With several weeks of January still to go, President Trump is wrapping up a masterful first year in office. Despite — or perhaps in part because of — unprecedented, unremitting hostility from the entire American establishment, Mr. Trump has redirected American policy to serve American interests. America — and the world — is already reaping the benefits.
The changes have been profound in several important policy arenas, including immigration, national security, foreign policy, and the judiciary. Those changes, however, take time to unfold. The first of the Trump economic gifts to America have arrived in time for his first Christmas in office.
The sclerotic Obama economy had been so lackluster for so long that many economists (and all progressives) had already accepted it as the new normal. Those same seers had predicted confidently that a Trump presidency would destroy even the lame economy he found upon entering office.
Wrong and wrong. Mr. Trump’s election convinced everyone with money to invest that the progressive stranglehold on the American economy was ending. Money flooded into American businesses as regulations fell away. The stock market, employment figures, and wages all rose. Mr. Trump understood, however, that the euphoria over the end of the Obama economy could only last so long. Sustained growth would require more than simply an end to intentional progressive strangulation.
Such structural changes required another herculean task that the media assured us was far beyond the president’s skill set: He had to work productively with the thin Republican majority in Congress. Wrong again. Working together, congressional leaders and the White House crafted a bill that combined tax cuts for nearly every American taxpayer with significant incentives for business investment.
Two provisions of the Tax Cut and Jobs Act stand out. First, the lower corporate tax rate will make more money available for businesses to invest. At the same time, it will reduce the return necessary to rationalize certain investments — specifically those that appeared unprofitable at a 35 percent tax rate, but appear profitable at 21 percent. Second, the new ability to write off investments the year they are made (i.e., expensing) rather than over time (i.e., depreciation), will spur even further business investment — particularly for the first five years, (after which this provision will expire unless some future Congress makes it permanent).
To top that off, the president’s immediate turn to a discussion of infrastructure is telling. Yet another key provision of the new law is a one-time, 15.5 percent tax on overseas corporate profits brought into the U.S. (i.e., repatriation). Though progressives may lament the government’s decision to “forego” claims of 35 percent that it would never have seen on a pool of capital that Citibank has estimated at $2.5 trillion, realists know better.
Any amount that enters the country taxed at 15.5 percent puts a significant windfall in the hands of the federal government — potentially creating a sizable pool for an infrastructure bill.
Even more importantly, 84.5 percent of the amount repatriated will end up in American hands — shareholders, contractors, and workers. If “only” a fifth of Citibank’s estimate comes home, it will inject $350 billion into the private economy while handling the federal government’s $150 billion. That’s a far more effective stimulus than any of the far more expensive Obama efforts ever produced.
So much for fixing the economy. Growth is back, and it’s not going away any time soon. A new American normal of restored greatness produces a far better feeling than the economic anxiety of the Obama years. One year in, America’s economy is indeed great again. It feels good. It feels right. Thank you, President Trump.
• Bruce Abramson is vice president and director of policy at the Iron Dome Alliance, and a senior fellow at the London Center for Policy Research. Jeff Ballabon is CEO of B2 Strategic and an adviser to Donald J. Trump for President, Inc.