Donald Trump gave a speech today in which he outlined his economic plan for the country. It was masterful. I strongly suggest that you read the entire speech by following the link above.
Of course, it didn't take long for the critics to start running off at the mouth. I heard multiple people announce on CNN that Trump's plan would cause the federal deficit to soar. I switched to MSNBC, and I heard the same thing. It's amazing that after eight years during which president Obama doubled our national debt while CNN and MSNBC hardly even mentioned it, that their first line of attack on Trump is the effect his plan would have on the national debt. Let's put the cynicism of CNN and MSNBC aside for the moment and consider the validity of what they had to say. Here are the relevant facts:
1. The American GDP is currently running at $18.436 trillion per year according to official government statistics.
2. For the last three quarters, that GDP has been growing at an annual rate of roughly 1% again according to official government statistics.
3. Trump says that his plan will bring a growth rate of 3.5% and hopefully of 4%. These are not extraordinary numbers that are unlikely to be attainable. The average annual rate of growth for the GDP of the United States since World War II has been just over 3.5%. There have also been many years when growth has been above 5%. (During the Obama years, America has not even once made it to 3.0% growth, and the country has not come close to the average.)
4. If the growth rate of the GDP is brought to 4% rather than 1%, that means an extra growth of 3% per year. During the next four years, that extra growth will mean that the economy will grow an extra 13%.
5. That extra 13% of GDP means an extra $2.4 trillion of goods and services produced in 2020.
Think about that. $2.4 trillion of American made goods and services will require millions more workers than under Obama's current plans. (Of course, Hillary wants to continue Obama's policies.) That huge amount of additional production will also cut government spending in a major way. For example, if fewer people are unemployed, then the costs of unemployment insurance will fall. Similarly, more jobs for Americans mean fewer expenses on welfare, food stamps, and other social welfare programs. More demand for employees will also mean higher wages for workers so that middle class workers can finally start seeing their incomes growing again.
6. Meanwhile, the extra $2.4 trillion in GDP means additional federal government tax revenues of roughly half a trillon dollars per year. Couple that additional half trillion in taxes with a sizable decline in spending due to reduced social welfare costs. Then throw in a further reduction in welfare costs for illegal aliens whose numbers will be declining drastically by 2020. Add in also the big increases in Social Security and Medicare payroll taxes paid in by all those additional workers. The end result is that there is no increase in the deficit. To the contrary, there should be a major decline in that figure. We could even once again reach a government surplus.
If Trump is re-elected and we look at the figures at the end of eight years, the additional GDP for the USA will be more than five trillion dollars per year. Simply put, this is the difference between prosperity and stagnation. Indeed, robust economic growth is the best way possible to get rid of our national debt.
Of course, it didn't take long for the critics to start running off at the mouth. I heard multiple people announce on CNN that Trump's plan would cause the federal deficit to soar. I switched to MSNBC, and I heard the same thing. It's amazing that after eight years during which president Obama doubled our national debt while CNN and MSNBC hardly even mentioned it, that their first line of attack on Trump is the effect his plan would have on the national debt. Let's put the cynicism of CNN and MSNBC aside for the moment and consider the validity of what they had to say. Here are the relevant facts:
1. The American GDP is currently running at $18.436 trillion per year according to official government statistics.
2. For the last three quarters, that GDP has been growing at an annual rate of roughly 1% again according to official government statistics.
3. Trump says that his plan will bring a growth rate of 3.5% and hopefully of 4%. These are not extraordinary numbers that are unlikely to be attainable. The average annual rate of growth for the GDP of the United States since World War II has been just over 3.5%. There have also been many years when growth has been above 5%. (During the Obama years, America has not even once made it to 3.0% growth, and the country has not come close to the average.)
4. If the growth rate of the GDP is brought to 4% rather than 1%, that means an extra growth of 3% per year. During the next four years, that extra growth will mean that the economy will grow an extra 13%.
5. That extra 13% of GDP means an extra $2.4 trillion of goods and services produced in 2020.
Think about that. $2.4 trillion of American made goods and services will require millions more workers than under Obama's current plans. (Of course, Hillary wants to continue Obama's policies.) That huge amount of additional production will also cut government spending in a major way. For example, if fewer people are unemployed, then the costs of unemployment insurance will fall. Similarly, more jobs for Americans mean fewer expenses on welfare, food stamps, and other social welfare programs. More demand for employees will also mean higher wages for workers so that middle class workers can finally start seeing their incomes growing again.
6. Meanwhile, the extra $2.4 trillion in GDP means additional federal government tax revenues of roughly half a trillon dollars per year. Couple that additional half trillion in taxes with a sizable decline in spending due to reduced social welfare costs. Then throw in a further reduction in welfare costs for illegal aliens whose numbers will be declining drastically by 2020. Add in also the big increases in Social Security and Medicare payroll taxes paid in by all those additional workers. The end result is that there is no increase in the deficit. To the contrary, there should be a major decline in that figure. We could even once again reach a government surplus.
If Trump is re-elected and we look at the figures at the end of eight years, the additional GDP for the USA will be more than five trillion dollars per year. Simply put, this is the difference between prosperity and stagnation. Indeed, robust economic growth is the best way possible to get rid of our national debt.
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