Capitalism is most important during crisis: Art Laffer

Channel: Fox Business
Published: 5 hours ago

Description
Former Reagan economist Art Laffer argues the U.S. economy is growing more than the Eurozone at a rate of one percent and that tax revenues are up across the board following Trump tax cuts. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms



Transcript
I'Ve got new fox news polls this morning on the economy want to show you. Voters are giving the economy its best rating in nearly two decades. They are crediting. President trump take a look at these numbers. 55 % said that the economy is quote in excellent or good shape up from 47 % in october. It is the first time in 19 years that so many have felt this positively about the economy. Joining us r ...
ght now is laugher associates. Chairman and former reagan, economic adviser, art laffer, all right. It'S always great to see you. Thank you. So much for being here good to see you maria and you have to say that one of the reasons that people are so happy about the economy is because of tax reform and the tax cuts that we saw going into place. But the democrats have another idea about this: how significant has the tax legislation being on global on the us economy's growth? And what are you expecting? Come tax increases? You should one of the democrats actually win? Well, let me just go through the tax bill.

If it has it passed, it passed in december 22nd, 92,000, 17. And if you look at it, us growth had been almost exactly the same as eurozone growth for the two prior years and then all of a sudden after the tax bill passed while at the same time us growth accelerated dramatically relative to eurozone growth. And now we are probably about two and a half percentage points higher gdp than we would have been had. We followed eurozone growth and that's a lot of money. Maria that's six hundred billion dollars and the growth differential is still very large. I think we are still one percent higher in growth than the eurozone. If you look at employment growth that went very nicely as well stock market beautifully, if you look at real wages up five thousand dollars versus the entire eight years of obama as a little over a thousand dollars. So that's wonderful, but the one that i really bothers me maria, is that you're i read in the new york times by benjamin applebaum. I read articles by jared bernstein, saying that tax revenues are way down. That is not true, in fact, tax revenues counting from the fourth quarter of 2017, all right for the next two years, eight quarters versus the prior two years - tax revenues, state and local are up 6. 4 %. That'S a 3.

2 percent per annum and federal tax revenues are up 5. 1 percent. The tax revenues are coming in beautifully and you know appelbaum you it's a very bad word with regard to venusian secretary of treasury, minutiae as saying it was a lie, but you know minutiae is exactly correct. These tax cuts have paid for themselves already, and i just don't know where they're getting off, but i think they're trying to get anything call me i'll, get the data they're trying to get ahead of the president in congress. Talking about cutting taxes even further, i mean last week i sat down with president trump while we were in davos, and i asked him about tax cuts for the middle class and what his priorities are for 2020 watch. This i saw that for the middle class. We just want to make that permanent. No, no, i'm gon na make a tax cut and we're gon na probably make the other permanent. It'S got a long way to go and all fairness, but we're going to make that permanent for the middle class. So we'll be doing that we'll be announcing it over the next 90 days. That'S to me very important, so what would be the ideal tax plan next or do you want to see the the the taxes that are in place right now permanent, or do you want to see another cut for the middle class? I would like to see both of those. I think the president was very clear.

I'Ve watched your interview was really spectacular by the way the president said. He doesn't expect to get it passed through this session. In congress i mean it has to get new congress, but you know i think it's yeah. He needs the house back and i think this tax cut that he's proposing will really pull the democrats out of the woodwork. Are they against tax cuts and economic growth or are they for it and if those guys voted against it, i think it leave means that we take the house, and if we take the house, then everything's open for game it'll be perfect and i think there's a Good chance we do take the house, i mean, there's a good chance. We keep the senate and with what's going on in the impeachment stuff, i watch that over the weekend as well - and it looks good too for the president. I mean you've been on top of that. Like mad, i mean just fantastic coverage. Maria on that. Thank you. I think it looks very good for the president. The economics is working beautifully.

I just couldn't have asked for a better results than it actually occurred. Marked morning material just staying on topic of tax cuts and tax reform, many have commented that the economic pop that we got was a sugar high. I personally don't agree with that, but i'm curious from your perspective. Looking at this historically, when you have a sweeping tax reform, like we had how many years does it take to really begin to see the long term or at least medium term benefits of it, because we're just in the early stages of it, i would suspect. I know we are, and growth rates are still higher in the u. s. than they are in the rest of the world by as much as they ever have been. So it's been a two-year sugar high so far and there's no sign of it tapering off at all. I mean what you're seeing right now is the growth rates are still higher and the differential between us gdp and what it would have been had we grown at eurozone rates, is about six hundred billion dollars. I mean that's a very large amount mentioned. I would guess the tax rate reductions that were done in 2017 will continue to, in fact growth rates for years to come. Well, i don't think there's any sugar high and i don't think it dissipates.

I just want to point out that that the journals out with an op-ed this morning the tax increases to come, and they say, there's little doubt a new 12. 4 % tax would depress incentives and reduce america's competitive advantage for high-skilled workers and make the tax structure more Typical of european countries, they actually quote cornerstone macro, which is a firm that i follow. A lot in quote cornerstone macro. A lot on this program to prove the point. Higher taxes basically pushes money to lower tax places, whether it's country or or states, which is what we see in america, but i got to get your take on capitalism versus socialism, 2020 hopeful bernie sanders out with a new ad targeting jpmorgan chase chairman and ceo jamie Dimon after he slammed socialism last week, sanders tweeted this last week, that's funny. Jamie dimon seems fine with corporate socialism, when his bank got four hundred and sixteen billion dollar bailout from american taxpayers. Here'S rick dimon told me at the jpmorgan healthcare conference in san francisco earlier this month. When i asked about socialism versus capitalism, what do people not understand about socialism versus capitalist? Like socialism? You have to define it first, so i think a lot of people. You know younger people think socialism means we're going to take care of people which we all want to do: safety nets for the sick, the old, the poor, our veterans or just someone someone gets laid off or gets very sick. They get a chance to come back in society, so a lot of pros for that don't work, but we should. We all believe that, but the socialism itself means that the government controls companies by one form or another, and you know that remember that you may not remember this, but the old russia. They had the coma sars you know, but on the the submarine or their business.

The coma saw in the room that political leader was the real boss and when companies control companies they don't control, could do a better job for the clients for innovation or growth or competition, or so that they control it for political purposes. All right reaction here - yeah. Well, i i think he was talking more about communism, but socialism here is reading it very clear you take from those who have and you give to those who have not now, if you tax people who work maria and pay people who don't work, you're gon na Get a lot of people not working you're gon na cause, a collapse. Yeah the stuff of science and zuckerman and piketty is interesting. Here is bernie. Sanders is playing on the same feeling that gave rise to the tea party where's. My bailout, you bailed out these bangs where's, my bailout where's, my money, yeah, that's what gave birth to the tea party. It'S very interesting he's again. It'S not right versus left with bernie sanders or trump. It is about populism and nationalism, yeah, and it doesn't help when you come to finish round table coming out and saying all these stakeholders are important. Somebody has to defend capitalism, yes, well i'll defend it. Those bailouts for the banks were wrong when they did it.

The reason the great recession was so long, and so deep was because of these bailouts because of that whole process yep, we should not have done it then, and we shouldn't do it now going into the future will create another great recession, yet, which is exactly why It occurred before and it's not you know i was on it, you guys back then saying there should be no bailouts. It should be it should let the markets clear it. Capitalism is most important during crisis yeah. That'S when you need to rely on the markets. The most and that's when politicians rely on them, the least by the way, all right. The right answer for wait, jump. We got to jump it real quick. Are you worried about the coronavirus cutting growth? I am worried about the coronavirus being almost 80 years old. I'M really worried about it. I am worried. Yes, i aren't good to see this morning, we'll be watching, of course, come back soon, as we look at the implications there, art laffer.


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