While the administration of President Donald Trump has made great strides towards restoring the U.S. to a state of strong economic growth, his reforms don’t go far enough to help Americans achieve their financial goals, conservative economist Douglas Holtz-Eakin said.
When advisors create plans for client goals like education, retirement and leisure, they’re implicitly counting on the strength and growth of the economy to help them along, said Holtz-Eakin, president of the American Action Forum, a conservative think tank, former director of the Congressional Budget Office and an economic policy advisor to Sen. John McCain during the 2008 presidential campaign.
“I want to talk about the fundamentals of the economy, without which no one would be able to achieve their dreams,” said Holtz-Eakin, addressing the Investment and Wealth Institute’s 2018 Annual Conference Experience in Nashville, Tenn., on Tuesday. “The U.S. has a problem: Through 2009, the GDP grew quickly enough, doubling on average ever 35 years, meaning that in the course of one working career, the standard of living would double, and for many people that was their route to the American dream. Beginning in 2009, the projection was that the economy would grow more slowly, at 2 percent per year, and the standard of living would double over the course of 75 years.”
In 2016, economic growth slowed further, he said, leading to no real income growth for the year. Slowing growth led directly to the historic 2016 elections, where Republican Donald Trump won the presidential election and Republicans won majorities in both houses of Congress.
In the 15 months since Trump took the oath of office, the U.S. has made some progress enacting six major policy reforms that Holtz-Eakin believes will restore stronger economic growth, but he said there’s still more that can be done to restore the American economy.
Regulatory Reform
“I think that, quietly, the Trump administration has performed somewhat of a miracle on the regulatory front,” said Holtz-Eakin. “It doesn’t get as much attention as tax reform, but to me it’s just stunning.”
Holtz-Eakin’s American Action Forum tracks regulatory policy and estimates the cost of compliance with new federal rules. During the administration of Barack Obama, new regulations were issued at an average rate of 1.1 per day, at a total cost of $890 billion.
The regulations acted as “stealth taxes” on the business community, said Holtz-Eakin, causing the rate at which new businesses were created to fall below the rate at which firms failed for the first time in statistical history.
“The Trump administration shut down the regulatory state,” he said. “In 2018, they empowered the Office of Management and Budget to send out to the agencies budgets, an allotment for how much in additional regulation they can add to business’s budgets. In 2018, these allotments were all zero or negative numbers. We’re going to roll back up to $9 billion in regulations in 2018.”