Where Does President Trump Find the Money?
Will Congress Cooperate?
President Donald Trump has been speaking about creating a balanced budget economy for years. He totally “gets” the numbers, the contributors to the deficit, and the drivers of achieving a balanced budget. Contrary to most “Never Trumpers” and RINO elites, the President’s economic plan is absolutely Fiscally CONSERVATIVE and achievable.
The President’s plan is based on growing and sustaining the growth of the US Economy, Period.
Trump has laid out his overall economic plan via his speeches, Tweets, and past interviews. Below are the key elements of the Trump “America First” Economic Plan:
- Massive Reduction in Regulations
- Unfettered US Energy Expansion
- Tax Cuts and Tax Reform
- Education Reform
- Repeal & Replace Obamacare
- Infrastructure Upgrade
- Welfare Reform
- Immigration Reform
- Budget Cuts
Saving Social Security, Medicare and the reduction in the national debt will be discussed at the end of the plan. This is due to the need to re-establish our economy, re-educate our citizens, and make many systemic changes to existing programs and budgets. The results of the Trump America First Economic Plan will be the saving of Social Security, Medicare and a reduction in the national debt and the establishment of ongoing balanced budgets!
Massive Reduction in Regulations and Unfettered US Energy Expansion:
President Trump has long-held that in order for the US economy to grow, you must remove the boot of the government regulators from the throat of business entities. Secondly, low-cost energy is the key to driving business expansion and reducing the costs of goods and services as well as lower direct energy costs to consumers. To date, in 11 months, President Trump has rolled back over 1,000 business killing regulations and instituted a 2:1 regulation reduction where any new regulation must be met with the elimination of two existing regulations. Further, he has opened up more inland and off-shore drilling areas and is working with Congress to open up the vast Alaska reserves in ANWAR. President has laid the regulatory and energy foundation to support a strong America First economy. Trump’s regulation rollbacks and pro-energy policies have propelled the DOW to a gain of 6,000 points since his election and have added trillions to the stock value of US companies.
Tax Cuts & Tax Reform:
President Trump is a pure Reagan/Kennedy hawk when it comes to the use of tax cuts to drive increases in tax revenues and the need to keep the tax code as simple as possible. He believes that tax cuts stimulate the economy in stark contrast to the Obama administration’s belief that bigger government and higher taxes drive the economy. President Trump laid out his tax and reform principles and the House and Senate have both passed their version of the Trump Tax cuts. Now, it is up to the combined House and Senate conference committees to unify the chambers and pass a compromise tax bill that adheres to the Trump guidelines.
The impact of the tax cuts should be dramatic based on past tax cuts. When Reagan cut taxes in the 1980’s, he created 15 million new jobs and DOUBLED the tax revenues! Current projections are that federal tax revenues for 2018 (ending October, 2018) will be 3.654 (half are from income taxes) without the tax cuts. Since the tax cuts will only be effect for 10 months, assuming passage in the next few days, the tax revenues may not increase significantly in 2018. But, by the end of 2020. tax revenues should increase by at least 1.5 Trillion dollars. That would raise the total revenues to about 5.2 Trillion with at least 10 million+ new jobs added. Similar increases in revenue will be seen for Social Security and Medicare.
Trump’s education plan is an integral part of America First and is vital to providing literate and educated Americans to fill the anticipated new jobs created through regulation and tax reform. Education reform is also integral to Trump’s plan to raise those trapped in poverty in our inner-cities into the American mainstream.
Trump’s plan includes decentralizing education from the Federal Government to the States and local school boards. Further, that School Choice be at the forefront of the education reform, especially for inner-city children who are trapped in Progressive-Left public schools. The Secretary of Education is a School Choice proponent who has spent her entire career, and invested personally, in charter and other forms of alternative educational providers. Ms. DeVos will also seek to return the curriculum to the basics reduce illiteracy rates, and re-emphasize STEM (Science, Technology, Engineering and Math) courses.
Without improving our educational systems and graduating capable students, the economic outlook for the US is bleak and pressure politicians to supplement our workforce with foreign nationals. This would be ridiculous as our citizens are more than capable of being educated and lead this nation to new heights of US predominance.
Repeal & Replace Obamacare:
This is a sore subject but the reason the repeal and replace is that it is vital to increasing revenues, decreasing taxes and regulations on 1/6th of the economy! There are billions in hidden costs that Obamacare added to the cost of healthcare in the form of taxes on pharmaceuticals, medial devices and private citizens via mandates. Further, Obamacare diverts trillions of dollars over a decade from consumer pockets to support a failed healthcare environment. Also, the 860 Billion dollars that was diverted from Medicare to Obamacare has to be returned to Medicare to keep it solvent over the long haul.
Think of Obamacare as a drag on every sector in our economy as it raises healthcare costs on individuals, small businesses, and large corporations while adding nothing to the quality of medicine.
The President departs from some conservatives when he touts his proposed $1 Trillion dollar infrastructure plan. But, conservatives should look a little deeper and see that the President envisions a public-private partnership, read cost sharing, arrangement to pour private sector dollars into the plan. Further, he believes that if enacted as he proposed, his tax plan should bring back into the US about $3.5 Trillion dollars in parked offshore corporation profits that should yield about $350 Billion in taxes that would otherwise not have been collected. The President sees these dollars as the public sector’s ante to improve US infrastructure without blowing a hole in the budget and adding significantly to the deficit. Before jumping off of the fiscal bridge, remember that this program will not be completed in one or even two years. The infrastructure project will consume all of Trump’s first term and maybe more.
Keep in mind that President Trump is a builder. He is used to the concept that when he was trying to build a building, he had to foot the costs for sidewalks, road improvement, water, sewage etc. He will certainly negotiate with the private sector to invest in our infrastructure with every expansion project and new business development.
Welfare Reform: (Does not include Social Security and Medicare which are not welfare programs)
President Trump surprised those who have not been with him from the beginning of his candidacy, with an announcement that he will be pursuing welfare reform with Congress in 2018! There are approximately 68 million Americans receiving some form of Government assistance today (including those drawing unemployment)! 67% of those receiving welfare benefits stay on welfare for at least 1 year while 20% ( of million people) of those have been on welfare for more than 5 years.
Trump’s corporate and small business tax cuts are key to welfare reform and his “Welfare to Work” plans. Welfare reform cannot be fully effective until there are jobs to absorb those leaving welfare and entering the workplace.
Trump’s education reforms are also key to welfare reform as our economy is dependent on a literate and educated workforce. While improvements in education for the minority inner-cities will take time, it is critical to begin the education reform as soon as possible. Secretary of Education DeVos is currently making as many regulatory changes as possible to make education choice more available to inner-city minorities. It will take Congressional action to expand school choice and move rapidly away from a centralized educational system to a State centric educational system.
Welfare reform is also a key to Trump’s raising the opportunity potential for minorities as Blacks, who represent 12% of the US population make up 39.6% of the welfare recipients. Trump’s plan to improve the lives of minorities is only possible through welfare reform and providing substantive employment for minorities trapped in poverty.
If President Trump can cut welfare spending by 20%, which should be attainable, he can reduce the welfare costs by $14 Billion per year! Those returning to work, will also become tax payers and pay payroll taxes in support of social security and Medicare and possibly even income taxes.
Immigration reform is vital to the US for several reasons: One, to keep illegal immigration from directly lowering wages for US citizens; Two, to only allow immigrants into the US who can add value to our economy; Three, to not allow criminal aliens or terrorists into our country via an open border and who endanger the lives of US citizens; Four, to stop drug and human trafficking; Five, To substantially reduce the roughly $115 Billion in costs to support illegal immigrants living in the US, less the amount of taxes collected from illegal aliens. . This includes $45.9 Billion in Federal spending and $89 Billion in State and local spending.
Trump is proposing a Trillion Dollar reduction, $1,000,000,000,000, in the Federal Budget over 10 years. A 3 Trillion dollar budget was the norm until Bush and Obama came along! This equates to a $100 Billion budget reduction per year. Trump is proposing a significant reduction in the federal bureaucracy in all functions of government and a significant rollback in welfare and discretionary spending via head count reductions. If the Trump tax plan generates the economic growth that is expected, there should be no need to cut Social Security and Medicare due to increased contributions from the 16-20+ million new jobs that will have been created.
The president will add to his cuts the savings from the repeal and replacement of Obamacare, immigration reform, welfare reform, and other program realignments and deregulation. It is interesting to note that the conservative host of the Ingraham Angle on Fox news, Laura Ingraham, tweeted that Trump should hurry to fill the Whitehouse open staff positions so he can be more efficient. Trump Tweeted back that he had no intention of filling many of the federal positions in order to reduce costs and streamline the federal bureaucracy including his own staff! That is how you get federal spending inline!
It is a game changer with a business man in the Whitehouse!
Conclusion: Saving Social Security, Medicare and Reducing the Debt!
For some odd reason, our elected officials have not figured out that if you have a retirement plan, or a healthcare plan, like social security and Medicare, it is good to have as many people paying into the plan as possible. DUH! Therefore, any effort you can exert to increase the number of participants, also known as private sector employees, should be accomplished every single day. If tax cuts stimulate employment, and creates more employees paying payroll taxes, then you should implement deep cuts as soon as possible!
For some odd reason, our elected officials have not figured out that if you owe a lot of money, you should do everything you can to increase your revenue and decrease your spending! Stop the interest expense bleeding! So, if you owe a lot of money, and tax cuts can increase your revenue, then you cut taxes. If you are spending more than you are taking in, then you cut spending! There, we are done, we can go home and fire Congress!
Social Security today has a SURPLUS of $2.8 Trillion dollars that is earning a paltry 2.3% per year. Social Security payments to retirees exceed the amount of Social Security contributions by about $90 Billion per year. The shortfall includes both social security retirement payments as well as disability payments that have ballooned during the Obama years.
If Trump’s America First Economic Plan kicks in as expected, we should add a minimum of 16-20 million new workers in the next 3-4 years. Assuming that 10 million of these workers earn $50,000 per year and 6 million earn $100,000 per year, the Social Security fund would add $600 billion over the next 10 years even at a paltry 4% interest return. By the end of 2024, with continued employment gains, the Social Security fund would be virtually self-sustaining.
The Federal debt today is 20.6 Trillion dollars! President Trump understands that his economic plan is not an instant fix and will take 2+ years to totally kick in. This also assumes that Congress does not raise taxes later nor spends wildly like under Reagan. President Trump constantly reminds everyone that the US GDP is increasing and should exceed 3.5% in the fourth quarter. Why is this important? For every percent rise in GDP, $2.5 Trillion dollars are added to the GDP. During the Obama years, GDP growth only averaged 1.075%. (Bush was only slightly better) In the last 20 years of the 20th century, GDP growth averaged 3.4%! If President Trump can merely match the last 20 years of the 20th century, he will add $5.8 Trillion to our GDP! Tax revenues will also increase proportionally and provide funding for NON ENTITLEMENT programs such as Social Security and Medicare!
Couple of final thoughts. Social Security and Medicare funds are required to be invested in only government securities that have terrible yields, 2% in 2016. If The Social Security and Medicare funds were invested in a safe S&P 500 fund, it would have averaged 9.9% over the past 40 years. If the phoneys in Congress try to say that this would be too risky, it is an admission that they can not responsibly manage this country and its economy. If they are really scared, they could put an automatic trigger in place that if the S&P yield fell below 2%, the funds would be invested again in Government Securities, or, any shortfalls would be reimbursed out of general funds during the shortfall periods. Slim chance!
Secondly, why are public employees EXEMPTED from paying into social security? This takes a large pool of social security contributions out of the fund and for what reason? Congress should change this immediately and make the government and its employees subject to the same retirement systems!
Consider this: If you are receiving around $2,300/month from Social Security today, you would be receiving $12,000/month if the funds had been invested in S&P 500 funds. And Congress thinks that we the people are not smart enough to do the math? Entitlement reform should not include Social Security and Medicare. These two programs were paid for by taxpaying employees and their employers and it is not their fault that our government is a poor money manager.
Merry Christmas and Thank You President Trump for pushing through the passage of our Tax Cuts!