Lets say that President Trump’s pro growth agenda succeeds in raising the GDP just one half of one percent.
Douglas Holtz-Eakin, CBO Director under George W. Bush, stated “The average growth rate of Great Britain was only 0.2-0.3% lower than the United States.” But over the long term (since the Revolutionary war), this small average difference allowed the United States (GDP = $18 trillion) to vastly surpass the mighty British Empire (GDP = < $3 trillion) and become the world’s most powerful economy. In just 10 years, a one half of one percent difference in growth of the GDP (i.e., the difference between Obama’s average GDP growth of 2% and a GDP growth of 2.5%) calculates to more than a trillion dollars of GDP growth. Only 24 nations in the entire world even have a GDP of one trillion dollars.
Rule of 70. This “rule” allows one to quickly determine how long it takes for a variable to double – in this instance the GDP. Let’s hope that President Trump actually can deliver on 4% growth of the GDP and compare it with Obama’s 2% growth. One simply divides “70” by the growth rate of the variable. At 2% growth the US economy will take 35 years to double ($36 trillion). At 4% growth it would take only 17.5 years. In the additional 17.5 years it would take “the Obama growth rate” to bring the GDP to $36 trillion, our GDP would instead soar to $72 trillion. That’s a lot of trillions more.
In the most recent Fox News poll, 73% of Americans said “yes” to the question, “Should the US tax system be reformed this year?” And importantly a majority of Democrats agreed as did a majority of Americans making less than $50,000 per year. Let’s face it, my friends, the US Tax code sucks and Americans know it. It seems only the Washington establishment doesn’t.
As well, a reduction of the corporate tax rate to 20% (recommended of the House plan) places the United States 5% below the median for the developed world (instead of being the HIGHEST in the developed world at 35%). But unlike Europe and other Organization for Economic Co-operation and Development nations, our 20% corporate tax would be the sole tax – no Value Added Tax (VAT). That makes America “Great Again,” and highly competitive.
Importantly, corporate tax reform also should promote investment and tax only those dollars earned in the US – not all over the world. We are the only nation that does that.
These differences are massive. Perhaps Washington could actually start thinking about paying down the national debt instead of ever increasing it. Perhaps we could see the end of the greatest oxymoron in the history of political speak: “The Debt Ceiling!”