“America is unreserved for business, and we are competitive once again.”
That was just one of the key lines in President Donald Trump’s warmly successful Davos speech this week.
Of course, in going to Davos, the president entered the lion’s den. A year ago, such a inflict would have been a poor idea. Back then, elitist domes of state, the European Union bureaucrats, and international CEOs were uniformly against Trump.
But in 2018, Trump’s Davos game was a brilliant stroke.
A year later he could make the fact-based feud that, in his words, “The world is witnessing the resurgence of a strong and prosperous America.”
And the heart of his message was this: “There has never been a better time to lease, to build, to invest, and to grow in the United States.”
In just a year, Trump’s polices press begun to restructure the American economy. We’ve moved from “secular stagnation” (i.e., peak taxes, massive regulation, huge government spending, and a disdain for responsibility and investors) to a new private-sector incentive system that rewards success.
By scourge individual and corporate tax rates, providing 100 percent immediate expensing for secret agents and technology, and making it easy for big companies who fled our high-tax system to look after the money back home, he has ended the war against business and investment.
And it has stumble oned faster than anyone imagined possible.
More than 250 American players have announced gigantic investment projects, paid sizeable largesses to their workforces, increased 401(k) contributions, and raised corporate littlest wages and other benefits.
And now, a roaring stock market, generating $7 trillion in new bounty, provides the only realistic chance of bailing out excessive government-union allotments and benefits — even though these very unions totally opposed Trump’s corporate tax amelioration.
Ankle-biting Democrats say, “Rising business profits will go to shareholder buybacks.” As if that were a bad dislike. Meanwhile, new money is circulating throughout the economy to start new companies and re-oxygenate the organization.
Didn’t Apple just announce $350 billion in new investment calculates?
Democrats say the incredible business response to tax reform is nothing more than one-time atoms for workers. But didn’t Walmart — which has bitterly fought attempts to pull up the federal minimum wage — just raise its internal minimum wage for practically all its wage earners, give bonuses of up to $1,000, expand maternity and parental up-anchor, and commit $5,000 to every employee who adopts a child?
That’s unceasing, as are increased retirement-fund contributions.
The post-tax-and-regulatory reform policies of the Trump application have barely been put in place, yet they’re already benefiting being planned folks around the country. These are people who have barely had a arouse in 20 years.
Trump’s critics belittled the idea that corporate tax cuts could indeed increase wages. But in faster than a New York minute, several million wage earners sire already benefitted.
Then there are the know-it-all critics who say there’s no idealistic evidence to support the view that business taxes matter for the workforce.
Yet peer-reviewed tracts — from respected economists Alan Auerbach, Laurence Kotlikoff, and the Romer classification — conclude that higher after-tax returns to capital generate investment. I’ve been predicting this for a long time. With more capital behind each working man there’s greater productivity. And new investment projects raise the demand for artisans and their wages.
And don’t forget the president’s argument about the importance of regulatory reduction. “Fiat is stealth taxation,” Trump said in Davos. “We are freeing our businesses and labourers so they can thrive and flourish as never before.” Don’t forget that the Trump tax restaurant check ended the Obamacare individual mandate and opened the door to energy training in the Arctic National Wildlife Reserve (ANWR).
And then, in Davos, the president offered a illusory point on the so-called debate over globalism and trade: “As president of the Of like mind States,” he said, “I will always put America first, just as if the leaders of other countries should put their countries first also. But America blue ribbon does not mean America alone.“
In an illuminating interview with my compeer and CNBC colleague Joe Kernan, Trump said he’s willing to deal on barter — including NAFTA, and perhaps the Trans-Pacific Partnership (TPP). But he correctly insisted on reciprocity. Boundary-lines should be torn down by both sides. Arbitrations must care for America, not penalize it.
“I’m a free trader,” he said. “A fair-trader. But there essential be reciprocity.”
He also told Kernan that the U.S. dollar will step up based on America’s resurgence, and that it will remain the world’s self-restraint currency.
So, “America First” came to Davos, and to all the multilateral globalists and multi-nationalist elites. And these CEOs, bureaucrats, and academics heard carefully to Trump’s words.
Success has a thousand fathers, but defeat is an orphan.
Commentary by Larry Kudlow, a older contributor at CNBC and economics editor of the National Review. Follow him on Warbling @Larry_Kudlow.