December 9, 2024

Permission to republish original opeds and cartoons granted.

Another Trump Miracle: Will Jeff Bezos Join Elon Musk in Promoting His DOGE Regulatory Purge?

By Rick Manning

According to Forbes, Amazon founder Jeff Bezos is the second richest man in the world. The only people who are more wealthy are Elon Musk, who has a Tesla, SpaceX, Boring Company, Neuralink, and Solar City empires. So, it is worth paying attention to when these two barons agree that America must take action to dig our way out of the debt hole that was created.

Bezos made noise at a recent New York Times Deal Book Summit by expressing optimism about incoming President Donald Trump’s approach to reducing regulation, saying about the second Trump presidency, “I’m very hopeful that he seems to have a lot of energy around reducing regulation and my point of view, if I can help him do that I’m going to help him because we do have too much regulation in this country.  This country is so set up to grow. By the way, all of our economic problems if you look at the deficit, the national debt, and how gigantic it is as a portion of GDP. These are real long-term problems, and you get out of them by out-growing them.  You are going to solve the national debt problem by making it a smaller percentage of GDP, not by shrinking the national debt, but by growing the GDP.”

What a victory.  Jeff Bezos, the owner of the Washington Post, declared the national debt a major problem and identified reducing regulation as a key element of growing our economy to meet that challenge.

However, Elon Musk’s Department of Government Efficiency focuses on cutting the size and scope of government to control the debt. This includes identifying unconstitutional regulations and killing economic growth without a resulting benefit worth the cost.

While some might want to create a false controversy between Bezos and Musk on what is the appropriate approach, the truth is that President-elect Donald Trump embraces both approaches as they are not mutually exclusive. Coupled with President Trump’s pro-growth tax cut agenda, it can restore America’s economic might.  

President Trump’s proposals to end taxes on tips, overtime, and Social Security payments provide a bottom-up stimulation of the economy, driving consumer spending growth.  His plan to make the so-called Trump tax cuts permanent allows businesses to plan long-term capital spending with certainty, encouraging additional private business expansion spending. Trump’s plan to cut the corporate tax rate to 15 percent (down from 21 percent) for corporations that employ exclusively Americans will put real dollars into the pockets of Main Street, which are the lifeblood of most small towns. And his plan to reduce capital gains taxes will encourage the risk-taking investment needed to rebuild our nation’s manufacturing and energy infrastructure.

That is growth-oriented.

But the truth is that cutting taxes and stimulating the economy on the supply side is not enough to get our nation’s debt bomb under control. These important tax cuts must also be balanced with action to limit the size and scope of government.

Musk’s DOGE is focused on eliminating costly inefficiencies, waste, and fraud in the federal government and evaluating the overall number of employees and contractors needed to make government work. Most importantly, the regulatory focus driven by recent Supreme Court rulings declaring regulations that exceed congressional intent and those solely reliant on government bureaucrat opinions as to their benefits provides an opening to remove many of the federal government's economic strangleholds rapidly. 

Ending economically destructive, constitutionally dubious regulations will encourage private sector investment and ensuing growth, which generates higher wages, larger profits, and more government revenues.  

However, when relying upon the federal government's calculation of what makes up the Gross Domestic Product the U.S. Department of Commerce there is a problem. The formula is outdated as it significantly emphasized federal government spending growth as an economic multiplier without taking into account the much greater negative impact of the federal government sucking up $7-9 trillion to buy bonds to pay interest on the $35 trillion national debt.  So, the official GDP number may not be the best indicator of real economic growth in the private sector, where wealth is created and capital expenditures drive innovation and expansion.

Studies of the impact of government debt on a country’s economic growth show that too much debt actually creates a drag on the economy. Much like the discovery by Professor Arthur Laffer, very high-income tax rates actually generate less revenue than lower ones, as demonstrated by his famous Laffer Curve.

The truth is that cutting spending and creating growth through ending the regulatory stranglehold and lowering taxes are compatible solutions to the same problem, and President Trump is acting to do all three to tackle an almost $2 trillion annual deficit. 

At a time such as this, Jeff Bezos should join with Elon Musk in dedicating himself to constantly promoting Donald Trump’s ruthless regulation-cutting regime to go with shrinking the size of the federal government and lowering taxes as the key to restoring and sustaining America’s economic dominance for the next generation.

Rick Manning is the President of Americans for Limited Government.

To view online: https://townhall.com/columnists/rickmanning/2024/12/06/another-trump-miracle-will-jeff-bezos-join-elon-musk-in-promoting-his-doge-regulatory-purge-n2648692

John Carney: The Fed’s Flawed Math on Trump’s Tariffs

By John Carney

A new study from New York Fed claims tariffs imposed during Trump's first term inflicted trillions of dollars in economic harm and a serious "welfare loss" on Americans, yet the Trump years saw unprecedented gains in household income, a booming stock market, and historic lows in unemployment.

Something doesn't add up.

Like so much economic analysis from the establishment, the Fed study arrives with breathless findings of calamity. According to the Fed, tariff announcements wiped out $4.1 trillion in U.S. stock market value, inflicted a three percent "welfare loss," and sowed uncertainty across the economy. The verdict: tariffs are to blame for grievous harm to the American economy.

This fails even the simplest test of economic plausibility because the Trump years—at least prior to the pandemic—were a time of widespread economic prosperity, rising stocks, and stable prices. Any finding that the tariffs imposed significant harm has to overcome the unavoidable fact that the U.S. economy thrived during Trump's presidency.

Americans know this, even if Mary Amiti, Matthieu Gomez, Sang Hoon Kong, and David E. Weinstein—the authors of the Fed study—do not. Every survey of public opinion shows that Americans understand they were better off economically when Trump was president. And over the past month, Trump's election has spurred a surge in economic optimism.

A deeper examination reveals that this study is less a verdict on tariffs than a cautionary tale about the dangers of narrow framing. Its conclusions rest on a selective and myopic methodology that overstates short-term volatility while ignoring the economy’s remarkable adaptability. They are an artifact of the study's method rather than a description of the economic reality.

Looking Beyond the Fed's 10-Day Window

At the heart of the Fed’s study is an event-study approach that measures stock market reactions immediately following a tariff announcement and then looking at them only within a narrow 10-day window following the announcements. The idea is simple: tariffs roiled markets, causing immediate declines in stock valuations, which the study equates with economic damage.

The study found that, within the 10-day window following tariff announcements during the 2018-2019 U.S.-China trade war, the cumulative effect on U.S. stock market valuations was a decline of 11.5 percent, equating to a $4.1 trillion loss in firm equity value

But why stop at 10 days? Why not examine 15, 30, or 60 days? When we expand the lens, the story changes dramatically:

• At 15 days, the S&P 500 shows a 6.23 percent gain.
• At 20 days, stocks rise 6.0 percent.
• At 30 days, the gain rises to 7.24 percent.
• At 60 days, the market is still up 3.24 percent.

If we just add two more trading days to the Fed's study—so that we're looking at 12 days instead of 10—we get a gain of 4.7 percent.

These longer windows reveal a pattern: the market’s initial fears gave way to recovery and growth. Far from signaling lasting harm, the medium-term rebound suggests that investors—and the economy—adapted quickly to the new trade landscape.

The study’s fixation on 10 days magnifies short-term noise and creates a distorted narrative. Markets react to uncertainty, and tariffs were certainly disruptive. But disruption is not destruction. The broader trajectory of the market tells a story of resilience, not fragility.

Stock Volatility ≠ Economic Harm

The study further errs in treating temporary stock market declines as a proxy for economic damage. Stocks move on sentiment as much as fundamentals, and tariff announcements created plenty of sentiment and negative headlines that may have spooked investors over fear of retaliation, uncertainty over supply chains, and speculation about global trade.

But let’s consider the actual economy. Over the two years of the trade war, the S&P 500 delivered a cumulative gain of 7.24 percent, including a stellar 31.49 percent rally in 2019. The economy expanded 2.9 percent in 2018 and then 2.3 percent in 2019, well above the Fed's longterm growth estimate of 1.8 percent. Unemployment averaged 3.9 percent in 2018 and then fell further to 3.7 percent in 2019. Domestic manufacturing began to claw back market share. Consumer prices rose by a mere 1.9 percent in 2018 and 2.3 percent in 2019. Real median household income experienced a historic jump of 6.8 percent, reaching $68,703, in 2019. This was the largest annual increase on record. If tariffs inflicted lasting harm or "welfare loss," where’s the evidence?

The truth is that tariffs forced the beginning of a recalibration of global trade. Supply chains shifted. Businesses adapted. Consumers adjusted. The short-term volatility captured by the Fed’s study is real, but it tells us little about the economy’s underlying strength.

A Convenient Omission: The Broader Context

The Fed claims to control for simultaneous events, such as employment or inflation data releases, but its analysis fails to account for the broader economic environment of 2018-2019:

• Federal Reserve Policy: In 2018, the Fed raised rates four times, tightening financial conditions and amplifying market jitters. In 2019, the Fed reversed course, cutting rates three times and helping to fuel the market’s rebound.
• Global Growth Fears: The trade war coincided with broader concerns about a slowing global economy, which weighed on export-heavy industries.

These factors undoubtedly influenced markets, yet the study treats tariffs as the sole villain. It’s a convenient narrative but a simplistic one.

The Case for Tariffs

Critics of tariffs love to invoke free trade orthodoxy, but they ignore the lopsided realities of U.S.-China trade. For decades, American workers bore the brunt of globalization, watching their factories shutter and their communities hollow out while China exploited its access to western markets.

The 2018-2019 tariffs were a necessary correction. They forced China to the negotiating table and signaled that the U.S. would no longer tolerate one-sided trade relationships. Yes, tariffs caused disruption, but disruption is often the price of progress. The long-term benefits of recalibrating our trade policy far outweigh the temporary volatility captured in the Fed’s study.

The real story of what Trump's critics call a "trade war" isn’t one of economic harm—it’s one of resilience. Tariffs jolted markets, but the economy adjusted and thrived. The Fed’s 10-day window captures the panic but misses the recovery. Its findings, far from damning tariffs, highlight the adaptability of American businesses and investors.

To view online: https://www.breitbart.com/economy/2024/12/05/breitbart-business-digest-debunking-the-ny-feds-tariff-tunnel-vision/