By Stephen Moore
T.S. Eliot famously wrote that April is the cruelest
month, but when it comes to America’s fiscal picture, nothing could be further
from the truth about this past April. The latest government numbers confirm
that last month was a blockbuster for growth, federal revenues, and deficit
reduction.
One of the key principles of Trumponomics is that faster
economic growth can help solve a multitude of other social and economic
problems, from poverty to inner-city decline to lowering the national debt.
We’re not quite at a sustained elevated growth rate of 3
percent yet, but the latest economy snapshot tells us we are knocking on the
door. The growth rate over the last four quarters came in at 2.9 percent, which
was higher than any of the eight years of Barack Obama’s presidency.
Halfway through this current quarter, which began on
April 1, the Atlanta Federal Reserve estimates growth at 4 percent. If that persists
through the end of June, we will have reached an average growth rate of 3
percent under President Donald Trump.
Not bad, given that nearly every liberal critic trashed
the president’s campaign forecast of 3 percent to 4 percent growth as an impossible
dream.
Economists such as Larry Summers, Obama’s first chief
economist, gloomily declared that we were mired in a new era of “secular
stagnation” and that 3 percent growth was unachievable.
Paul Krugman of The New
York Times said it was more likely we would see flying cars than 3 percent to 4
percent growth.
Now for the even better news.
We are already starting to
see a fiscal dividend from Trump’s tax, energy, and pro-business policies.
The
Congressional Budget Office reports that tax revenues in April—by far the
biggest month of the year for tax collections because of the April 15 filing
deadline—totaled $515 billion, which was a robust 13 percent rise in receipts
over last year.
MoneyWeek reports that the $218 billion monthly surplus
(revenues over expenditures) this April was the largest ever, with the previous
record being $180 billion in 2001. (April is always the one surplus month.)
Here’s the simple lesson: more growth, more tax revenue.
But there’s another lesson, and it is about how wrong the
bean counters in Congress were who said this tax bill would “cost” the Treasury
$1.5 trillion to $2 trillion in lost revenues over the next decade.
If the higher growth rate that Trump has already
accomplished remains in place, then the impact will be well over $3 trillion of
more revenue and thus lower debt levels over the decade. Putting people to work
is the best way to balance the budget. Period.
Critics will dismiss the importance of these higher
revenue collections by arguing that the new receipts are for 2017 tax payments,
which don’t take account of the tax cut that passed in December.
This ignores
that some of the growth we have seen was a result of the anticipation of the
tax cut. Moreover, the fact that the tax cuts are just sinking in means that we
should get even higher growth rates for the next several years at least.
Alas, it is not all good news in the April surprise. The
inexcusable omnibus spending bill increased federal spending by some $300
billion in 2018, and we are starting to feel the impact of that splurge.
Federal outlays are up 8.7 percent in April.
That’s unforgivable, given that
Republicans run everything in Washington these days.
No one thought that Trump could ramp up the growth rate
to 3 percent or that his policies would boost federal revenues. But he is doing
just that—which is why all that the Democrats and the media want to talk about
these days is Russia and Stormy Daniels.
