With Christmas right behind us, it’s a little disappointing that there are still grinches lurking about seeking to dampen our cheer for President Trump’s once-in-a-generation tax reform package. But I’m certainly not going to let the naysayers and nitpickers get me down.
My colleagues and I just passed the most aggressively pro-growth tax reform package since the Reagan administration: That was a huge Christmas and New Year’s gift for everyone.
I don’t need to elaborate on the many virtues of this tax package — plenty of ink has already been spilled on that topic. What I would like to address, however, is one of the major lines of attacks leveled against the legislation: the argument that tax reform will “overheat” the economy.
Such rumblings predictably made their way to the opinion pages of the New York Times. Are these concerns about an overheating economy valid? Was the passage of tax reform a mistake? Absolutely not.
All the leading indicators do, in fact, show a booming economy — something we should all be cheering. But, more important, there are also no ominous counterindicators to suggest that the recent tax reform legislation will send our economy spiraling out of control anytime soon.
For proof that we are in the midst of extraordinarily prosperous times, here are just a few stunning statistics:
- Consumer confidence is at its highest level in 17 years.
- The value of the U.S. stock market has hit an all-time record of $27.8 trillion.
- Average weekly manufacturing hours are approaching a 70-year high.
- Single-family home permits set a new record not seen since before the Great Recession.
Perhaps if these (and other) statistics were all we knew about the economy, we might be right to be slightly more sympathetic to a few worrying economists. But two further observations should allay any fears that the economy is going to blow a gasket anytime soon.
First, it is important to remember that much of the tax reform-related economic boom has already happened. Corporations, small businesses, and consumers knew most of the likely provisions of the tax package long before the bill reached the president’s desk. They liked what they saw, and they made investment and spending decisions based on their accurate prediction of what the future would bring. Any future tax reform-related stimulus will likely be steady and predictable, rather than a whiplash-inducing upward spike.
Second, and more important, we have not yet seen any evidence that the great bugbear of a booming economy — inflation — is looming around the corner. Even before the Federal Reserve acted to tap the brakes by raising interest rates, our nation’s money supply was remarkably stable. Inflation rates of 5-, 10-, and 30-year bonds are all well below the Fed’s target and down significantly since the tax reform process began. In other words, while many other indicators have been red hot, inflation metrics have remained comparatively chilly — an almost ideally stable and prosperous economic situation.
Tax reform has placed us on the right course to keep our already booming economy humming at a good clip and sets the trajectory for even more significant growth in the future. I predict a very prosperous new year.
Rep. Andy Biggs, a Republican, represents Arizona's 5th District in Congress. You can follow him on Twitter: @RepAndyBiggsAZ