Kudlow: Biden admin does not care one whit about economic growth and prosperity

Joe Biden's economic report mentions gender 40 more times than inflation, according to a spot-on story from the Daily Caller. 

Meanwhile, the report mentioned inequality 147 times and emissions nearly 100 times. 

In Biden's introduction to the annual report penned by his Council of Economic Advisers he does not mention the word "inflation" once. None of this is surprising. 

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In Biden's budget, released a month ago, we counted over 100 references to inequality. 

We know the president is in denial about the record inflation surge, which is the cruelest tax of all to the tune of about $5,200 a year for a typical American family, but I find it even more discouraging that this administration does not care one whit about economic growth and prosperity. 

For them, tax policy is about punishing success, redistributing income and confiscating wealth. For example, through an absolutely unworkable attempt at attacks on unrealized capital gains. The rich have to pay their fair share according to Biden, even though the rich pay upwards of 60% of total taxes —federal, state and local—throughout the country. 

Federally, the top 1% earns about 20% of the income and pays nearly 40% of the income tax. I'd say that's fair. Call it doubly fair. 

This woke administration has published a woke budget with a woke economic policy—sex and gender mandates, schoolroom racism, ultra-high taxes on successful entrepreneurs, massive welfare spending without work requirements, deficit finance and inflationary money. 

The woke economic bible is called modern monetary theory, which says, "Spend and create as much money as you want; it will never cause inflation to rise." Oops! 

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The latest inflation readings from March were: 8.5% CPI; 11.2% PPI; and 12.5% import prices. Oops! Kind of got that wrong, didn't they? 

I think modern monetary theory is being thrown out the window—I think—but it still remains that there is no emphasis from this group on economic growth. Robbing Peter to pay Paul does not create growth. Punishing innovators does not create growth and let’s not forget the damage to what used to be the world's greatest energy sector.  

The jihad against fossil fuels, which continues to this day, with a new regulation that would throw out the window president Trump's NEPA permitting reforms. Of course, all in the name of the Green New Deal, net-zero carbon emissions policy that has caused oil prices to run sky-high. 

Last night I talked about the growth gap between the period following World War II up to 2000, which was high growth and the two decades of the new century, which was low growth. With Joe Lavorgna we re-did the numbers from per-capita to aggregate GDP.  

The story is the same. Between 1946 and 2000, the American economy—that is, the free-market capitalist American economy—grew 3.2% per year. Since 2000, however, that growth drops to nearly half at 1.9% per year. 

Obama's secular stagnation has ruled the new century, but for the 50 plus years preceding that, U.S. growth was the envy of the world and indeed the leader in the world. The difference between 3.2 and 1.9 are astronomical. 

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For example, if we grew the economy at 3.2% yearly for the next 20 years, real GDP would total $36.5 trillion. If, however, we remain stagnant at 1.9% per year, which by the way is what the Biden budget is showing, then real GDP by 2041 would only hit $28.3 trillion. That’s a point-to-point shortfall of $8.2 trillion. 

It’s the difference between prosperity and stagnation, but there's more. When you look at the cumulative shortfall of the stagnation scenario, the output lost to America comes to $113 trillion over 20 years. That's right, $113 trillion and, from a budget standpoint, with a 17.5% average tax rate, that represents a loss of $20 trillion in revenues. That's not much less than our total federal debt in public hands which is now $23 trillion. 

Too many numbers? I don't apologize. This is a very serious story and a very serious problem. Americans have shown that their system of free enterprise has in the past 50 years plus—and could in the future—produce vastly more prosperity for every single person in this country. Productivity would be far greater. Business investment would be massively higher, so would real wages for average working folks and their families.  

And you know what else? More growth from the supply-side of the economy would reduce inflation—lower taxes, fewer regulations, energy independence, limit federal spending, balance budgets. 

In short, stop big government socialism. We've had too much of it in the past two decades. It has strangled our economy. It's also damaged our culture. These left-wing nostrums should be thrown out the window, completely. 

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Now here's a final point on one component of growth. Remember the Trump tax cuts for corporations, smaller businesses and individuals? Well, this is the one area that Joe Biden has failed to reverse. He tried, but we saved America and killed the bill. 

Particularly the slashing of the corporate tax rate from 35% to 21%, that despite Biden still stands today, is undoubtedly responsible for what limited prosperity we have. 

Now, of course, the left fought Trump tooth and nail back in 2017 and played the usual Washington game about warning of out-of-control deficits and inadequate revenues, as though the woke crowd cares one jot about budget deficits.  

So along comes our pal Dan Clifton, with his new calculations that corporate tax collections coming in at the 21% rate are actually exceeding corporate tax collections before Trump's tax cut when the rate was 35%. Got that? 

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The Laffer Curve wins again—lower tax rates, generating a better economy and less tax avoidance produce higher tax revenues. 

I'm going to let Mr. Clifton tell his own story, but it just goes to show in the real world with actual factoids, the supply-side view was right and the woke view was wrong. Then again, we know that, so does the rest of America. That's why the cavalry is coming.

This article is adapted from Larry Kudlow's opening commentary on the April 19, 2022, edition of "Kudlow."