Now that we have a full 100 days under our collective belt with the new Trump administration, we have learned that the president is trying to pull a triple-play: Relieve over-regulation, pass real tax reform and, as it turns out, be a protectionist.
The first two are the life blood for a marketplace starving to free up seed capital which grows the economy. But the third thing, the protectionist ideology which has crept into the agenda, must be resisted at all cost!
Overregulation is choking off growth, whether the EPA's stringent standards making it next to impossible to build a new refinery or the NLRB insuring interference with Boeing's move out of Washington State. The Trump election and subsequent sweep of congress changed that mentality overnight and unleashed the suppressed American entrepreneurial spirit. Although the fight to repeal the ACA has been a setback, we can see a presidential shift away from his populist base seeking instant gratification towards the Republican leadership looking to pass negotiated legislation, something he had to learn on the job.
The second part of the 100 days' agenda is the start of tax reform. Since there is so much comparison to Reagan and supply side, a review of the effects of the Reagan tax cuts on the economy is good analysis. In 1981, the Economic Recovery Tax Act (ERTA), reduced personal tax rates by about 25 percent. The claim that unrealistic supply side Reagan Administration revenue projections caused large budget deficits during the 1980s is not correct.
The official Reagan revenue projections following enactment of ERTA, did not have huge revenue increase projections. In fact, they were very close to the Democrat controlled CBO revenue projections which showed that deficits would fall after the enactment of the Reagan tax cuts. Unfortunately, the Democratic controlled congress never cut spending ( promised by then Speaker Tip O'Neill) which led to the '87 crash and subsequent recession. But the fact is that individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989.