Economist Art Laffer Makes a Case for Optimism
While general optimism may be in short supply these days, famed national economist and presidential confidant Art Laffer made his fifth appearance before the RFDC panel dating back to 1995 in Chicago with a message that the best economic growth in recent memory may be in hand.
Recapping his conservative economic philosophy while sprinkling in personal anecdotes that include Laffer’s recent interactions with President Trump, he made an enthusiastic case that the American economy is heading into a major, sustained economic boom that will “lift all boats” due to recent governmental actions led by the recent large-scale tax cuts.
Looking back to booms during the Kennedy and Reagan years in particular, Laffer outlined five economic pillars he said apply no matter who is in the Oval Office.
First are taxes. “You want to collect your taxes in the least damaging fashion,” Laffer said. “If you look at this administration on taxes, if you look at the tax bill passed in 2017, and I was very involved in this with the president … it’s an amazing bill.” From his perspective as one of the administration’s advisors on that landmark policy, he added that he is exceptionally pleased with how this pillar is shaking out thus far.
The second pillar is government spending, which he made clear was his biggest beef with recent U.S. economic policy. “There has been no spending restraint in this administration or any previous administration for quite some time,” he said. “We are spending way too much money today in the United States federal government.”
Equating recent moves by the Federal Reserve with sluggish housing starts numbers, Laffer said his third core pillar is monetary. “I think we are going to move back up to where interest rates get where they should be,” Laffer said. “I think that’s where you get supply and demand and capital flows being in really good stead.”
The fourth is regulation, which he said is something everyone can acknowledge. “You can’t wake up one morning and drive on the left-hand side of the road,” he said. Noting Trump’s stated policy of repealing two regulations for every new one enacted, Laffer said he couldn’t be happier with how this aspect of the administration’s economic policy is shaking out—and boosting businesses.
“Trade is really, really important to a healthy economy,” he said. The current policy, which has resulted in a still-escalating tariff battle, Laffer said this area of the administration’s policy is a “work in progress.” Looking back at the president’s history as a multi-national business owner, he said his personal interactions with Trump reassure him that his bombastic strategy comes from the right place.
“He was the head of a large international organization and it makes him—for sure—a free-trader,” Laffer said. “Also, as I told him, anyone who has two foreign wives also has to be a free trader—he didn’t think that was at all funny.”
The current global trade landscape is designed to continue the U.S. status as the country that benefits from free trade more than any other.
To close his address, Laffer said the current administration started in the “worst possible position we’ve been in in the post-WWII period” due to the policies of George W. Bush and Barack Obama. While that seemed to overlook a certain Great Recession, Laffer said the business owners and decision makers in attendance at RFDC should make their decisions with the confidence that economic growth is set to boom with job creators and large corporations now facing less burdens.