperature in hell a couple degrees. When I see the 1099 provision go away, and 16,000 new IRS agents stopped in their tracks, and the eventual death of Barrycare, I will join in. As you say “trust but verify.”
Yep. What Rick said above. Gas is going up and food is going up. Housing has not stopped tanking yet. These will kill growth if not checked and reversed.
Drill, Drill, Drill.
Now, in an attempt to take the heat off of Sarah Palin:
Tell the environazi's to take a train to Dachau…..
….and the train will have all kinds of bulls-eyes on it.
….and we're going to shoot at will heavy caliber mini-guns.
How's that Krugman, 'ya yutz.
Been much talk about the changes that can be brought about by this new congress. There's been much discussed about how obama is purposefully trying to kill this economy in order to bring about the "change" he is looking for (more dependence upon government).
We should know pretty quick where the truth resides…….
I felt like standing up and putting my hand over my heart as I read your post. I too miss the Gipper.
Nope – because he will keep spouting off his mouth. He will keep vetoing it. He will give speeches and talks AGAINST the Conservative policies.
Also there are too many people with their eyes open now and will KNOW he's lying.
Get'em Joe, amen!
The new House majority should INSIST upon deep spending cuts (to the oft mentioned 2005 – 2008 levels), marginal rate reductions, abandonment of EPA oversight of CO2, removal of TSA scanner and pat down procedures (and implementation of profiling), and whatever else is on the Tea Party wish list in return for any increase in the debt ceiling.
Far be it from me to disagree with the learned Mr Kudlow, but the only "certainty" surrounding tax rates is that Obama will raise them at his next available opportunity. Indeed, Biden hinted as much when he said that they were troubled by the moral component of allowing people to keep their own money.
The GOP pissed away their last opportunity at using their leverage during the tax rate extension "negotiations." They better not do it again.
I’m with you Jim, a little too much kum-ba-ya in Mr. Kudlow’s article. I don’t believe for a minute that Barry will become a converted Supply-Sider, and what would uncle Frank say? As far as Sperling and Daley, they work for the messiah, not the other way around, nothing but repackaging…I hope I’m wrong.
Thank you for the compliment Stan. I am truly humbled by your compliment.
It will instantly put thousands of people to work. It is a no brainer for you and me.
Let him take the credit. All I want is for America today, is to have the same opportunity we had. We will know the what, when, where, why, and WHO.
Let's not forget nuclear, the industry we invented and abandoned to the French and others because of superstitious and unfounded environmental concerns. Modern nuclear energy can support the needs of our country and satisfy the "greens" in ways no other energy source can. Energy independence should be our #1 national security issue – there's no better way to secure our future and prosperity.
I'm pretty sure you have your metaphor mixed up, but then it already went south when you started talking about the Holocaust.
Any logical workable policy that's a "no brainer" for you and me, is a big scary mystery to Obama.
Some think he's doing it on purpose,
Americans are not on board for poverty. You can see the massive underground, below the radar, cash economy building everyday, in opposition to Obamanomics.
<Ann thinks Obama is just a pathetic, unprincipled, anti-capitalist pinhead>
The commissars of the Obama administration just dont seem to get it. You mess with the bull, you'll get the horns. As I'm sure you know, the Obama regime, not in the least bit respectful of the separation of powers (or any other inconvenient part of the Constitution, for that matter), decided to utterly ignore the fact that they couldn't get their knee-capping Trade bullcrap through Congress and tasked the EPA with enforcing it anyway.
The Republic of Texas told them to go screw themselves. Not at all happy about this lack of subservience to the Obama Politburo, the EPA then sent Governor Perry a nasty gram stating that if Texas wouldn’t obey their un-Constitutional power grab, then the EPA would just take over the issuing of permits in Texas. To which Governor Perry, undoubtedly getting a bit tired of DC and Obama’s regime's inability to understand plain English, replied that they can, once again, go screw themselves.
Anyway, Obama and his commissars will just have to find out how well “coercing” works on Texans, won’t they? They could start off by asking Santa Anna, the “Napoleon of the Americas”, how well that worked out for him first.
It constantly blows my mind that the same fire-breathing liberals that point at France and Sweden as models for what we should be forget that those countries rely heavily on the nuclear power that the liberals fight against.
Its really true. All these electric cars aren't going to get powered up by solar. Its going to be coal, and while we have a true abundance of it (the saying should really be "dig baby dig!") for a true sustainable energy source we need to get to the forefront of making this a nuclear powered country again.
Here in Texas we can leave the union if necessary. It is in our state constitution.
VIVA LA TEA PARTY
Careful there buddy. Some on the left might take that in the wrong way and think that you want to kill them all.
"Stop the bad stuff" John Boehner. Instant Classic. We need to cut the spending to the bone. That's the only way to take care of basic needs and cut taxes to revive the economy.
-new competing currencies (it's starting already in states)
-end the Fed Reserve cartel system, default to the Fed they're moochers
-let states default/declare bankruptcy to jetison the union and pension liabilities
-Drill baby drill for gas, coal, oil (there is only peak environmentalism)
-break up the big banks like Goldman Sachs, JPM, BAC, Citi
- turn the water on in California again for God's sake
-reduce regulations for small businesses
-VAT transition and eliminate the IRS and income taxes
-Seize the gold under the FRBNY and move it to West Point.
-abolish the education department, ed is all local by states
-states rights, 10th amendment reinforced
-limit commerce clause by Federal statute or constitutional amendment – no more
-limit the general welfare clause (and the good and plenty clause!) by statute or constitutional amendment
-Federal ban on sharia law, such as tenets of slavery, honor killings, as seditious the constitution and an afront to humanity
….more?
It amazes me as to how many Dems in Congress LOVE keeping their own money, inclusive of POTUS and VPOTUS. Notice all the deals that go down with their crony capitalist buds and the number of tax cheats amply rewarded with high positions or slaps on the wrist.
Collapsing the economy to usher in Socialism/Marxism/Communism is the Cloward-Piven strategy. Hit the people from all sides so that they are so overwhelmed, they'll capitulate and accept the above in a bloodless coup. In fact, Clara Piven is one of Obamao's advisors.
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