1) Liz Truss Is Turning Out To Be A Reagan-Thatcher Hero In England
Regular readers of these pages know that we have been despondent that seemingly the whole world – led by the US of A – is seemingly sprinting toward big government socialism.
So last week’s decision by British Prime Minister Liz Truss to challenge the reigning orthodoxy by sharply cutting taxes to boost growth is a gutsy and sound policy decision. She also ended a ban on fracking and is deregulating industries.
Here is a summary of the tax plan:
The government has announced that the planned 1ppt cut to the Basic Rate is to be brought forward by 12 months to next April.
To allow people to keep more of their money, the Basic Rate of Income Tax will now be cut from 20% to 19% from April 2023, rather than from April 2024.
To incentivize enterprise and hard work and simplify the tax system, the government has also abolished the Additional Rate of Income Tax.
From April 2023, there will be a single higher rate of Income Tax of 40 percent, rather than an additional 45% on annual income above £150,000.
By far the most important change is the reduction in the top income tax rate from 45% to 40%. This will bring jobs, capital, and businesses back to the U.K.
CNN’s Jake Tapper asked Truss if her plan could be viewed as fiscally responsible. We LOVED her answer:
“I don’t really accept the premise of the question at all.”
“The UK has one of the lowest levels of debt in the G7, but we have one of the highest levels of taxes. Currently, we have a 70-year high in our tax rates.”
In an op-ed for the Mail on Sunday, Truss went further in calling economic growth the centerpiece of her policies:
“We will be unapologetic in this pursuit. Everything we do will be tested against whether it helps our economy to grow or holds it back…We will usher in a decade of dynamism by focusing relentlessly on economic growth.”
Even more good news is that the architect of this plan is the Chancellor of the Exchequer, Kwasi Kwarteng. He is a protégé of our CTUP co-founder Arthur Laffer. The market fell in response to this decision. It’s a very good bet that these losses will soon translate into gains as investors study the big gains to the British economy and competitiveness from these cuts.
Probably none of you, our faithful readers, bothered to read Fed chairman Jerome Powell’s explanation for raising interest rates last week. Nor should you.
But WE have to. Powell has it half right and half wrong. Yes, the Fed must take aggressive action now to extinguish 8 to 10% inflation. Bidenflation is a cancer cell killing prosperity in our economy. The purpose of a currency is to retain its value as a medium of exchange.
But Powell thinks that his best strategy to restore the past 38 years of relative stability is to torpedo the economy. Here are some of the choice statements made by the Fed chairman about inflation:
"We don’t know — no one knows — whether this process [rate hikes] will lead to a recession or, if so, how significant that recession would be."
"How do we get rid of inflation? Supply and demand must get back into alignment, by slowing the economy"
"We want to see growth run below trend"
"We think we need to have softer labor market conditions"
"I wish there were a painless way to reduce inflation"
The Fed and its more than 100 PhD economists are dazed and confused.
We need to get back to growth ABOVE trend. Under Reagan, the combination of lower tax rates and less regulation combined with the Paul Volcker interest rate hikes broke the back of inflation. Prices came down as the growth of money was slowed and as the production of goods and services expanded greatly.
We had low inflation and high growth all at the same under Reagan, Clinton, and Trump. Austerity is NOT the solution for stagflation. Prosperity is.
What Joe Biden has done in less than two years in office to America’s energy security is almost criminally incompetent. As this Laffer Associates chart shows, Trump’s plan for energy dominance was a spectacular economic and national security success. We became an energy EXPORTER. Now 20 short months into the Biden presidency, we are guzzling foreign oil like never before. We are enriching our enemies and handcuffing our own economy.
We would call this “incompetence” - but maybe not. Maybe this is all part of some deranged plan by Biden and his green allies for a national “grand transition.” But to what? Energy poverty and reliance on our enemies for our power sources. If that IS the endgame - the plan is being executed brilliantly.
On Friday, Nancy Pelosi announced yet another extension of proxy voting due to — we kid you not — "a novel coronavirus." Nearly everyone is getting back to showing up for work – except Congress.
Every proxy letter includes the statement:
"I am unable to physically attend proceedings in the House Chamber due to the ongoing public health emergency."
Here are the 100 House members who filed at least 20 proxy letters. Surprise. Surprise. Most of them are Democrats.
