During President Donald Trump’s 2016 campaign, his call to “Make America Great Again” immediately reminded the country of Ronald Reagan’s call for a new administration in 1980. The two politicians are known for their America First economic agendas, and on Thursday one man who has advised both presidents will visit Stanislaus State to talk about “Trumponomics” and the impact it’s had on prosperity in America.
Dr. Arthur Laffer, who was a senior advisor to Trump in 2016 and served on Reagan’s Economic Policy Advisory Board for both of his terms in the White House, will speak at the university as part of the Executive Speaker Series and is most famous for the Laffer Curve, an illustration of the relationship between tax rates and government revenue.
In his lecture, titled “Trumponomics: The Road to Riches or Ruin?” Laffer will deliver an analysis of the president’s approach to trade, taxes, employment, infrastructure and other economic policies.
“I think the economic plan is one of riches,” Laffer said in a phone interview with the Journal on Monday, implying that his lecture will come to the same conclusion. “I have been working with administrations now for the last half century, and I have never seen a first term of any president that’s even close to the first two years of this president.”
According to the White House, real gross domestic product (GDP) grew at annual rates of 3.4 percent in the third quarter of 2018 and 4.2 percent in the second quarter, while the unemployment rate remains below 4 percent. Prior to 2018, the unemployment rate had fallen below 4 percent only five times since 1970.
“People were expecting it to be the lowest quarter in 10 years, and it turned out to be the highest quarter in 10 years,” Laffer said, speaking of 2018’s last quarter. “The unemployment rate is down and there aren’t enough people to hire…it’s what we dream of.”
With one year of the Tax Cuts and Jobs Act under the nation’s belt, Laffer said there is enough evidence for him to conclude that the bill is the “single best tax bill” he’s ever seen — except for the 1986 tax act under Reagan. Signed in December 2017, the tax cuts dumped billions of dollars into the U.S. economy. The Tax Policy Center estimates the tax cuts added 0.8 percent to GDP in 2018, at a time when global growth was slowing.
However, according to the Congressional Budget Office, the boost is expected to fade in the coming years as revenue is expected to drop by about $1.9 trillion by 2030.
Much of the nation’s economic boost from the tax cuts comes courtesy of the corporate tax rate reduction, which was implemented during a time when progressives, like Senator Bernie Sanders, were calling for corporations to be heavily taxed. This would cause economic ruin, Laffer said.
“There is no substitute for economic growth, and anyone who thinks they can help the poor by hurting the rich doesn’t understand economics,” he said. “If you tax people who work and you pay people who don’t work, you’re going to get a lot of people not working.”
Laffer will also talk about the ongoing trade war with China, which has disproportionately affected farmers in the Valley. While he believes tariffs are Trump’s way of “getting China to the table” for trade negotiations, he’s not sure if the strategy will work out in the end, he said.
“Whether it’s your farmers or the steel producers, there is only one answer to trade, and that’s free trade,” Laffer said. “The U.S. has been doing really well lately and that includes the tariffs, and that includes the shutdown.”
From working with Reagan in the ‘80s to now advising Trump in the new millennium, there are many similarities and differences between the two presidents, Laffer said. What matters to him in the end is how each leader navigated the world of economics.
“Reagan was a very polished, smooth podium person…he was always perfect. That’s a very different president than Trump, but the policies are almost exactly the same,” he said. “So, if you care about what color the plate is that your delicious meal is served on, you’ll like Ronald Reagan, but if you’re like me and like the food, you like them both.”
Laffer will take the stage at Stanislaus State from 6 to 7:30 p.m. in the Snider Recital Hall on Feb. 28. The event is free and open to the public, though guests are encouraged to RSVP at www.csustan.edu/speaker.