Elections tend to be all about slickly packaged words, which is unfortunate, because as George Washington’s motto “deeds, not words” made clear, words are a poor excuse for deeds.
The United States is now enjoying a truly remarkable economic resurgence. Yet, it wasn’t all that long ago that we were trapped in the Great Recession, followed by the slowest and most anemic economic recovery since the Great Depression of the 1930s. And both situations – getting trapped in the Great Recession and getting out of it – were about deeds, not words.
When you get past all the words, the key similarity between the Great Depression and the Great Recession was a lack of business investment. Business investment in new machinery and technology is what drives increased worker productivity, and in the real world increased worker productivity is what drives increased wages. Without those two, the economy isn’t firing on all cylinders. But, both business investment and wages flat-lined during the Great Recession and the slow recover that followed, causing the economy to just sputter along in low gear.
We were told by the people in charge at the time that that was the new normal. America’s best days were behind us, our economy was destined to stagnate, our children could not expect the economic prosperity we had grown up in, and 2 percent GDP growth was the best we could do.
It wasn’t. It was just the best they could do. And it was the best they could do because when you’re more focused on growing the scope and reach of government than on growing the economy, you create an environment that is hostile to business. Business owners, who are no less rational than you or me, don’t make new investments or expand in that kind of environment. So, we limped along.
In fact, as bad as it was for the country, it was even worse for Virginia. Virginia traditionally comes into a recession later, bottoms out sooner, and recovers faster than the rest of the country. It didn’t work that way this time.
Employment growth in Virginia sank below the national average during the “recovery.” That subpar economic growth was mostly driven by Virginia’s over-dependence on federal government spending which predictably slowed as the federal debt skyrocketed from from $10 trillion in 2008 to $20 trillion in 2016.
Moreover, with the annual interest payment on that federal debt now projected to absorb $1 out of every $6 collected in federal taxes just ten years from now, we shouldn’t count on government spending becoming a reliable economic mainstay again any time soon.
In 2017, things began to change for the better. And that too happened because of deeds, not words. The Trump administration began an aggressive and widespread effort to reduce the regulatory calcification of our economy that had taken place under the previous administration. That caused small business confidence to immediately soar to reach its highest level in three decades.
Small business is the traditional backbone of the American economy. Both small and large businesses were hard hit by the recession, but big business generally recovered, while small business did not. One of the main reasons was that where big business can afford the lawyers and lobbyists necessary to defend itself against government over-reach, small business can’t.
Then in late 2017, my Republican colleagues and I passed the Tax Cut and Jobs Act. That legislation was designed to encourage economic growth by putting more money in the pockets of consumers and business owners alike, and by removing disincentives to investment and growth for both large and small businesses. The results from that legislation have been nothing short of miraculous.
Businesses are investing again, labor productivity is rising again, and wages are rising again. The unemployment rate is the lowest it has been since 2000, while unemployment rates for Hispanics and African Americans are the lowest they have been since the Department of Labor began keeping those records in the early 1970s.
U.S. corporations have already repatriated $400 billion in corporate cash back to America and are expected to repatriate about $1.1 trillion more. Where quarterly GDP growth average 2.1 percent during the “recovery” from 2010 through 2016, it accelerated to 2.5 percent in 2017, and 3.2 percent so far in 2018. And on top of that, federal tax revenues are up.
Meanwhile, back in Virginia our employment growth began to accelerate again at the beginning of 2018 and is now once again above the national average.
But, as quickly as that turnaround happened, it could also “un-happen.”
Every single Democrat in the House and Senate put politics before prosperity and voted against tax reform.
If the House reverts to Democrat control, the same Democratic leadership that oversaw the most anemic economic recovery since the Great Depression will be back in power and they have vowed to repeal tax reform on day one.
So, the question now is do we go back to a Democratic party that tells us “America was never that great” and economic stagnation is the best we should expect.
Or, do we move forward with a Republican party that has demonstrated through deeds not words that it can deliver on a better economic future for all Americans.
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