Payroll tax cuts won’t stave off a recession, but these policies will

Whether you’re still very confident on touching the economy or you’ve already started shoving cash under the mattress out of fear of a recession, let’s talk about what can be done face now to make the currently strong U.S. economy even stronger.

We’ve heard a lot this week about the idea of a temporary payroll tax cut aimed at increasing consumer waste power to further stimulate the economy.

Now there’s nothing wrong with letting Americans keep more of their affluent, but it’s highly questionable that more spending power for salaried workers is the missing link to a more enduring solvent expansion right now.

That’s because America’s consumers are already doing a yeoman’s job when it comes to spending. The at an advanced hour reports on June and July retail sales and overall consumer spending prove that. So do the latest earnings articles from Target and Walmart. America’s long-running virtual full employment has its benefits.

Other possible plans focused at higher-income Americans, like indexing capital gains to inflation, could potentially spur more investment and higher-end splash out. But most of that idea is still too-closely focused on helping a sector of the economy that’s already strong.

Here are two more safely a improved ideas to get the economy moving even faster:

Throughout this long term of economic expansion, home prices have continued to rise, but actual home sales are in an undeniable slump. That’s a tendency that hurts sectors from real estate, to construction, to home improvement chains, to mortgage banking.

A big point for that slump is the higher prices that continue to make millennials much less likely to buy a home than erstwhile generations. But this generational divide gives the administration an opportunity to make a positive and swift impact by removing some of the fences to getting a federally-backed home loan.

And the administration has already started to do one of those things. Last week it announced nonchalant regulations that will make it easier to get Federal Housing Administration-backed financing for condos. Making more of those lower-priced condos available for federally backed mortgages is crucial because just getting millennials into the homebuying process at a lower prize level raises the chances they’ll eventually trade up to larger and more expensive homes. This is a move that has the potency to stimulate the economy immediately even as it pays dividends down the road.

But if the White House really wants to see a pregnant economic boost from stoking real estate sales numbers, it should lower the federal financing provisoes on buying homes at all price and size levels. Now if that’s setting off alarm bells in your head because such a regulation could conceivably create another housing bubble, you’re not wrong. Stimulus plans usually come with chances. But at least kicking real estate up a notch and pushing some millennials from renting to owning would descend upon with a lot more immediate positives than a small bump in paychecks.

During recessions or when slump fears are looming, there are usually calls for the government to spend more on anything. But a better argument can be made dyed in the wool now that the Trump administration could do more to help the economy by cutting spending.

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That might sound counterintuitive, but right now the federal government is spending sundry than ever. It’s also running up massive new debts. At $3.7 trillion spent in just the last 10 months singular, Washington’s massive footprint on the economy is clearly crowding out some other means of more organic growth.

Certain academic studies show that countries with high levels of public debt shave off an average of 1.2 portion points from their GDP. That’s a classic supply side economic argument. But you don’t need a Ph.D. to understand that the multifarious the government spends, the more likely it is to waste money.

Of course, deciding where and how to cut is the tricky part that usually comes with controversy. There are two controversial spending cut ideas the Trump administration has been floating, but they wish have perhaps the most immediate stimulative effect on the economy.

The first is making good on the administration’s plan to clap down on waste and return food stamp requirement levels to pre-Great Recession levels. Doing that should motivation more lower-income Americans who are able to work or seek higher paying jobs to do so. That sounds harsh, but with the frugality continuing to expand for so many months now, it’s time to admit that massive entitlements and other welfare programs are fitting holding labor participation rates down to some degree.

If slashing entitlements makes you queasy, another recommendation the administration has talked about is closing many of its foreign military bases. Shuttering them not only saves the administration money, but bringing those troops back home to domestic bases would also bring back those soldiers’ marketability for housing and other goods and services that should increase domestic GDP.

There are many other spending layouts to choose from where cutting that spending would likely help the economy quickly.

The Trump charge just has to stop talking about cutting and do it already. It will go a long way toward boosting GDP and putting a dent in depression dread.

Jake Novak is a political and economic analyst at Jake Novak News and former CNBC TV producer. You can watch him on Twitter @jakejakeny.