The Daily Signal - Victor Davis Hanson: The Quiet Economic Boom of Trump 2.0

Starting point is 00:00:00 The Trump budget is making its way through the Senate and people on both sides of the issue of fiscal sobriety are kind of arguing because the Biden deficit doesn't seem to be radically reduced given the doge cuts are kind of offset by not cutting other programs that came in under Biden. And more importantly, there are some tax cuts that suggest either there won't be the sizable budget deficit reduction as promised by the Trump administration or it won't occur to late. later on. But there is a wild card here. We saw these gyrations in the stock market, recession, slow growth, market uncertainty, trade wars. But if you actually look at the data, two things pop out at you. Hello, this is Victor Davis Hanson for the Daily Signal. The Trump budget is making its way through the Senate and people on both sides of the issue of fiscal sobriety are kind of arguing. Because the Biden deficit, which is somewhere between $1.9 trillion and $2.1, doesn't seem to be radically reduced given the doge cuts are kind of offset by not cutting other programs that came in under Biden.

Starting point is 00:01:27 The build back better and new Green Deal, all of that stuff, is not radically cut. And more importantly, there are some tax cuts, things like taxes on tips, the salt state tax deductions that suggest that either there won't be the sizable budget deficit reduction as promised by the Trump administration, or it won't occur to later on or it could get bigger. But there is a wildcard here. And consider that in March through April, all the way into May, we had some months. monthly data and income, real income is substantially up. So is the savings rate. Energy prices are down. The inflation rate came in at April at 2.1. The economy, according to the Federal Bank, District Bank in Atlanta, will not grow at 3.8, but it could, they think, at an annualized rate of 4.6%. That's critical because in a $33 billion plus economy, if you get two or three

Starting point is 00:02:36 points of additional economic growth, then obviously you're going to have more federal revenue. It could be two or three hundred billion dollars more. Also, people kind of discounted the Trump tariffs. They said either one of two things would happen. They would either, and believe it or not, They said the trade deficit might increase because of retaliatory tariffs that would increase faster than ours or decrease trade. But we might be in a recession. And yet when you look at the April data, the 160 billion monthly trade deficit has been halved. It's incredible. It's almost like the story on the border that we went from 10,000 people a day to virtually nobody.

Starting point is 00:03:25 So what does all this mean is that we saw these gyrations in the stock market. We read the Wall Street Journal every day, recession, slow growth, market uncertainty, trade wars, recession on the reexecutive. But if you actually look at the data, two things pop out at you. The economy is doing very, very well. And a lot of it is the expectation of the things that are in process, the $10 trillion of foreign investment, this extensions of the tax cuts, incentives for investment in the new budget. And so this is completely unknown territory. If Donald Trump were to get, as Ronald Reagan did in 1984, in the first half of 1940,

Starting point is 00:04:13 he got up to an annualized rate of 7%, especially in the latter part. If he were to get 4.6 or 5%, then this mythical idea that we all discounted, that you can grow your way out of deficits, it wouldn't quite be realized, but it would really help. And that $1.9 to $2.1 trillion deficit could go down substantially. And all of us never believed in sort of supply side will solve the problem. It won't solve the problem without physical cuts and discipline, but it will do a lot for the economy. And this is sort of emblematic of this first mysterious four months of Donald Trump. When people said that Donald Trump could shut the border down, nobody believed him.

Starting point is 00:05:00 When people said that he could deal with the university and then Harvard had a lot of exposure violating Supreme Courts, not rulings, not reporting Chinese and Middle East money, overcharging the government. And yet all of this exposure that's happening on the campus is enlightening the American people about issues they didn't think was possible. just in the first 120 or 130 days of this administration. So what's the bottom line? What am I getting at? There are revolutionary, maybe counter-revolutionary developments going on at the border,

Starting point is 00:05:34 going on with the universities, but especially with the economy. It's being rebooted. It's being redirected in ways that economists are not even able to figure out because we haven't done this before. And the net result might be that we're going to make progress both in the expansion of the economy and through growth in federal revenues cut down these deficits. Thank you very much. This is Victor Davis-Hansson for the Daily Signal. Thank you for tuning in to the Daily Signal. Please like, share, and subscribe to be notified for more content like this. You can also check out my

Starting point is 00:06:13 own website at victorhansson.com and subscribe for exclusive features in addition.

The Daily Signal - Victor Davis Hanson: The Quiet Economic Boom of Trump 2.0

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