By: Ralph Odierna
President Reagan had a campaign ad that stated, “It’s morning in America. Today more men and women will go to work than ever before in our country’s history.” This will be a mantra when President Elect Trump transitions to President Trump on January 20th 2017. This will be no small task. The mainstream media has showed that their agenda is more important than the truth. They speak of consistent job growth and low unemployment under President Obama.
The truth is muddled in their so called facts. At the end of 2016 we had a job place participation of 62.8%. Simly put 94,609,000 Americans are not in the labor force. This is the lowest on record. A full 38% of eligible workers have given up on even looking for employment. In addition, while the Obama administration and the press are prone to citing the 10 million jobs added to the economy over the past eight years, 95 percent of those are temporary, contractual jobs or part-time employment.
Trump needs to put more money into the pockets of employees and employers. Obamacare at its heart is a massive tax increase on the middle class and employers. A recent analysis by the Congressional Budget Office (CBO) found that repealing this tax would decrease spending by $311 billion over ten years. Not only must Trump repeal Obamacare but he must also immediately begin repealing President Obama’s onerous regulations on business. 20,642 new regulations under Obama. This has shackled job creation, business creation, and entrepreneurship. It gets worse. While the rate of business formation has decreased 30% under Obama, the pace of business closures, which had held steady over the previous decade, started to ascend in 2005. It spiked in 2008, according to data compiled by the Brookings Institute. Consequently, business deaths now outpace business births for the first time since researchers started collecting the data in the late 1970’s.
Lastly, offshore cash holdings. At the end of 2015 the Forbes 500 had approximately 2.4 Trillion in cash overseas. Trump needs to go after this problem in a three pronged approach. One, reduce the corporate tax rate. We have the highest corporate tax rate in the world. This incentivizes companies to look for off shore tax havens. Trump’s proposal to cut corporate tax from 35% to 15% is smart but I would be bolder and go to 10%.
Second, he should offer a one-time extremely low tax of 7.5 % to repatriate the cash. This would give an automatic infusion of $180 billion into the treasury. Third, Trump should simply end “deferral,” that is, repealing the rule that indefinitely exempts offshore profits from U.S. income tax until these profits are repatriated. Ending deferral would mean that all profits of U.S. corporations, whether they are generated in the U.S. or abroad, would be taxed by the United States.
These actions would end the dismal economic growth of the Obama presidency. President Obama is the only president to have less than 3% growth for his presidency. I believe Trump can maintain a 4% growth in GDP by applying the above actions. A 4% growth rate compared to where we are today would give us an extra $3 Trillion in GDP per year. At that point President Trump can rightfully claim, “It’s Morning In America, Again”.