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Looking for growth. Which candidate can restore economic prosperity?

Written By | Jun 25, 2020
growth

Image by iXimus from Pixabay. Public domain, CC 0.0 license.

WASHINGTON — As we enter the 2020 campaign season in earnest, voters should ask themselves this key question. Which Presidential candidate can bring prosperity back to the US after the coronavirus pandemic recedes? The differences in both parties’ political platforms are great. So we should endeavor to objectively examine each candidate’s position on the key issues. But one thing is certain. Americans are looking for growth. So each candidate should set economic growth as his top priority.

Indeed we can regard the ongoing lack of prosperous growth over the past decade as the main villain lurking behind most of our social problems. Without growth, workers can find little opportunity. And without opportunity, a country tends to encounter increasingly severe social problems.

Economic stagnation

As we saw during the economically stagnant period that occurred between 2007 and 2016, the persistent lack of growth induced opportunity increased income inequality, raised the national poverty rate and created a general feeling of frustration among the population in general. But the lowest income earners in particular felt this frustration most keenly.

To achieve truly prosperous growth, a president’s economic policy should follow the same basic principles that led to the miraculous success of the U.S. during its short but astonishing history. After all, the U.S. went from the birth of a nation to its status as the largest and most prosperous economy in the world in roughly 150 years. Other countries were (and still are) hundreds, and in some cases,thousands of years older. What was different here?




Growth in the U.S. Four basic principles

Four basic principles that promoted rapid economic growth in the U.S.

  • The first of these was the principle of individual freedom. As long as an individual did not infringe on the rights of another, that citizen was free to pursue his or her interests, no matter what they might be.
  • The second was the principle of individual responsibility. All able-bodied Americans were encouraged to take care of themselves, rather than expecting the government take care of them.
  • The third principle: Low rates of taxation. If the government kept rates low, citizens knew they could keep most of what they earned.
  • The fourth principle? A limited role for government. Aside from providing some public services like a legal system and a national defense, the government was expected to stay out of each citizen’s way.
Maintaining national prosperity

When followed, these four principles lead to economic prosperity. That’s something not seen here in the U.S. since 2000, when the economy grew at a 4 ½% annual rate. In fact, the 4 ½% annual rate continued from 1997 to 2000, thanks to President Bill Clinton following those four principles.

After abandoning the national health insurance program in his first term, he lowered the capital gains tax rate in 1997. The lower rate created more capital which led to higher growth and greater opportunities. That, in turn, provided workers with more economic freedom.

In his 1996 State of the Union speech, Clinton said, “The era of big government is over.” He worked with Speaker of the House Newt Gingrich to eliminate the deficit and create a budget surplus.

Individual freedom, individual responsibility, low rates of taxation and a limited role of government led to Clinton’s era of surprising economic prosperity.

Do Biden’s economic policies more closely follow the four principles?

Biden favors expansion of Obamacare and perhaps even expanding it into a Medicare solution. He wants to raise taxes, especially on high-income earners and corporations. He wants the government to provide social services like extra paid sick leave and expanded childcare allowances.

Biden also wants the government to pay for higher education for all. Additionaly, he claims he can plan to reduce income inequality through higher taxes on income earners and more overnment spending on social programs for low-income Americans.

Overall Biden supports the left-liberal views that dominate today’s much-altered Democratic Party. Unfortunately, these policy views are exactly opposite to the principles that made America great. Biden’s policies would reduce and curtail individual freedoms, since government control of healthcare and higher education will inevitably lead to less freedom of choice.

Biden’s policies replace individual responsibility with “social responsibility.” Presumably, the government will “take care” of every American’s healthcare and higher education needs. Such policies inevitably lead to increased government spending, resulting in greatly higher tax rates for all Americans.


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Lastly, his policies will lead to a larger role for government. That means less individual freedom, less individual responsibility, higher rates of taxation and a larger role for government. Indeed such policies slow economic growth, leading to less and less prosperity.




And what about President Trump’s economic policies?

Trump’s economic policies — currently disrupted by the coronavirus pandemic — reduce regulations and government involvement in markets, giving Americans more personal and economic freedom. Trump favors less government involvement in both healthcare and higher education, placing the primary responsibility for both on the choices made by individual citizens.

Trump and the GOP have already reduced tax rates. They want to reduce the rates further, especially given the crippling 15.3% total payroll taxes that the vast majority of Americans pay to the Federal government. And he wants to reduce the role of government further than he already has.

Trump’s policies call for more individual freedom, more individual responsibility, lower rates of taxation and a more limited role for government. Those are the founding principles that grew our economy to the colossus it eventually became.

Trump’s economic policies will bring back economic prosperity and make America great, again.

And Biden’s will not.

The choice is clear.

— Headline image: Image by iXimus from Pixabay. Public domain, CC 0.0 license.

 

Michael Busler

Michael Busler

Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.