It looks like the presidential campaigns are about to expand. President Donald Trump is holding rallies, while presumed Democratic candidate Joe Biden is emerging to return to more active campaigning. A good part of the campaigns will focus on the economy. The differences in the platforms are great. Which will lead to economic prosperity?
Economic prosperity fueled by high growth rates should be the primary goal of economic policy. Indeed, it is the lack of prosperous growth that has led to most of our social problems. Without growth, there is little opportunity. And without opportunity, there are severe social problems.
To achieve growth, the economic policy set by the president should follow the same basic principles that led to the miraculous success of the U.S. Afterall the U.S. went from the birth of a nation to the largest and most prosperous economy in the world in about 150 years. Other countries were hundreds, and in some cases thousands of years older.
There were four basic principles that promoted rapid economic growth. The first was the principle of individual freedom. As long as an individual did not infringe on the rights of another, the citizen was free to pursue their interests, no matter what they may be.
The second was the principle of individual responsibility. Every able-bodied American was encouraged to take care of themselves, rather than have the government take care of them. The third principle was low rates of taxation so that everyone knew that they could keep most of what they earned.
And the fourth principle was a limited role for government. Aside from providing some public goods like a legal system and defense of the country, the government stayed out of the way.
When followed these four principles lead to economic prosperity, something not seen here in the U.S. since 2000, when the economy grew at a 4 ½% annual rate. In fact, the 4 ½% annual rate was seen from 1997 to 2000, thanks to President Bill Clinton following those four principles.
After abandoning the national health insurance program in his first term, he lowered the capital gains tax rate in 1997. The lower rate created more capital which led to higher growth and greater opportunities, giving workers more freedom.
In his 1996 state of the union speech, Clinton said, “The era of big government is over.” He worked with Speaker of the House Newt Gingrich to eliminate the deficit and create a budget surplus.
Individual freedom, individual responsibility, low rates of taxation and a limited role of government led to Clinton’s economic prosperity.
Which economic policy position, Trump and Biden more closely follow those principles?
Biden favors expansion of Obamacare and perhaps even a Medicare for all program. He wants to raise taxes, especially on high-income earners and corporations. He wants the government to provide social services like paid sick leave and childcare. He also wants the government to pay for higher education and has plans to reduce income inequality through higher taxes on income earners and government spending on social programs for low-income Americans.
Overall Biden supports the liberal views that are dominating the Democratic Party today. Unfortunately, these policies are exactly opposite to the principles that made America great. Biden’s policies will reduce individual freedom since government control of healthcare and higher education markets will lead to less freedom of choice.
Biden’s policies replace individual responsibility with social responsibility, noting that the government will “take care” of every American’s healthcare needs and higher education needs. These policies will lead to increased government spending which will result in higher tax rates for all Americans. And lastly, his policies will lead to a larger role for government.
Biden’s policies will lead to less individual freedom, less individual responsibility, higher rates of taxation and a larger role for government. These policies will slow economic growth.
Trump’s policies reduce regulations and government involvement in markets, giving Americans more freedom. Trump favors less government involvement in both the healthcare and higher education, keeping the responsibility with individuals.
Trump has already reduced tax rates and would like to reduce the rates further, especially with the crippling 15.3% total payroll taxes that the vast majority of Americans pay. And he wants to reduce the role of government.
Trump’s policies call for more individual freedom, more individual responsibility, lower rates of taxation and a more limited role for government. Those are the principles that grew our economy.
Trump’s economic policies will bring back economic prosperity and make America great, again.