Last October, not long before passage of the Republican tax cuts, Chuck Todd on “Meet the Press” argued over taxes with his guest, Treasury Secretary Steve Mnuchin.
“There has been no study that has been able to somehow reinforce this idea that tax cuts do translate to economic growth,” the NBC host said.
To the contrary, there is plenty of evidence that shows tax cuts do spur economic growth, and the proof can be found in the economic data that followed passage of the four major tax cuts of the last half century.
Start with the Kennedy tax cuts in 1964; followed by the 1981 Reagan cuts (which weren’t fully in place until 1983); then the Gingrich/Lott/Clinton cuts in 1997; and finally, the George W. Bush tax cuts, passed in 2003, which delivered positive results in 2004. (The 2001 cuts are omitted here because of the unusual impact of 9/11.)
These four major tax cuts shared three key economic accomplishments. Gross domestic product went up. Unemployment rates went down. And federal revenues increased substantially after passage and implementation.
That positive historical record didn’t appear to factor into the media and Democrats’ doom-and-gloom narrative on GOP tax reform last fall. And not much has changed since, at least when it comes to the naysayers. But as optimistic economic data pours in and anecdotal evidence of a growing economy mounts, it is becoming more difficult for the media to paint a negative picture.
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Numbers don’t lie
Here we are at the six-month point after passage of the Tax Cuts and Jobs Act of 2017, and while we may not have an academic treatise to validate the country’s economic progress, we do have the Labor Department’s remarkable announcement early this month that the country has more job openings than unemployed.
As House Ways and Means Chairman Kevin Brady put it in a recent Wall Street Journal opinion piece, “The U.S. has gone from a nation asking ‘Where are the jobs?’ to one that asks ‘Where are more workers?’”
We’ve come a long way since 2010 when House Republicans, led by Speaker John Boehner, made the economy the focal point of their election strategy. At that point, the country was in the midst of 30 consecutive months of unemployment at 9 percent or higher. Today, we are seeing unemployment rates reaching historic lows, especially for women and minorities, and more than a million jobs have been created since the Republican tax cuts were enacted.
From January to May, the Treasury’s monthly statements suggest its early revenue figures are coming in about $26 billion, or 2 percent, higher than last year for the same period. And just recently, the Bureau of Economic Analysis announced that corporations repatriated over $300 billion back to the U.S. during the first quarter of this year. The same period last year, that figure was just $38 billion.
Hundreds of companies have given wage increases, bonuses or other benefits because of the tax cuts. For example, Apple announced 20,000 new hires, $2,500 bonuses for employees, and a $30 billion commitment in new investments. Georgia Power decided to deliver the company’s expected $1.2 billion in tax savings to their customers through lower rates or better infrastructure.
But it isn’t just the big guys who have gotten on board. Small businesses are making commitments of their own. Take Colling Pest Solutions. It’s a small company in Idaho Falls, Idaho, that is giving its employees a one-time bonus, quarterly bonuses, and will pay 50 percent of employee child care costs going forward.
As Juanita Duggan, president and CEO of the National Federation of Independent Business, put it, “This is the strongest Main Street economy in 50 years.” The trade association’s Small Business Optimism Index for May saw a 3-point increase to the second-highest level in the survey’s 45-year history.
On Monday, CNBC released its All-America Survey with good news for Republicans — 52 percent of Americans said they were optimistic on the economy. Fifty-four percent called the economy good or excellent, according to the poll, the “highest recorded by CNBC in the ten years of the survey.”
A Gallup poll last month found that 67 percent of Americans “believe that now is a good time to find a quality job in the U.S., the highest percentage in 17 years of Gallup polling.” Our own Winning the Issues poll from May found the GOP leading Democrats on handling the issues of the economy by a 47 percent to 38 percent margin, leading on jobs 45-38 percent, and on taxes 43-39 percent.
So, no, we don’t have a study to prove our point. We’ve got something better — actual results, millions of new jobs and a rising GDP.
Despite these positive gains, however, it would be premature to assume that what has been a near-death battle over tax cuts is over and decided. While polls show improving numbers for the GOP as growth translates into better personal economies, the truth is people are wary of economic predictions and for good reason.
The 2008-09 recession left a terrible scar, and its continuing impact can’t be underestimated. We were losing close to 500,000 jobs a month for 16 months, a staggering shock to the nation’s psyche. President Barack Obama’s stimulus promised much and delivered little.
People remember the promises of the “Summer of Recovery.” They remember Obama’s decision to focus on health care instead of jobs, and the memory of one of the slowest recoveries since the Great Depression still lingers.
For the last year and half, the media and Democrats, who almost always oppose legislation that moves money out of government, have pushed a consistent narrative: The Republicans’ tax reform is a one-time giveaway that only benefits corporations.
But that stale mantra is becoming more and more difficult to perpetuate in light of economic data that tell a different story. Still, while polls show people are becoming more optimistic, it’s not surprising they remain cautious about whether tax cuts will deliver as promised after ten years of disappointment.
Fifty-eight percent of respondents said in a recent Winning the Issues survey that they were living paycheck to paycheck. The positive economic numbers they’re now seeing will cause them to look for positives in their own economic situation.
But the proof will still be in the pudding. If people see more money in their paychecks and are beginning to feel some relief from living with constant financial anxiety, then they will feel things are moving toward the change they voted for in 2016.
David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for House Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, and is an election analyst for CBS News.