Despite massive hurricanes and Congress’ failure to pass free-market healthcare reforms, the economy grew at an annual rate of 3 percent in the third quarter of 2017, exceeding even the expectations of President Trump.
Perhaps spurred by the good economic news, the Dow Jones Industrial Average, NASDAQ, and S&P 500 all closed at near-record highs on Friday. And earlier in October, the Bureau of Labor Statistics announced that, at 4.2 percent, the unemployment rate is at its lowest point since February 2001.
The bulk of the credit for the strong economy belongs to the job-creators, innovators, and entrepreneurs who made it happen. But President Trump’s administration also deserves credit for getting the federal government out of their way.
Since day one in the White House, Trump has quietly made deregulation one of his highest priorities. As Adam Gustafson wrote in the cover story of our magazine last week, “As a deregulator, Trump has been winning, and winning big.” According to various reports, the administration has saved $560 million through deregulation and is meeting its promise to eliminate two old rules for every new one.
The stock market's gains since Election Day should be seen as anticipation of the economically friendly actions Trump promised. Even the GDP figures reflect hope for the near future: companies are building their inventories, presumably in expectation of increased demand.
That is, the positive effects of Trump's economic reforms are already, to some extent, priced into the market and into GDP. So, Trump needs to continue his deregulation, and Congress and the White House simply cannot afford to fail on the other big pillar of Trump's economic plan: tax reform.
The transition from debating healthcare to tax reform in Congress created an anticipation for tax reform that likely played a part in the third quarter’s economic growth. Companies are building up their inventories, expecting Congress to give individuals and corporations alike a big tax cut that will increase demand for their products.
As we wrote shortly after the GOP released their tax reform framework in late September, the plan “can raise the economic tide and lift all boats,” as long as it’s done right. But a framework is no substitution for legislation.
As the weeks have gone on, it’s become increasingly ridiculous that a tax reform bill has not been introduced in Congress. After all, it’s been 51 weeks since the election, when Republicans found out they would have a unified government and the opportunity to pass tax reform.
Also concerning is the lack of transparency in the development of the upcoming bill. “I’m not sure who’s all doing this,” Sen. Ron Johnson, R-Wis., told us in an editorial board meeting last week. “I have my suspicions. But somehow we’re going to get this Plan A dumped on us.” (Johnson, to his credit, is working on a Plan B in case things go awry.)
The public deserve to know who is rewriting the tax code, or at least whose office on Capitol Hill is taking the lead. If a second-term senator doesn’t know how to give input on tax reform, how is the public supposed to?
Once a bill is finally released, congressional leaders must pass it through regular order. Have hearings, pass it through the relevant committees, take votes on amendments. Learn the lessons from their failure on healthcare, and the GOP Congress might actually get major legislation done.
If tax reform efforts fail, the economic growth caused by its anticipation won’t just be nullified, it’ll be reversed. The Trump administration’s deregulations should be applauded, but in terms of finalizing economic growth, we’re only halfway there. The economy is livin’ on a prayer, a prayer that Congress needs to answer with tax reform, and soon.