Tax Facts Tuesday: 4.1%

July 31, 2018 — Blog   

 

Here’s the news: Last Friday, the Bureau of Economic Analysis released its report on Gross Domestic Product (GDP) for the second quarter of 2018. As NPR noted, the “U.S. economy had a blockbuster second quarter,” with GDP coming in at 4.1%.

Democrats Were Silent: Usually quick to dismiss the positive effects that families and Main Street businesses nationwide are seeing in this booming economy, House Democratic Leader Nancy Pelosi and House Democratic Whip Steny Hoyer were both silent on Friday’s report. A growing economy where workers are in the driver’s seat – not Washington special interests – seems to be of little interest to the minority party.

Here’s the reality: Our economy is shaking off the sluggish days of the Obama years. Real GDP growth has averaged 3.1% this year compared to the 1.9% pace seen over the eight years of the Obama Administration.

Here is what people are saying about Friday’s GDP report: 

American Action Forum:

“The economy has been accelerating steadily over the past two years and now is running at least a half percentage point faster than the 2.2 percent average during the recovery in the Obama years. … The acceleration since the start of 2017 is suggestive of the importance of the sharp regulatory rollback under President Trump. The other key policies have been the Tax Cuts and Jobs Act (TCJA) and the omnibus spending bill signed early in 2018.”

Investor’s Business Daily Editorial Board: 

The 4.1% spurt in second-quarter GDP shows just how much policies matter. Not only did President Trump’s tax cuts and deregulation deliver faster growth in the spring and early summer, but they will likely do so going forward as well.”

Mike Solon, U.S. Policy Metrics:

Are low taxes key to a booming economy? Their success is harder than ever to deny after Friday’s report that the U.S. economy grew 4.1% in the second quarter, bringing the average quarterly growth rate during the Trump presidency to 2.9%. This explosive growth, and the accompanying spikes in hiring and wages, should finally discredit three popular claims made by opponents of the president’s policies: that tax cuts would blow a hole in the deficit, that corporate tax cuts would serve only rich investors, and that secular stagnation was a valid excuse for the slow growth of the Obama era.”

National Association of Manufacturers:

Over the past six months, tax reform and regulatory relief have sparked the robust manufacturing job growth manufacturers predicted. The business optimism of our member companies stands at a record high, and 86 percent of them plan to invest in new plants and equipment, 77 percent plan to increase hiring, and 72 percent plan to increase wages and benefits for workers. That is driving the robust growth we are now seeing reflected in today’s report…”

New York Times:

Tax cuts…are adding fuel to the already strong economy, putting the United States on a pace for its best year of growth in well over a decade. … ‘The bottom line is that the economy is doing better,’ said Diane Swonk, chief economist for the accounting firm Grant Thornton.”

Newt Gingrich, former Speaker of the House 

“The historic Tax Cuts and Jobs Act, which was a tremendous accomplishment by the White House and the Republican-led Congress, has helped to encourage investments in the United States. The tax cuts have allowed American families to keep more of their money and incentivized American businesses to bring money they earn overseas back to our country. This is a big part of why the United States is becoming twice as productive under President Trump as it was under President Obama.”

Wall Street Journal Editorial Board: 

Tax reform broke the bottleneck on capital mobility and investment from the highest corporate tax rate in the developed world. Above all, the political message from Washington after eight years is that faster growth is possible and investment to turn a profit is encouraged. … It’s worth recalling that not a single Democrat in Congress voted for tax reform and nearly all of them opposed every vote to repeal the Obama Administration’s onerous rules. Had they prevailed, we’d still be experiencing secular stagnation instead of arguing if 4.1% growth is too much of a good thing.”

The Bottom Line: The Tax Cuts and Jobs Act is producing concrete results for our families and small businesses. But Republicans’ work doesn’t stop here. As House Ways and Means Committee Chairman Kevin Brady (R-TX) said:

“Solid growth should never be a one quarter occurrence; it needs to be the standard in America. While Democrats are declaring their desire to take our country back to a time when Main Street businesses were pessimistic about the future, families paid higher taxes, and our global competitors all leaped ahead of us, Republicans are determined to build on this growth to continue strengthening our economy for workers and families.”