We begin with a rare economic declaration from our President Joe Biden, which we will now record for posterity. Take a listen:
Biden: “For too long Republicans have thrown around terms like pro-growth and supply-side economics to drive an economic agenda that didn’t deliver enough growth and supplied more wealth to those who already were very well-off. From day one, my economic agenda has been different. It’s been about taking a fundamentally new approach to our economy
That’s right, Joe. We have a brand-new approach to our economy. You have generated the first serious bout of inflation in 40 decades. Nice going! This could not have been easy! The Fed has been trying to get inflation above their 2% target for years and years. You just did it in 9 months!
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Nice going, sir. It’s called way too much government spending to boost demand and way too many taxes and regulations to choke-off supply. What you should do in the new year is dump your advisers and make Senator Joe Manchin the chair of your Council of Economic Advisers. Why? Because he was completely right about his high inflation forecast. He’s been right all year, and that’s why we’re saving America, and killing the bill – your $2 trillion boondoggle spending bill last winter contributing mightily to inflation.
The Federal Reserve enabled it and distinguished Democratic economists like Larry Summers and Jason Furman told you so, along with Joe Manchin.
Now, if you slap on another $5 trillion of spending – which you have tried awfully hard to do but have failed, and will continue to fail – we’ll hit double-digit inflation.
You’re right, sir. You have triggered a fundamentally new approach to our economy, a big inflation which inevitably will lead to a big recession in a couple of years. So, thank you for that.
Maybe you can haul out Vice President Kamala Harris, who will put your new economic thinking in the same historical pantheon as Pearl Harbor and 9/11.
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Now, as for your attack on supply-side growth economics, I invite your attention to some actual factoids in a recent piece by Trump economic advisers Kevin Hassett and Tyler Goodspeed. Using government factoids, they note that in 2019 alone real median household income rose by $4,400 – a bigger increase in one year than even the combined totals during the Bush and Obama administrations. Real wages for the bottom 10% of the distribution rose 8.4% while real wages for the top 10% rose only 5.2%.
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Real wealth for the bottom half of income earners rose an incredible 28.4% while that of the top 1% rose only 8.9%.
Business investment surged as did labor productivity growth, which is why real wages for the middle class increased far more than for the upper-end folks.
By the way, Trump tax policy imposed a severely lower cap for the rich blue state deductions for state and local taxes. You want to subsidize the blue state rich. President Trump’s supply-side policies led to a middle-class, blue-collar boom throughout the country.
Unemployment among minority groups – African Americans, Hispanic Americans, Asian Americans – [and] women, dropped to 50-year lows and in some cases, even more. Poverty fell substantially. So did inequality.
But Uncle Joe, your big government socialism plan to spend, tax and regulate the entire economy is losing ground on almost every one of these fronts.
Your single achievement with your so-called fundamentally new approach to the economy is a massive inflation tax on middle-class working folks, and even more on the lowest income folks.
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And Uncle Joe, as you were reading across your teleprompter this morning, attacking supply-side economics, let the record show that as a senator you voted for Ronald Reagan’s hugely successful supply-side tax cut packages in both 1981 and 1986.
So either you were smarter back then, or you’ve become a hypocrite right now. May I remind you that Democrat John F. Kennedy was the first post-World War II supply-side tax cutter, and it led to massive across-the-board prosperity. Then came Reagan, and then came Trump.
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Lower taxes, with their incentives to work and invest, boost prosperity and reduce inflation. As Art Laffer reminds us, tax something more, and you get less of it. Tax something less, and you get more of it.
Somebody should add that to your teleprompter, Mr. President. It was Kennedy who first said a rising tide lifts all boats. Somebody should add that to your teleprompter. Come to think of it, sir, just throw the whole teleprompter out and get yourself a new one, this time backed up by some common sense economic thinkers.
And that’s my Riff.
This article is adapted from Larry Kudlow’s opening commentary on Jan. 7, 2022.
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