America is open for business, and we are competitive once again.
That was just one of the key lines in President Trump’s highly successful speech in Davos, Switzerland, last week.
Of course, in going to Davos, Trump entered the lion’s den. A year ago such a visit would have been a poor idea. Back then, elitist heads of state, European Union bureaucrats and international CEOs were uniformly against Donald Trump.
But Trump’s 2018 Davos strategy was a brilliant stroke.
He could make the fact-based argument that, in his words, “The world is witnessing the resurgence of a strong and prosperous America.”
And the core of his message was this: “There has never been a better time to hire, to build, to invest, and to grow in the United States.”
In just one year, Trump’s polices have begun to restructure the American economy. We’ve moved from secular stagnation (i.e. high taxes, massive regulation, huge government spending, and a disdain for business and investors) to a new private-sector incentive system that rewards success.
By slashing individual and corporate tax rates, providing 100 percent immediate expensing for plants and technology, and making it easy for big companies that fled our high-tax system to bring the money back home, he has ended the war against business and investment.
And it has happened faster than anyone imagined possible.
More than 250 American companies have announced gigantic investment projects, paid sizable bonuses to their workforce, increased 401(k) contributions, and raised corporate minimum wages and other benefits.
And now, a roaring stock market, which has generated $7 trillion in new wealth, provides the only realistic chance of bailing out excessive government-union pensions and benefits — even though these very unions totally opposed Trump’s corporate tax reform.
Ankle-biting Democrats say that rising business profits will go to shareholder buybacks. As if that were a bad thing. Meanwhile, new money is circulating throughout the economy to start new companies and re-oxygenate the system.
Didn’t Apple just announce $350 billion in new investment projects?
Democrats say the incredible business response to tax reform is nothing more than one-time crumbs for workers. But didn’t Walmart — which has bitterly fought attempts to raise the federal minimum wage — just raise its starting minimum wage for virtually all its wage earners, announce a one-time bonus of up to $1,000 for eligible employees, expand maternity and parental leave benefits, and commit as much as $5,000 to every employee who adopts a child?
That’s permanent, as are companies’ increased contributions to retirement funds.
The post-tax- and regulatory-reform policies of the Trump administration have barely been put in place, yet they’re already benefiting working folks around the country.
These are people who have barely had a raise in 20 years.
Trump’s critics belittled the idea that corporate tax cuts could actually increase wages. But in faster than a New York minute, several million wage earners have already benefitted.
Then there are the know-it-all critics who say there’s no academic evidence to support the view that business taxes matter for the workforce.
Yet peer-reviewed papers — from respected economists Alan Auerbach, Laurence Kotlikoff and the Romer family — conclude that higher after-tax returns to capital generate investment. I’ve been saying this for a long time. With more capital behind each worker, there’s greater productivity. And new investment projects raise the demand for workers and their wages.
And don’t forget the president’s argument about the importance of regulatory reduction. “Regulation is stealth taxation,” Trump said in Davos. “We are freeing our businesses and workers so they can thrive and flourish as never before.” The Trump tax bill ended the Obamacare individual mandate and opened the door to energy drilling in the Arctic National Wildlife Refuge.
The president offered a fantastic point on the so-called debate over globalism and trade. “As president of the United States,” he said, “I will always put America first, just like the leaders of other countries should put their country first also.
“But America first does not mean America alone.”
In an illuminating interview with my friend and CNBC colleague Joe Kernan, Trump said he’s willing to deal on trade — including NAFTA, and perhaps the Trans-Pacific Partnership. But he correctly insisted on reciprocity. Barriers should be torn down by both sides. Arbitrations must protect America, not penalize it.
“I’m a free trader,” he said. “I’m a fair trader. … but I want reciprocal.”
He also told Kernan that the U.S. dollar will strengthen based on America’s resurgence, and that it will remain the world’s reserve currency.
So, America First came to Davos, and to all the multilateral globalists and multinationalist elites. And these CEOs, bureaucrats and academics listened carefully to Trump’s words.
Success has a thousand fathers, but defeat is an orphan.