Thanks to the Bidenomics hangover, the US economy is fragile — as the most recent job numbers and GDP estimates are signaling.
The last report from the Federal Reserve Bank of Atlanta is indicating a -2% economic growth forecast for the first quarter of the year.
Housing and consumer spending are weakening and so is labor force growth, which was down by 500,000 in the latest Bureau of Labor Statistics report.
That means America needs a shot of economic steroids to steer clear of the post-Biden recession iceberg.
Tax policy holds the key.
The extension of President Trump’s 2017 tax cut must be signed, sealed and delivered — quickly.
Last month it cleared the hurdle in the House of Representatives, as Republicans voted to advance a budget blueprint that would keep in place the tax rules set by Trump’s Tax Cuts and Jobs Act of 2017, which is set to expire this year.
Trump should push for the Senate to get this bill on his desk by Memorial Day. Voters support this initiative by a nearly three-to-one margin, according to a new McLaughlin poll, with even 69% of Democrats in favor.
Why wait?
As an anti-recession insurance policy, that tax bill should include added growth hormones.
Include President Trump’s 15% business tax rate for made-in-America products and his “no tax on tips” policy — plus a big cut in the capital gains tax, which will instantly raise revenue and raise needed investment.
To deal with demands to reinstate the federal deduction of state and local taxes, let’s benefit taxpayers across the board by cutting the current 22% and 24% personal income tax rates to 15% and 20%, respectively.
President Trump has focused more of his attention of late on tariffs rather than tax cuts.
That’s a mistake: He should shift now toward taxes, to head off any slowdown in this critical part of his economic agenda.
Every time the president announces a new tariff, the stock market takes a hit.
Manufacturers here at home have complained that the constantly changing tariff policies are causing supply-chain problems that could even lead to plant layoffs.
Trump is right that, as the world’s only economic superpower, we can use American leverage to pressure other nations to enact policies that are in the security and economic interests of the United States.
And he is also right that China is an enemy that has adopted illegal and predatory trade practices.
He has admitted that his tariff policy may cause “short term pain for long term gain.” That’s true — because tariffs are taxes.
They will raise prices.
But given the wobbly economy, now is not the time to risk even short-term pain.
The longer Congress delays in getting the tax cut done, the longer it will take to feel the economic upside.
Investment is frozen right now due to the uncertainty.
Meanwhile, the downside risk of a stalemate between the House and the Senate would mean higher taxes on virtually every worker, every family with children, and every small and large American business.
One last point: Trump understands better than most the power of using leverage to negotiate better trade deals.
But that leverage is much greater when the US economy is surging, not struggling.
The “tax cuts first” strategy will help the president get better trade deals long-term — and will force both our friends and our foes to lower their tariffs on American-made products.
This is the winning strategy to make America’s economy great again. But the order of operations will make all the difference.
Steve Forbes is chairman and editor in chief of Forbes Media. Stephen Moore is a senior fellow at the Heritage Foundation. They are co-founders of Unleash Prosperity.
