American Elephants

Who Said the Economy Could Not Return to 3% Growth? by The Elephant's Child

I frequently mutter something to the effect that Democrats don’t understand economics, that’s why they are Democrats. Democrats were saying that there was no chance of returning the economy to 3% growth, but as the media have once again reported, the economy “surprisingly” grew at a 3% pace in the third quarter, despite the impact of three major hurricanes. Most economists had reduced their estimates to just above 1% because of the impact of Hurricanes Harvey and Irma on the economy. Those who keep expecting a big slowdown should look at what’s really going on.

The IBD/TIPP Economic Optimism Index, the Conference Board’s Consumer Confidence Index, the National Association of Manufacturers survey and the Institute for Supply Management all report stronger optimism and rising factory output. Overall optimism hasn’t been this high in over a decade.

The current unemployment rate at 4.2% is the lowest since before the financial crisis. Total employment has jumped more than 2.2 million since Trump entered office. Even the broadest U.S. unemployment measure, so-called U6, now stands at 8.3% — its lowest since June of 2007.

Meanwhile, all major stock market indexes are up strongly since Trump’s unexpected win last November, with the Dow Jones industrial average breaching 23,000 for the first time this month. The stock market, as we’ve said before, is a reliable if imperfect predictor of future economic activity. Its message today is unequivocal: Expect more of the same.

Donald Trump has embarked on a sweeping round of deregulations in recent history. He got rid of Obama’s disastrous “Clean Power Plan,” and the Paris Climate Accord, which did nothing whatsoever for the climate and sent a lot of U.S. money to emerging nations to solve their climate problems. He is now removing the restrictions that Obama put on federal energy lands. Oil is flowing through the Dakota Access pipeline, and with the fracking revolution the United States will be a global energy powerhouse again.

Democrats are all about control, which means that they try to regulate everything. And regulation means extra costs, inefficient ways of doing things, silly extra requirements all of which slow an economy down. When excess regulation is removed, companies are encouraged to invest in new equipment, plants and training, and to hire more workers. That’s what makes an economy grow. Tax reform gives businesses more of their own money to  invest in growth.

The Federal Register, the bible of federal rules, came in at a record high 97,110 pages of rules under President Obama. Trump has already knocked it down the 45,678 pages, and he’s just getting started. Many of his new rules in the pipeline are about getting rid of old regulations.

Wayne Crews, who is CEI’s regulatory analyst, estimates that the economic cost to the economy is $2 trillion, or roughly 12% of  current GDP. Obama’s regulatory state has been especially hard on small businesses. I can name a significant number of small businesses who disappeared during the Obama administration.


Obama Attempts to Make Nice With Business, by Lecturing. by The Elephant's Child

“Winning the Future”, with the embarrassing acronym, is the new program.  The President plans to help American entrepreneurs with his War on Regulation.  The president’s executive order of Jan. 18, the president says, will ensure that regulators consider the economic consequences of new rules, but with a 120-day period for a government-wide review of regulations already in place. Immediacy.

A  closer look suggests that there is less substance there than claimed.  The executive order requires agencies to submit a “preliminary plan” for reviewing regulations sometime in the future to either make regulations “more effective” or “less burdensome.” And the results of any regulatory reviews are required to be posted online “whenever possible” This is a prize collection of weasel words, not leadership.

The president spoke today to the Chamber of Commerce.  It was meant to be a peace-making gesture, but the speech was flat and the Chamber didn’t like it much.  The problem is that the president comes to business with an anti-business mindset.  He assumes that business abuses their workers, that they are underpaid by greedy bosses. He assumes that American business is not competitive with business in countries like India and China, without understanding their advantages and America’s advantages. And to top it off he lectures them.  I guess he can’t resist.

Keith Hennessey listed what the president called the responsibilities of government:

  1. to encourage American innovation;
  2. to provide our people and businesses with the fastest, most reliable way to move goods and information;
  3. to invest in the skills and education of our people;
  4. to cut the spending that we just can’t afford;
  5. to break down barriers that stand in the way of the success of American businesses — citing trade, corporate taxes, and unnecessary regulation.

But we already know what he plans. He will subsidize battery plants and solar shingle makers.  He wants to build high speed rail. Government has been investing billions in education for years, as education steadily declines.  We have not yet seen any spending that Obama thinks we cannot afford.  Our corporate taxes are still the world’s highest, he has refused to sign free trade agreements, and the regulation that needs repealing is not on his to-do list. He said that “there are some safeguards and standards that are necessary to protect the American people from harm or exploitation.”

Here is Heritage’s list of 20 burdensome regulations starting with the Health Insurance mandate, and running through the lightbulb ban, with a thorough explanation of why these regulations are burdensome.  It would be a great start, but I won’t bet on any of them being repealed or ended anytime soon or at all.

This administration simply does understand business, and it shows.

(Click to enlarge)

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