BUSINESS TOWN HALL, "KUDLOW,
RESTORING BUSINESS IN AMERICA."
I WILL SEE YOU TOMORROW.
[APPLAUSE]
LARRY: HELLO, FOLKS.
WELCOME TO A SPECIAL TOWN HALL
EDITION OF "KUDLOW."
IT IS CALLED RESTORING
PROSPERITY IN AMERICA, FEATURING
A LIVE STUDIO AUDIENCE.
I’M LARRY KUDLOW.
WELCOME, EVERYONE.
I WANT TO BEGIN WITH PERHAPS THE
MOST FAMOUS LINE EVER WRITTEN IN
THE ENGLISH LANGUAGE, WE ARE
ENDOWED BY OUR CREATOR WITH
CERTAIN UNALIEN ABLE RIGHTS,
THAT AMONG THESE ARE LIFE,
LIBERTY AND THE PURSUIT OF
HAPPINESS.
PROBABLY HEARD THAT BEFORE.
THOMAS JEFFERSON AND FOUNDERS
KNEW WHAT THEY WERE TALKING
ABOUT.
THAT FAMOUS PHRASE IS NOT ONLY
ABOUT PROSPERITY, BUT AS FRIENDS
AND DEVOTEES OF ADAM SMITH, THEY
ARE THINKING ABOUT THE ECONOMY.
THEY WERE THINKING ABOUT MAKING
FOLKS HAPPY.
SMITH WAS THE FREE MARKET ROCK
STAR.
HE LED SCOTTISH ENLIGHTENMENT.
JEFFERSON, FRANKLIN, OTHERS NEW
ADAM SMITH, COMMUNICATED WITH
HIM REGULARLY.
THE WEALTH OF NATIONS?
THAT WAS PUBLISHED IN 176.
RING A BELL?
SO WAS THE DECLARATION OF
INDEPENDENCE.
IN SOME SENSE THE AMERICAN
REVOLUTION SIT ITSELF WAS AT
ECONOMIC REVOLT OF EXCESSIVE TAX
POLICIES OF BEGINNING GEORGE THE
THIRD.
FREE PEOPLE WANT OPPORTUNITIES
TO BETTER THEMSELVES, CLIMB THE
LADDERS OF SUCCESS, TO ACHIEVE,
CREATE, SUPPORT THEIR FAMILIES
AND THEIR COMMUNITIES.
THAT IS WHAT FREE-MARKET
CAPITALISM IS ABOUT.
THAT IS WHAT ECONOMIC GROWTH
SHOULD BE ABOUT.
THAT IS WHAT PROSPERITY MEANS.
I WILL SAY FLATLY, THIS EVENING,
WE DO NOT HAVE ENOUGH PROSPERITY
IN AMERICA.
CERTAINLY NOT THE PAST YEAR,
WHERE WE SUFFERED THROUGH
INFLATIONARY RECESSION.
BUT IT’S A LONGER-TERM STORY
UNFORTUNATELY.
IT REALLY DATES BACK TO THE PAST
FEW DECADE.
A COUPLE OF NUMBERS FOR MODERN
TIMES.
BEAR WITH ME ON THESE NUMBERS.
AFTER WORLD WAR II, FROM 1947 UP
TO THE YEAR 2,000, THAT IS A
PERIOD OF OVER 50 YEARS, THE
AMERICAN ECONOMY AFTER INFLATION
GREW BY MORE THAN 3 1/2% PER
YEAR, ON AVERAGE.
IT IS A REMARKABLE ACHIEVEMENT,
3 1/2%.
HOWEVER, SINCE THE YEAR 2000,
OUR ECONOMY HAS STAGNATED TO AN
ANNUAL GROWTH RATE AVERAGING
LESS THAN 2%.
THAT IS STAGNATION.
THAT IS NOT THE AMERICAN WAY.
IT IS NOT THE KIND OF LONG TERM
PROSPERITY THAT AMERICA USED TO
BE KNOWN FOR.
ONE QUESTION TONIGHT, IS WHAT
HAS GONE WRONG?
AND THEN HOW TO FIX IT.
IF THAT POSTWAR TREND LINE OF
3 1/2% GROWTH PER YEAR HAD BEEN
MAINTAINED THE LAST TWO DECADES,
OUR ECONOMY WOULD BE INCREDIBLE
NINE TRILLION DOLLARS BIGGER
TODAY.
IF WE KEPT THE 3 1/2% GROWTH
RATE OVER THE NEXT 10 YEARS, WE
WOULD BE ADDING ANOTHER 8 1/2
TRILLION IN GDP OUTPUT.
SO THE DIFFERENCE IN ROUND
NUMBERS, IS ALMOST $20 TRILLION
OF LOST ECONOMIC OUTPUT.
AVERAGE FAMILIES IN THE U.S.
WOULD PROBABLY BE ABOUT $75,000
WEALTHIER IN INCOME.
IT COULD BE USED FOR
INVESTMENTS, FOR RETIREMENTS,
FOR THEIR KIDS, FOR THEIR
EDUCATION, FOR THEIR GRANDKIDS
AND A BETTER LIFE.
SO THE STAKES IS ALWAYS VERY
HIGH HERE AS YOU CAN SEE.
I KNOW IT IS NOT ALL ABOUT
NUMBERS.
THESE NUMBERS SHOW US HOW FAR
SHORT WE ARE FROM AMERICAN
ECONOMIC POTENTIAL SHOULD BE.
IT IS HARD TO PINPOINT ONE
SPECIFIC CAUSE OF THE AMERICAN
ECONOMIC SHORTFALL, I WOULD
POSIT THE VIEW THE FEDERAL
GOVERNMENT GROWN TOO LARGE,
SPENDS TOO MUCH, TAXES AND
REGULATES TOO MUCH.
IT INFLATE TOO MUCH.
AS AN ASIDE, WE HAVE HAVEN’T HAD
MUCH KING DOLLAR CURRENCY
CONFIDENCE SINCE THE EARLY
’70s, WHEN THE U.S. LEFT THE
GOLD EXCHANGE STANDARD
DISCIPLINE.
INFLATION RATE FOR 25 YEARS
AFTER WORLD WAR II IS 2 1/2%.
OVER PAST HALF CENTURY,
INFLATION NEARLY DOUBLED TO OVER
4%.
IN THE PAST TWO YEARS IT NEARLY
DOUBLED AGAIN.
THAT IS A HUGE PROBLEM.
THE SIZE OF THE FEDERAL
GOVERNMENT?
WELL, DURING THE HIGH GROWTH
PERIOD, FEDERAL SPENDING AS A
SHARE OF THE ECONOMY AVERAGED
18.9%.
THE LAST 22 YEARS, HOWEVER, IT
MOVED UP TO 21.6%.
RIGHT NOW IT STANDS AT NEARLY
24%.
SO WE ARE MOVING IN THE WRONG
DIRECTION.
IN THE LAST THREE YEARS,
GOVERNMENT SPENDING AT ALL
LEVELS, FEDERAL, STATE, LOCAL,
ACTUALLY AVERAGED JUST OVER 44%
OF GDP.
THAT SOUNDS A LOT LIKE BIG
GOVERNMENT SOCIALISM TO ME.
IN FACT, A RECENT TIP INSIGHTS
POLL, A SHOCKER, 51-31%
AMERICANS AGREE THAT THE U.S. IS
MOVING TOWARDS SOCIALISM.
ALL RIGHT?
51-31.
THEY DON’T LIKE IT.
I MEAN BY 57% TO 35% AMERICANS
SAY THEY ARE UNWILLING TO PAY
HIGHER TAXES TO SUPPORT MORE
SOCIAL PROGRAMS BUT THE REALITY
IS IN RECENT DECADES WE HAVE
BEEN DRIFTING TOWARDS SOCIALISM
TO USE KEVIN HASSETT’S PHRASE
AND GROWTH AND PROSPERITY HAS
SUFFERED AND STALLED.
SO, I ARGUE, WE NEEDLESS
GOVERNMENT AND WE NEED MORE
ECONOMIC FREEDOM.
WE NEED TO SPEND LESS, WE NEED
TO TAX LESS, WE NEED TO REGULATE
LESS.
WE NEED TO REMOVE GOVERNMENT
BARRIERS TO GROWTH.
AS ART LAFFER HAS TOLD US SO
MANY TIMES, TAX SOMETHING MORE,
YOU WILL GET LESS OF IT.
TAX SOMETHING LESS, YOU WILL GET
MORE OF IT.
THE NEXT FEW YEARS WE MAY BE
FIGHTING RECESSION.
THAT IS WHY SPENDING AND TAXING
AN REGULATING SHOULD BE
SIGNIFICANTLY CURBED.
LET’S REMOVE GOVERNMENT BARRIERS
TO PRODUCTION AN INVESTMENT.
MAKE TYPICAL BLUE-COLLAR
FAMILIES WEALTHIER, MAKE THE
FEDERAL GOVERNMENT A BIT POORER.
LET’S RESTORE WORKFARE, WORK
REQUIREMENTS SO ABLE-BODIED
PEOPLE WHO RECEIVE GENEROUS
BENEFITS WILL GO BACK TO WORK.
WORK IS THE HEART AND SOUL OF
THE AMERICAN ECONOMY.
PEOPLE LOVE A JOB WELL-DONE BUT
GOVERNMENT INCENTIVES NOT TO
WORK HAVE BEEN A BODY BLOW TO
THE ECONOMY AND TO FAMILIES.
YOU KNOW, THIS FREE MARKET MODEL
HAS WORKED IN THE PAST.
LET’S GO BACK IN TIME.
RONALD REAGAN SLASHED TAX RATES,
WHEN HE LEFT WASHINGTON, THERE
WERE ONLY TWO TAX BRACKETS.
TAKE A DEEP BREATH HERE, TWO
BRACKETS.
28% AND 15%.
THAT WAS IT.
NOW, DID THAT WORK?
WELL BETWEEN 1982 AND 1989 THE
U.S. ECONOMY INCREASED AT 5.1%
ANNUAL RATE AFTER THE REAGAN
REVOLUTION.
OKAY?
REAGAN WANTED PEACE THROUGH
STRENGTH.
THAT WAS THE GIPPER’S GOAL.
HE REIGNITED THE ECONOMY AND
SOVIET COMMUNISM CRUMBLED.
ALL RIGHT.
SO IT WORKED.
THERE IS MORE EVIDENCE.
GO BACK MORE IN TIME.
DEMOCRAT JFK SLASHED TAX RATES?
DID IT WORK?
BETWEEN 1962 AND 1969 AMERICAN
ECONOMY AFTER INFLATION GREW AT
A 5.4% ANNUAL RATE.
WAIT A SECOND.
LET ME GO EVEN DEEPER BACK INTO
HISTORY.
IN THE 1920s, THE JAZZ AGE,
WARREN HARDING, CALVIN COOLIDGE,
ANDREW MELLON SLASHED TAX RATES,
HANG ON, SLASHED GOVERNMENT
SPENDING AND SLASHED THE FEDERAL
DEBT BURDEN AS WELL.
THINK OF IT.
AFTER THE TERRIBLE
POST-WORLD WAR I DEEP RECESSION
WITH HIGH INFLATION, FREE MARKET
POLICIES LAUNCHED AN
UNBELIEVABLE BOOM.
FROM A NEW BOOK BY HISTORIAN
RYAN WALTERS.
BETWEEN 1922 AND 1927 THE
AMERICAN ECONOMY AVERAGED 7%
REAL GROWTH.
DESPITE THE TAX CUT WHICH FUELED
THE GROWTH, GUESS WHAT?
FEDERAL REVENUES SOARED,
SPENDING TIGHTLY CONTROLLED,
YEARLY GOVERNMENT BUDGET
SURPLUSES EMERGED AND 1/3 OF THE
NATIONAL DEBT WAS PAID OFF.
ALL RIGHT?
NOW, THE BIDENS HAVE MOVED IN
THE OPPOSITE DIRECTION.
THEY NEVER TALK ABOUT GROWTH OR
PROSPERITY.
IT IS CLIMATE, RACE, SOCIAL
WELFARE, THESE ARE THEIR BIG
THEMES.
THE POOR RESULTS IN JUST HIS
FIRST YEAR ALONE JOE BIDEN’S WAR
AGAINST FOSSIL FUELS AND HIS WAR
AGAINST BUSINESS IN ATTORNEY
GENERAL MERRICK GARLAND RATED AN
UNBELIEVABLE 200 BILLION-DOLLAR
INCREASE IN NET REGULATORY
COSTS.
HIS CENTRAL PLANNING REGULATORY
OCTOPUS, GOTTEN EVEN WORSE IN
HIS SECOND YEAR.
THERE IS NO END IN SIGHT.
BEFOREHAND DONALD TRUMP SLASHED
REGULATIONS, GAVE US U.S. ENERGY
INDEPENDENCE, AND BIGGEST
CORPORATE TAX CUT IN HISTORY.
SO, FOR SEVERAL YEARS WE HAD A
PROSPERITY INTERLUDE.
BUT THE BIDENS OBSESSIVELY ARE
TRYING TO REVERSE EVERY SINGLE
ONE OF TRUMP’S POLICY SUCCESSES.
NOW, OPTIMISTIC, THAT THE NEW
REPUBLICAN CONGRESS CAN BEGIN TO
UNWIND BIDEN’S BIG GOVERNMENT
SOCIALISM.
BUT IT WILL NOT BE EASY AND IT
WILL NOT BE FAST.
NOW LOOK, PUTTING ALL OF THE
LEGISLATIVE PROPOSALS ASIDE FOR
THE MOMENT, THE DEBATES, THE
DEALS, WHATEVER, WE HAVE
LEARNED, FROM HISTORY, THAT
PROSPERITY MATTERS.
IT IS CRUCIAL TO FAMILY
PROGRESS, IT IS CRUCIALAL TO
NATIONAL DEFENSE SECURITY.
THE WAY TO HAVE PROSPERITY,