The latest liberal spin is that the economy is on a “sugar high” from deficit-financed tax cuts and spending hikes. When the rush wears off, they warn, watch out for a crash landing. It’s true that in fiscal 2018 the budget deficit swelled to nearly $800 billion, or about 4.2% of gross domestic product. But the Bureau of Economic Analysis estimates that the economic “contribution” from extra government spending added only 0.23 percentage point to growth in 2018. So even without all the budget bloat, the economy would still be growing well above 3%.
.. The same BEA data confirm that this year’s growth comes predominantly from a boom in production and investing—particularly in construction, manufacturing, and oil and gas development. While the housing market is weak, consumers are spending more as their wages rise... The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.
The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.
Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.
.. Massive government spending blitzes don’t produce “sugar highs” or anything like them. Even some conservatives erroneously argue that military spending stimulates the economy. But as Milton Friedman said, the government can only put money into the economy that it first takes out.
.. Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.
The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.
National Review Comments: Pro and Anti-Trump
One wonders why a successful business or enterprise would have a reason to hire a “fixer.” You could poll the executives of the largest US corporations and companies and not find one fixer that needed to be retained do administer company business. The smart business people would subcontract the messy stuff (Facebook paying to have false dirt spread about George Soros comes to mind). For small endeavors, only those who intend to do bad things or cover them up, employ a Fixer. Criminal organizations for instance have them on the payroll. Even Mr McCarthy analogizes using figures in the Godfather. These are not good people. Where there is smoke, there may not always be fire. But where there is a criminal organization, there are always criminals.
.. We have just scratched the surface when it comes to all the “fixes” that Cohen provided for the president. We know about payoffs to porn stars.We know about trips to Russia during the campaign to makes deals for a Trump Tower near the Kremlin (with a $50 million penthouse for Putin to seal the deal). Soon, when the Trump tax returns (“So complicated”) are requested by the House Tax Committee, the story will get even more sorted.
Andrew McCarthy is right about one thing. Mueller is preparing a report. But he has also handed off part of that report to the Southern District of New York. There, they can begin a criminal case; a case that Trump can’t use his Get-Out-Of-Jail-Free card to keep his subordinates quiet. This report by Mueller is just the roadmap, one where others will soon follow up... mtorillion:.. The Clintons had, and perhaps still have, the bulk of the FBI and Justice Department running and blocking for them. That and the media support gave it an air of “officialdom” the Trump team does not have. The Trump team was all private people, not government fixers and perhaps. In other words, the core of the Deep State... Trump was elected despite having no friends among the established major figures of either party; he was nominated and elected despite the disdain of many of the elite information organs of the Right. He has far fewer natural vocal allies in conservative circles than any Republican president. It ought make serious conservatives take a second look at their virtuous opposition to him now that it is clear that many of the powers of the State were set in motion against his campaign even before his election and these officials—and the Left—have been tireless, since before his inauguration, in assaulting the legitimacy of his presidency.Because he campaigned without Republican elites in his inner circle—most of whom would have nothing to do with him—and because he to this day has few strong allies among the Republican establishment, those who have been working most assiduously to destroy this presidency have understood from the outset that without having a firm foundation of support in DC itself, Trump is at special risk... Certain writers at NRO and certain Commenters here are among the far too many conservatives willing to sacrifice this presidency because they despise the man whom people had the temerity to elect. They are determined to separate the rectitude of their judgment about political matters from that of the hoi polloi: the Mueller investigation is, for them, a necessary cleansing agent. Thus they latch onto a vague unsettling that arises from the sordid iniquities of the president, permitting them to set aside elementary constitutional concerns about placing a presidential administration from its inception under an investigative cloud without just cause.
Elizabeth Warren isn’t out to get capitalism. She’s out to save it.
The heart of the Accountable Capitalism Act is a requirement that companies with more than $1 billion in revenue obtain a corporate charter at the federal level, rather than basing themselves in the most loosely regulated state they can find. (Sorry, Delaware.)
This new charter is meant to address an epidemic of bad corporate behavior, especially the tendency of top executives to value profits over wider well-being. It would obligate executives to consider the interests of all corporate stakeholders — including employees, customers and communities — not just shareholders. It would require that at least 40 percent of company board members be elected by employees, an idea known as co-determination. The bill also contains provisions curbing stock buybacks, which tend to benefit only shareholders, and unilateral political expenditures.
.. it’s a distinct break from the neoliberal capitalism of the recent Democratic Party.
In the 1980s, Milton Friedman enshrined the idea of shareholder value maximization, which told businesses that their sole purpose was to maximize profit for their owners. Rather than pushing back against this obviously selfish, wealth-favoring theory, Democrats got on board. Sure, this framing might need a tweak here, a bit of regulation there, or the carrot of a tax break or two. But super-efficient big businesses would keep the broader economy chugging along for everyone — self-interest would mean we’d all win.
.. some 80 percent of stock market value is owned by 10 percent of the population, little of that benefit trickles down to the rest.
.. All that said, the Accountable Capitalism Act still relies on a fundamental belief that capitalism is good, even as a new generation of Democrats wants to upend that system altogether. On the left, winner-take-all competition — which Warren professes to “love,” by the way — is more and more seen as the root of our country’s ills, not something to preserve. A new wave of socialist candidates are loudly making that case.
.. But Warren isn’t out to get capitalism. She’s out to save it. The senator clearly believes that markets can create wealth.
Repeal and Compete
Modern conservatism, at least in its pre-Donald Trump incarnation, evolved to believe in a marriage of Edmund Burke and Milton Friedman, in which the wisdom of tradition and the wisdom of free markets were complementary ideas.
.. The essence of Cassidy-Collins, and the reason that many Republicans don’t like it, is that it isn’t actually a full Obamacare replacement. Instead, it’s a federalist compromise. It lets individual state governments decide whether they want to stick with Obamacare or not, which would mean that the law would remain intact in most blue states for the time being, while redder states would have the opportunity to turn roughly the same amount of money (95 percent) to a different end.
.. That end would look like one of the more plausible conservative alternatives to Obamacare: a subsidy to cover the cost of a catastrophic health insurance plan, plus a directly funded health savings account to cover primary care.
.. The peril is that there would be too wide a gap between what the money in your health savings account covers and what you need before your catastrophic coverage kicks in. In which case many people with consistent health care costs for chronic problems would rack up impossible medical bills in short order.