Finding America’s Lost 3% Growth – Jay Davidson

ECONOMIC RECOVERY demands economic growth in the private sector.  Show me any nation that successfully grows its federal control and its economy.  This fact is the Achilles Heal of all Socialist, Communist and Democrat rhetoric.
The best government is one that stays out of the private sector and lets market forces prevail.
Remember F.A. Hayek’s quote: “If a Socialist understood the economy, he would no longer be a Socialist.”
– Jay Davidson

Finding America’s Lost 3% Growth

For the original WSJ article, please go here.

If the country can’t grow like it once did, then the American Dream really is irretrievably lost.

Growth deniers are declaring that America’s economy has lost its ability to grow at 3% above inflation. If that’s the case, maybe we should go back to where we lost 3% growth and retrace our steps until we find it. For only with 3% or higher growth does America experience measurable progress in poverty reduction, strong job creation and income growth. If 3% growth is irretrievably lost, so is the American Dream.

Did America actually experience 3% real growth to start with? Yes. In the postwar era, the U.S. averaged 3.4% annual growth from 1948 through 2008. We averaged 3% growth for half of the George W. Bush presidency (2003-06). From 2009-12, the Obama administration, the Congressional Budget Office and the Federal Reserve all thought they saw 3% growth just around the corner. If the possibility of 3% growth is gone forever, it hasn’t been gone very long.

America enjoyed 3% growth for so long it’s practically become our national birthright. Census data show that real economic growth averaged 3.7% from 1890-1948. British economist Angus Maddison estimates that the U.S. averaged 4.2% real growth from 1820-89. Based on all available data, America has enjoyed an average real growth rate of more than 3% since the founding of the nation, despite the Civil War, two world wars, the Great Depression and at least 32 recessions and financial panics. If 3% growth has now slipped from our grasp, we certainly had it for a long time before we lost it.

So poor was our economic performance during the Obama presidency, with its 1.47% economic growth, that now many Americans believe 3% growth is gone forever. The CBO has slashed its 10-year growth forecast to a measly 1.8% per year. If we never see 3% growth again, our grandchildren may point to 2009 and say, “That was when the American economy ran out of gas.”

While Obama apologists like to claim that labor-productivity and labor-supply factors preclude 3% growth, most of the growth constraints we face today are directly attributable to Mr. Obama’s policies. The Bureau of Labor Statistics reports that labor-productivity growth since 2010 has plummeted to less than one-quarter of the average for the previous 20, 30 or 40 years. Productivity fell during the current recovery, not during the recession. With high marginal tax rates, especially on investment income, new investment during the Obama era managed only to offset depreciation, so the value of the capital stock per worker, the engine of the American colossus, stopped expanding and contributed nothing to growth.

Illustration: David Klein

A tidal wave of new rules and regulations across health care, financial services, energy and manufacturing forced companies to spend billions on new capital and labor that served government and not consumers. Banks hired compliance officers rather than loan officers. Energy companies spent billions on environmental compliance costs, and none of it produced energy more cheaply or abundantly. Health-insurance premiums skyrocketed but with no additional benefit to the vast majority of covered workers.

In a world of higher costs, productivity plummeted. Productivity measures the production of things the market values that flow from the employment of labor and capital. Try listing the Obama-era regulatory requirements that generated the employment of labor and capital in ways that actually produced something you buy.

True, America is aging. In 2006, when the labor force participation rate was 66.2%, the BLS predicted that demographic changes would push it down to 65.5% by 2016. Under Mr. Obama’s policies, it actually fell further, to 62.8%, and the number of working-age Americans not in the labor market spiked to 55 million.

By waiving work requirements for welfare, lowering food-stamp eligibility requirements and easing standards for disability payments, Mr. Obama’s policies disincentivized work. Disability rolls have expanded 18.6% during the current recovery, compared with a 16% decline during the Reagan recovery. The CBO estimates ObamaCare alone will reduce work hours by 2% and eliminate 2.5 million jobs by 2024. At the current 1% growth in the civilian population above the age of 16, a mere reversion to the pre-Obama labor-force participation rates would supply more than enough workers to generate a 3% growth rate.

Even baby-boomer retirement is driven in part by public policy. When Social Security paid its first check in 1940 average life expectancy was 64 years and benefits started at 65. Today early retirement is available at 62. Life expectancy is now projected to be 79 years. People are healthier, morbidity rates have fallen dramatically, and the retirement age can and should be raised.

Bad policies—not bad luck or a loss of God’s favor—have driven down labor productivity and the labor supply. We can change those policies. If reversing Mr. Obama’s policies simply eliminated half the gap between the projected 1.8% growth rate and the average growth rates during the Reagan and Clinton recoveries, it would deliver 3% real growth generating nearly $3.5 trillion in new federal revenues over the next 10 years. That’s not as much as the $4.3 trillion in revenues lost by Mr. Obama’s slow growth, but it’s more than Mr. Trump promises to bring back by reversing his predecessor’s policies.

America without 3% growth is not America. Since 1960, the American economy has experienced 30 years with growth of 3% or more. Seventy-nine percent of all jobs created since 1960 were created during those years. The poverty rate fell by 72% and real median household income rose by $20,519. In the 26 years when the economy had less than 3% growth, just 21% of all post-1960 jobs were created, the poverty rate rose by 37% and household income fell by $12,004. With 3% growth, the American dream is achievable and virtually anybody willing to work hard can live it. Let 3% growth die and a lot of what we love most about our country will die with it.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.

Jay Davidson

The largest threat to our prosperity is government spending that far exceeds their authority – Jay Davidson

Every time the Federal Government spends a dollar, on anything, it must first obtain that dollar through one of two methods: take it from the working private citizen through taxation, or print money, which is the same as going further into debt, which debt will be paid by the private citizen, another form of tax.  Even when corporations pay tax, they pass that cost along to the consumer.  Therefore, are you getting value for the vast amount of tax you pay?
Is the Federal government efficient in using your money?  In very few instances, it is probably the most inefficient entity in the nation.  Why then would any rational, thinking citizen allow their elected congressmen to increase federal spending, which means more taxation and more debt flowing to the most inefficient user of your hard earned money?  You, and only you, are paying for your government.
Politicians say that Welfare and Entitlement are the third rail, to touch them (reduce spending on them) is political suicide.  Well, we the people need to make NOT reducing federal spending political suicide by speaking up, supporting, or not, those politicians who are willing to reduce the destructive burden of federal excess.  It starts with federal spending reduction.
Progressives, Socialists and Communists live to increase taxation using the excuse that welfare and entitlements are morally just.  But these same economic morons ignore the fact that their ‘moral” social vision costs money, our money.  They absolutely ignore the rights to private ownership by ever-increasing taxes to pay for their perverted “moral” vision.  It is time to re-balance the scales of justice.
Jay Davidson

We’re All to Blame

For the original article link, please go here.
The largest threat to our prosperity is government spending that far exceeds the authority enumerated in Article 1, Section 8 of the U.S. Constitution. Federal spending in 2017 will top $4 trillion. Social Security, at $1 trillion, will take up most of it. Medicare ($582 billion) and Medicaid ($404 billion) are the next-largest expenditures. Other federal social spending includes food stamps, unemployment compensation, child nutrition, child tax credits, supplemental security income and student loans, all of which total roughly $550 billion. Social spending by Congress consumes about two-thirds of the federal budget.

Where do you think Congress gets the resources for such spending? It’s not the tooth fairy or Santa Claus. The only way Congress can give one American a dollar is to use threats, intimidation and coercion to confiscate that dollar from another American. Congress forcibly uses one American to serve the purposes of another American. We might ask ourselves: What standard of morality justifies the forcible use of one American to serve the purposes of another American? By the way, the forcible use of one person to serve the purposes of another is a fairly good working definition of slavery.

Today’s Americans have little appreciation for how their values reflect a contempt for those of our Founding Fathers. You ask, “Williams, what do you mean by such a statement?” In 1794, Congress appropriated $15,000 to help French refugees who had fled from insurrection in Saint-Domingue (now Haiti). James Madison, the “Father of the Constitution,” stood on the floor of the House to object, saying, “I cannot undertake to lay my finger on that article in the federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” Most federal spending today is on “objects of benevolence.” Madison also said, “Charity is no part of the legislative duty of the government.”

No doubt some congressmen, academics, hustlers and ignorant people will argue that the general welfare clause of the U.S. Constitution authorizes today’s spending. That is simply unadulterated nonsense. Thomas Jefferson wrote, “Congress (has) not unlimited powers to provide for the general welfare, but (is) restrained to those specifically enumerated.” Madison wrote that “if Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the Government is no longer a limited one possessing enumerated powers, but an indefinite one.” In other words, the general welfare clause authorized Congress to spend money only to carry out the powers and duties specifically enumerated in Article 1, Section 8 and elsewhere in the Constitution, not to meet the infinite needs of the general welfare.

We cannot blame politicians for the spending that places our nation in peril. Politicians are doing precisely what the American people elect them to office to do — namely, use the power of their office to take the rightful property of other Americans and deliver it to them. It would be political suicide for a president or a congressman to argue as Madison did that Congress has no right to expend “on objects of benevolence” the money of its constituents and that “charity is no part of the legislative duty of the government.” It’s unreasonable of us to expect any politician to sabotage his career by living up to his oath of office to uphold and defend our Constitution. That means that if we are to save our nation from the economic and social chaos that awaits us, we the people must have a moral reawakening and eschew what is no less than legalized theft, the taking from one American for the benefit of another.

I know that some people will say, “Williams, I agree with most of what you say, but not when it comes to Social Security. Social Security is my money I had taken out of my pay for retirement.” If you think that, you’ve been duped. The only way you get a Social Security check is for Congress to take the earnings of a worker. Explanation of your duping can be found on my website, in a 2010 article I wrote titled “Washington’s Lies” (

Supplying the Federal Beast with tax revenue is like pumping gasoline into a fire, it accelerates the destruction – Jay Davidson

Supplying the Federal Beast with tax revenue is like pumping gasoline into a fire, it accelerates the destruction.
Consider the absurdity of taxation: 50% of the citizens pay their own hard earned money to the Federal Behemoth so that the other non-working 50% can receive the benefits.  The Federal Monster thereby guarantees its cancerous growth.  It adds little value compared to its cost.
However, there is a tipping point, soon to be reached, where there will not be enough workers to support the non-working.  That is the end of every Socialist, Communist and Democratic society.  (Democracy devolves into an Oligarchy or rule by the few, the Elites.)
There is one solution: Restore our Constitutional Republic form of government and slay the federal beast or at the least, control the federal government through our Constitution, as envisioned by the Founders.  Either we control our destiny or the very size of the federal beast will topple, on its bloated carcass, crushing our nation and any future for our progeny.
– Jay Davidson
Read the original WSJ article here

Paul Ryan’s ‘Anxiety’ Cure

Americans may be feeling better already.

President Donald Trump delivers remarks about things other than tax reform at Trump Tower on August 15.

President Donald Trump delivers remarks about things other than tax reform at Trump Tower on August 15. Photo: Drew Angerer/Getty Images


James Freeman

Do we dare to hope that politicians may now be turning their attention to encouraging prosperity for all Americans? For any readers who have found it stressful observing the issues that have lately dominated political discourse, there may be a treatment. Joseph Lawler of the Washington Examiner reports from Everett, Washington:

House Speaker Paul Ryan toured businesses in the Pacific Northwest this week to deliver the message that Republicans can produce a historic revision of the tax code…

Tax reform was always planned for the fall, and for Ryan, getting something done here is a chance to deliver a much-needed win for the GOP.

“I’ve been focused on this literally my adult life. But now, more than ever,” Ryan said, a major overhaul of the tax code could “help reduce that anxiety” that the country feels over politics.

Anxiety reduction would be most welcome. Wall Street seems to have gotten over its own minor case of anxiety on the news that President Trump’s economic adviser Gary Cohn will be sticking around the White House for a while. Some investors have been fretting that markets would decline if Mr. Cohn chooses to leave, on the theory that the former Goldman Sachs executive is critical to the effort to cut taxes.

This column is glad Mr. Cohn is around to encourage free trade, but has been skeptical of the analysis that he’s the key to tax cuts. This skepticism is based on the fact that Mr. Cohn wasn’t much of a cheerleader for tax relief before entering the White House and didn’t seem to have his heart in it once he arrived.

But Mr. Cohn’s new interview with the Financial Times may serve as a useful therapy for any Americans suffering from generalized economic anxiety disorder. The British business publication asked, “Will you offer any concessions to get some Democrats on board?”

Here’s Mr. Cohn’s response, according to an edited transcript:

If the Democrats want to work with us on a bipartisan tax bill we are excited to have them on board. But if not we will just do reconciliation. The important issue we need to talk about is why are we so compelled to do taxes . . . that is what the president is going to be out selling.

If you look at US GDP since 2008 we have been averaging less than 1.5 per cent GDP growth [including the recession]. Before that, we had much higher growth. We don’t think that a 2 per cent growth economy is good enough — we need to raise that.

It’s reassuring to know that Mr. Cohn is not satisfied with the Obama-era new normal of slow growth. Even more encouraging is that, unprompted by the Financial Times, he then explained why it’s so important for the United States to cut corporate income tax rates.

Many leftists argue that since tax rates aren’t as high as they were when President Ronald Reagan took office in 1981, there’s less need to enact a Reagan-style tax cut to boost growth now as he did then. But Mr. Cohn provides the important context, which is that the world’s other advanced countries have been busy cutting their own rates. As Mr. Cohn explains, the world has simply become a more competitive place, including in the 34 other member countries that, along with the U.S., belong to the Organization for Economic Cooperation and Development:

If you go back to the early 1980s and look at OECD and US tax rates, they were pretty similar then. But then most OECD rates went down, down, down. The US had one big drop in 1986 but we then flatlined… So we used to have a competitive advantage, but since then we have continued to be less and less competitive. Today we are 14.4 percentage points more expensive on tax rate than the rest of the OECD — we used to have a 5.7 percentage point advantage.

According to KPMG, the overall state and federal corporate income tax burden in the U.S. is even worse on a relative basis—closer to 16 percentage points above the OECD average. But Mr. Cohn is right on target in adding, “We have just gotten uncompetitive.” He also suggests that the trade deficit that is a fixation of some economic nationalists is in part just an artifact of bad tax policy:

If you are a company which manufactures in Europe and sells in the US and European tax is 10 percentage points lower in Europe than in the US then what you want is for as much profit as possible to show up in Europe. So you sell your product to the US subsidiary at the highest possible price and what does that do to the trade deficit?

The Trump adviser also said that the President will begin making his case with a speech in Missouri. According to the Financial Times:

“Starting next week, the president’s agenda and calendar is going to revolve around tax reform,” Mr Cohn said in an interview. “He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the US.”

A leadership team in Washington focused on economic growth is making this column feel better already.

Shame as a tool of conquest – Jay Davidson

Shame as a tool of conquest


Consider how powerful a tool is shame.  If you doubt it, look at the Progressives’ use of shame to condition both democrat and republican politicians, citizens of both parties, religious leaders, everyone.


Shame of success.

Shame of heterosexuality.

Shame of monogamous relationships.

Shame of making money.

Shame of something that happened 100 years before you were born.

Shame of being white, whatever that means.

Shame of loving your country.

Shame of deciding to defend your rights to Life, Liberty and the Pursuit of Happiness.

Shame of worshipping the leader of your religion.

Shame of believing in God.

Shame of honesty and ethics.


This shame has brought down governments and countries.  To be aware of it is to fight it.

Has President Trump done anything in his first six months?

What has Donald Trump done since he has been in office!!!
Maybe you should READ, I did not realize many of these!

1. Supreme Court Judge Gorsuch
2. 59 missiles dropped in Syria.
3. He took us out of TPP
4. Illegal immigration is now down 70%( the lowest in 17 years)
5. Consumer confidence highest since 2000 at index 125.6
6. Mortgage applications for new homes rise to a 7 year high.
7. Pulled out of the lopsided Paris accord.
8. Arranged 20% Tariff on soft lumber from Canada.
9. Bids for border wall are well underway.
10. Keystone pipeline approved.
11. NATO allies boost spending by 4.3%
12. Allowing VA to terminate bad employees.
13. Allowing private healthcare choices for veterans.
14. More than 600,000. Jobs created
15. Median household income at a 7 year high.
16. The Stock Market is at the highest ever In its history.
17. China agreed to American import of beef.
18. $89 Billion saved in regulation rollbacks.
19. Rollback of A Regulation to boost coal mining.
20. MOAB for ISIS
21. Travel ban reinstated.
22. Executive order for religious freedom.
23. Jump started NASA
24. $600 million cut from UN peacekeeping budget.
25. Targeting of MS13 gangs
26. Deporting violent illegal immigrants.
27. Signed 41 bills to date
28. Created a commission on child trafficking
29. Created a commission on voter fraud
30. Created a commission for opioids addiction.
31. Giving power to states to drug test unemployment recipients.
32. Unemployment lowest since may 2007.
33. Historic Black College University initiative
34. Women In Entrepreneurship Act
35. Created an office or illegal immigrant crime victims.
36. Reversed Dodd-Frank
37. Repealed DOT ruling which would have taken power away from local governments for infrastructure planning
38. Order to stop crime against law enforcement.
39. End of DAPA program.
40. Stopped companies from moving out of America.
41. Promoted businesses to create American Jobs.
42. Encouraged country to once again
43. ‘Buy American and hire American
44. Cutting regulations 2 for every one created.
45. Review of all trade agreements to make sure they are America first.
46. Apprentice program
47. Highest manufacturing surge in 3 years.
48. $78 Billion promised reinvestment from major businesses like Exxon, Bayer, Apple, SoftBank, Toyota…
49. Denied FBI a new building.
50. $700 million saved with F-35 renegotiation.
51. Saves $22 million by reducing white house payroll.
52. Dept of treasury reports a $182 billion surplus for April 2017 (2nd largest in history.)
53. Negotiated the release of 6 US humanitarian workers held captive in Egypt.
54. Gas prices lowest in more than 12 years.
55. Signed An Executive Order To Promote Energy Independence And Economic Growth
56. Has already accomplished more to stop government interference into people’s lives than any President in the history of America.
57. President Trump has worked with Congress to pass more legislation in his first 100 days than any President since Truman.
58. Has given head executive of each branches 6 month time Frame dated march 15 2017, to trim the fat. restructure and improve efficacy of their branch.Observe the pushback, the leaks and the lies as entrenched POWER refuses to go silently into that good night!
59. Last, Refused his Presidential Pay Check, donated it to Veterans issues.

 GUEST COLUMN: Transportation tax a bad idea for Colorado


By: Kim Monson  April 23, 2017

The proposed 21 percent state sales tax increase, Colorado transportation House Bill (HB)17-1242, estimates tax collection of $14 billion, however, only $5 billion (if we’re generous) is required to go to roads and bridges. A big portion can be spent on subsidized multimodal projects (light rail, bullet trains, bike & walk paths, driverless cars, high occupancy vehicles, etc). Everything but a privately owned vehicle. If you like your car, you may not be able to keep your car.

HB17-1242’s proposed 21 percent state sales tax increase passed in the Colorado House of Representatives and is traveling through the Colorado Senate. If approved, HB17-1242 will appear on the Colorado ballot in November 2017. I hope that our state senators who care about hardworking individuals throughout Colorado will just say no!

A 21 percent state sales tax increase hurts Colorado families who are trying to make ends meet, save for their children’s education and dream of buying a home. Almost everything we purchase – cars, clothes and craft beer – will be more expensive, however, interestingly enough, aviation fuels used in turbo-propeller or jet engine aircraft are items exempted in HB17-1242. Curious.

Per the Colorado Chamber Capitol Report, HB17-1242 is estimated to bring in $700 million per year or $14 billion over the 20-year life of the tax increase. Fourteen billion is a lot of money and HB17-1242 is one of the most impressive “bait and switches” in recent Colorado history. Here’s the breakdown:

– $375 million per year is dedicated to pay off $3.5 billion (not to exceed $5 billion with interest) in Transportation Revenue Anticipation Notes (TRANs). The $3.5 billion is to be used for Colorado Department of Transportation (CDOT) capital projects, implying roads and bridges, however the money can be used for multi-modal capital projects as well.

– $227.5 million per year or $4.55 billion is earmarked for counties and municipalities for transportation projects, again not restricted to roads and bridges.

– $97.5 million per year or $1.95 billion is earmarked for multimodal projects.

In adding up the numbers, that leaves $3.5 billion with no explanation of spending. And the language in HB17-1242 asks that these taxes not be subject to the Colorado Taxpayer’s Bill of Rights (TABOR), Article X of the Colorado Constitution. If taxes collected from HB17-1242 are above projections, the transit czars, politicians and bureaucrats can keep our hard-earned dollars instead of returning the excess back to the people.

Our roads and bridges could certainly use a little love. However, politicians and bureaucrats have been shaving anywhere from 20 percent to 30 percent out of the Highway User Tax Fund for subsidized projects such as trains, bike paths and walking paths for years while neglecting our roads and bridges.

The preliminary 2018 Colorado budget calls for $26.8 billion in spending. If politicians and bureaucrats would dedicate just 1 percent of the budget for our roads and bridges, Coloradoans could enjoy less road congestion, safer highways and faster mobility without a 21 percent ding in our wallets.

Kim Monson is co-host of “The Americhicks – Molly & Kim” on Salem Media’s 1690 AM, KDMT “Denver’s Money Talk” or livestream at Monson is a former Lone Tree City Council councilwoman.

Click here for the original article.

ObamaCare for Congress

Consider the irony here.  Congress exempts themselves from ACA, clearly because it is far inferior to any other medical insurance plan.  On the other hand, Congress, in complete disregard for the Constitution, abrogates their sole and exclusive mandate as the only body that can enact fines, levies, and taxes by giving said authority over to federal agencies.  Examples: the Chevron deferral, in which congress allowed the EPA to fine Chevron.  Another:  Dodd-Frank, which allows the CFPB to levy fines against banks.
So not only does Congress create exemptions for their self-interest, they don’t even do the job laid out for them under the Constitution.  I applaud Trump for calling them out.
Go here for the WSJ article.

ObamaCare for Congress

Trump can change a rule that exempts Members from the law’s pain.

U.S. President Donald Trump speaks during a press conference on healthcare Washington, July 24.

U.S. President Donald Trump speaks during a press conference on healthcare Washington, July 24. Photo: Bloomberg News


The Editorial Board

President Trump likes to govern by Twitter threat, which often backfires, to put it mildly. But he’s onto something with his recent suggestion that Members of Congress should have to live under the health-care law they imposed on Americans.

Over the weekend Mr. Trump tweeted that “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” He later added: “If ObamaCare is hurting people, & it is, why shouldn’t it hurt the insurance companies & why should Congress not be paying what public pays?”

Mr. Trump is alluding to a dispensation from ObamaCare for Members of Congress and their staff, and the back story is a tutorial in Washington self-dealing. A 2009 amendment from Chuck Grassley (R., Iowa) forced congressional employees to obtain coverage from the Affordable Care Act exchanges. The Senate Finance Committee adopted it unanimously.

That meant Members and their staff would no longer enjoy coverage from the Federal Employees Health Benefits Program, which subsidizes up to 75% of the cost of a plan. The text of the Affordable Care Act says that staffers may “only” be offered plans created by the law or on the exchanges.

The law did not specify what would happen to the employer contributions, though Democrats claim this was merely a copy-editing mistake. A meltdown ensued as Members feared that staffers would be exposed to thousands of dollars more in annual health-care costs, replete with predictions that junior aides would clean out their desks en masse.

Mr. Obama intervened in 2013 and the Office of Personnel Management issued a rule that would allow employer contributions to exchange plans, not that OPM had such legal authority. One hilarious detail is that OPM certified the House and Senate as “small businesses” with fewer than 50 full-time employees, and no doubt the world would be better if that were true. This invention allowed Members to purchase plans on the District of Columbia exchange for small businesses, where employers can make contributions to premiums. This is a farce and maybe a fraud.

In last week’s Senate health-care debate, Wisconsin Republican Ron Johnson circulated an idea to block subsidies for Members, who earn at least $174,000 a year and would not receive generous taxpayer underwriting on the exchanges. The Johnson amendment would restore staff to the federal benefits program. Alas, the amendment commands almost no support. Not even Democrats want to sign up for their own policy.

But Mr. Trump could direct OPM to scrap the rule for Members, which is reversible because Mr. Obama reworked his own law through regulation that can be undone by a successor. Mr. Obama also refused to pursue a legislative fix for the problem lest Republicans demand something in return.

Revoking the rule would have the political benefit of forcing Members to live under the regime that Democrats rammed into law and Republicans have failed to fix. If Members are pained by higher premiums and fewer insurance choices, perhaps they will be inspired to fix the law for the millions who have had to endure it.

Appeared in the August 2, 2017, print edition.

Repealing the Arbitration Rule

Any politician that states his goal is to protect the consumer, should ask us if we want that protection.  I say no, I’ve seen how well all the other federal programs work.

Just how stupid do politicians and bureaucrats think consumers are?

“Mr. Cordray said the ban would protect consumers, but his own agency’s study suggests otherwise. Consumers who prevailed in arbitration recovered on average $5,389 while those who joined class actions received $32. Trial lawyers on average raked in $1 million.”


Repealing the Arbitration Rule

Congress can kill Cordray’s payoff to his trial-lawyer funders.

By The WSJ Editorial Board

July 25, 2017 7:32 p.m. ET


Consumer Financial Protection Bureau chief Richard Cordray has been on a regulatory tear as he prepares to run for Governor in Ohio. But many of the Obama appointee’s midnight rule-makings need not see the light of day—for instance, his arbitrary ban on mandatory arbitration that the House voted to repeal on Tuesday.

The Congressional Review Act lets a majority of both chambers rescind a final agency rule issued in the past 60 legislative days. The 231-190 House vote overturns the CFPB’s new rule prohibiting class-action waivers in virtually all financial consumer-service agreements. Twenty-four GOP Senators have introduced a similar resolution.

Mr. Cordray said the ban would protect consumers, but his own agency’s study suggests otherwise. Consumers who prevailed in arbitration recovered on average $5,389 while those who joined class actions received $32. Trial lawyers on average raked in $1 million.

Most claims can’t be litigated on a class basis—though trial attorneys try—and arbitration provides an affordable and expeditious alternative. Companies typically pick up most if not all of the filing, administrative and arbitrator costs. Consumers usually obtain relief within two months, while class actions typically take years to resolve.

The rule would cause many firms to stop using arbitration since they would have to spend more defending class actions. The CFPB estimates that financial companies would spend between $2.62 billion and $5.23 billion over the next five years—much of which would go to attorneys—to defend some 6,000 class actions.

Ohio Senator Sherrod Brown, another plaintiff-bar favorite, cites Wells Fargo , which was found to have opened millions of unauthorized accounts in the names of its customers. But Wells Fargo agreed to settle the case on a class basis for $142 million—twice as much as estimated consumer out-of-pocket losses—because arbitrating individual disputes could have cost much more. The bank also paid $185 million to regulators and agreed to refund fees for unauthorized accounts.

Mr. Cordray wants to build a nationwide plaintiff-lawyer fund-raising base for his Ohio campaign. And he may hope that a few Republican Senators like South Carolina’s Lindsey Graham will sink the repeal resolution for their trial-bar campaign donors. But if Republicans stand together on repeal, the CFPB would be prohibited from ever issuing a similar rule. Republicans can strike a blow for the rule of law and against a major progressive cash source for Democrats with a single vote.

Appeared in the July 26, 2017, print edition.

Title: Re-affirms one’s faith in the Austrian School of Economics; that freedom begins with economic freedom…

Re-affirms one’s faith in the Austrian School of Economics; that freedom begins with economic freedom…

“But for the tax side of “one big idea,” Laffer would like to see corporate-tax reform. I agree. Reagan used to say, “Give me half a loaf now, and I’ll get the other half later.” Well, I’d take the half-loaf of corporate tax cuts right now.”

“…said Forbes, who offered an alternative: “The smart approach is get this economy moving through these tax cuts and deregulation … and then having a stable dollar, and then you sit down with country by country and remove trade barriers.” Anything but the trade protectionism that blew up the stock market in 1929.

“To which Laffer added the great line: “Don’t just stand there; undo something!”

“”Cut taxes, stabilize the dollar, reduce tariffs, reduce regulation,” he said. “Undo, undo, undo and undo the damages these other guys have done.””

For the original link to this article, please go here.

Big Economic Ideas From Art Laffer and Steve Forbes
Big Economic Ideas From Art Laffer and Steve Forbes
I participated in perhaps a bit of radio history last week when Steve Forbes and Art Laffer joined me on my syndicated radio show. It may have been the first time these supply-side economics giants were ever together over the airwaves.

Forbes, of course, is chairman of Forbes Media, and he twice ran brilliant issue campaigns for president. And Laffer, once a key adviser to President Ronald Reagan, is father to the groundbreaking Laffer Curve, for which he should have won a Nobel prize. In our discussion, they didn’t disappoint. (For a full transcript, visit

We started with “one big idea.” That’s how the late Jack Kemp approached economic policy reform back in the 1980s. And his big idea, embraced by Reagan, was a mix of low marginal tax rates to spur economic growth incentives and a sound, reliable dollar to conquer inflation and create confidence. (This duplicated President John F. Kennedy’s prosperity model, which Brian Domitrovic and I wrote about in “JFK and the Reagan Revolution.”)

But these days, if you adhere to that big idea, you’re ridiculed as clinging to the past. My guests would have none of it.

“We need it now more than ever,” said Forbes. “To say that just because it worked 40 years ago, therefore it’s old, is like saying the Declaration of Independence and the Constitution are old, therefore we can cast them aside.”

Forbes’ version of “one big idea” is a flat tax and a sound dollar linked to gold. If we have that, we’ll be the “land of opportunity again.”

Laffer agreed. “Our economic verities have remained forever,” he said. “They go back to caveman, pre-cavemen. Incentives matter: If you reward an activity, then people do more of it. If you punish an activity, people do less of it.”

But for the tax side of “one big idea,” Laffer would like to see corporate-tax reform. I agree. Reagan used to say, “Give me half a loaf now, and I’ll get the other half later.” Well, I’d take the half-loaf of corporate tax cuts right now.

And that would work for Forbes, who can see income-tax reform following corporate-tax reform. Of President Trump, he said, “Even if we get to this two years down the road, I think he’d be amenable to doing something radical like a flat tax.”

But why is it that our Democratic friends in the economics profession and politics work so hard to discredit the idea of lowering marginal tax rates on the extra dollar earned to spark the positive incentives that lead to prosperity?

“Let me put it just succinctly,” answered Laffer. “These people are willing to rebut arguments they know to be true in order to curry favors with their political benefactors.”

To which Forbes added: “A lot of these far-left ideologues would rather have a smaller economy and more government power than a bigger economy and a smaller government.”

From that sad truth, we moved to prosperity killers — trade protectionism in particular, about which there is still much talk within the Trump camp. Where, I asked, does trade protectionism — including tariffs on China — fit into the low-tax-rate, strong-dollar prosperity model?

“It doesn’t,” said Forbes, who offered an alternative: “The smart approach is get this economy moving through these tax cuts and deregulation … and then having a stable dollar, and then you sit down with country by country and remove trade barriers.” Anything but the trade protectionism that blew up the stock market in 1929.

To which Laffer added the great line: “Don’t just stand there; undo something!”

“Cut taxes, stabilize the dollar, reduce tariffs, reduce regulation,” he said. “Undo, undo, undo and undo the damages these other guys have done.”

One of those damages is Obamacare. And the fear now is that it will never get undone.

But my guests were optimistic, if philosophical. How will we get true free-market health care reform?

“You do this often, sometimes with great leaps but sometimes step by step,” said Forbes, to which Laffer added: “With any type of change that we can make in the right direction … never let the best be the enemy of the good.”

Finally, I asked, “Is the free-market model losing ground?” We’ve seen its decline in Europe, Latin America and elsewhere.

“This thing always ebbs and flows,” said Laffer. “Reagan, at first, was dissed by all the foreign leaders, except for Thatcher. And once our success story came in, he’s now virtually a god. That’s going to happen again, believe me.”

The limits of this space have forced me to drastically abbreviate what I do believe was a historic radio event. Two economic giants met and discussed the big ideas that will restore growth and prosperity. They offered the “how” and were confident that the “when” is near.

To find out more about Lawrence Kudlow and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at


Trump to Nominate Randal Quarles as Fed Bank Regulator

For the original WSJ link to this article, please click here.

Jay Davidson comments the article:  

Look for some major and positive changes to the banking environment.  Trump’s Federal Reserve nominee to vice chairman of supervision understands the cost of high capital ratios:

Mr. Quarles, in a March 2016 Wall Street Journal op-ed that he co-wrote, said he didn’t support “arbitrarily taking an ax to big banks and irreparably damaging the economy.” He endorsed a review of postcrisis regulations but warned that “the consequence of a dramatic increase in bank capital is an increase in the cost of bank credit.”


He also understands the high cost of regulation:

The choice of Mr. Quarles “shows that we’re looking for a change to the heavy-handed approach to regulation from the prior administration,” the White House official said Monday. Mr. Quarles, the official said, “has a track record of working well with others to implement public policy.”Former Treasury official would be the first Fed vice chairman of supervision

Randal Quarles spoke in New York in 2008.

Randal Quarles spoke in New York in 2008. Photo: BLOOMBERG NEWS

WASHINGTON—President Donald Trump plans to put his first mark on the Federal Reserve by nominating Randal Quarles, an investment-fund manager and former Republican Treasury official, to be the central bank’s top official in charge of regulating big banks.

The choice of Mr. Quarles, expected for months and confirmed by a White House official Monday, would put a more industry-friendly voice in perhaps the most powerful U.S. bank-regulatory post: Fed vice chair of supervision.

That job was created by Congress in 2010 and was never filled during the Obama administration, although former Fed governor Daniel Tarullo filled the role de facto. If confirmed by the Senate, Mr. Quarles would take a lead role in carrying out the Trump administration’s goal of rethinking many financial regulations adopted during the Obama era.

Mr. Quarles would also weigh in on monetary policy as one of seven members of the Fed’s board of governors, now short-staffed with only four members. His views in that sphere could put him at odds with his new colleagues, notably because he has criticized the Fed’s policy of keeping interest rates near zero for years following the financial crisis, and advocated for a monetary-policy rule, or formula, to guide rate decisions.

The Fed board has three vacancies, and the White House hopes to offer two more nominees as soon as possible, the official said. The administration has also begun the search for the next Fed chairman, though Mr. Trump hasn’t ruled out nominating Chairwoman Janet Yellen to a second term, to begin when her current term expires in February.

Mr. Quarles has donated to Republican candidates for years and served in the Treasury Department in both Bush administrations, working on both international affairs and as undersecretary for domestic finance, a senior job that involves coordination with the many U.S. agencies that oversee the financial sector.

He left the government in 2006 and was a managing director at the Carlyle Groupprivate-equity firm, investing in troubled banks. He is now managing director at Cynosure Group, a Utah investment firm.

Mr. Quarles, in a March 2016 Wall Street Journal op-ed that he co-wrote, said he didn’t support “arbitrarily taking an ax to big banks and irreparably damaging the economy.” He endorsed a review of postcrisis regulations but warned that “the consequence of a dramatic increase in bank capital is an increase in the cost of bank credit.”

Analysts and government officials have said nominating Mr. Quarles, an establishment Republican, would be a sign that the White House favors more incremental rather than radical changes to the Fed, an institution that has long engendered mistrust among the economic nationalists who backed Mr. Trump during his campaign last year.

Mr. Trump’s team has advocated a rethink of Wall Street rules but has few officials in place at financial regulatory agencies. If confirmed, Mr. Quarles would immediately take over the job of overseeing the Fed’s regulatory staff, which supervises some of the largest U.S. financial firms including J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.

He could push for changes in the way the Fed oversees those firms, but he couldn’t change the rules on his own. For that, he would need the support of other members of the Fed’s board and other agencies.

The choice of Mr. Quarles “shows that we’re looking for a change to the heavy-handed approach to regulation from the prior administration,” the White House official said Monday. Mr. Quarles, the official said, “has a track record of working well with others to implement public policy.”

Obama administration officials have said stricter curbs on financial risk-taking were warranted in the wake of the financial crisis.

Mr. Quarles would find some familiar faces at the Fed. He has worked before with Fed governor Jerome Powell, who is now the point person on the Fed’s regulatory efforts and also served in the George H.W. Bush administration and worked at Carlyle Group.

Mr. Quarles is married to Hope Eccles, who is a relative of Marriner Eccles, the New Deal-era Fed chairman whose name is on the building where Mr. Quarles would have his office.

Ms. Yellen is set to testify on Wednesday and Thursday on Capitol Hill, where she will likely be asked about Mr. Quarles and the Fed’s agenda. In the past, she has said she is open to changing some bank rules but not what she regards as core changes adopted after the 2008 financial bailouts.

Ms. Yellen has objected to proposals to require the Fed to use a mathematical monetary-policy rule, an approach popular among some conservatives who argue central banks have too much discretion and should be more accountable to the public.

Mr. Quarles said in the 2016 op-ed that low-interest-rate policies have “led to a rise in speculative positions” across the financial system and that a monetary-policy rule would reduce the incentive for big banks and smaller firms to take dangerous risks.

Mr. Quarles’s path to the nomination illustrates a broader trend in which nominees across the executive branch have faced delays completing the traditional background clearance and screening process.

Top White House officials had identified the vice chair post as a priority weeks after Mr. Trump’s election last year, and after an extended search process, officials identified Mr. Quarles as their top pick in April. At the time, Treasury Secretary Steven Mnuchin had indicated a nominee for the post was imminent.

The White House expected Mr. Quarles’s nomination to receive broad Republican support. He needs a simple majority to be approved by the Senate, where Republicans control 52 out of 100 seats.

The White House has also been considering economist Marvin Goodfriend to fill a second vacancy on the Fed board, according to people familiar with the matter. It isn’t clear when his nomination might be announced and submitted to the Senate.

The White House has been searching for a candidate with experience in small, locally focused community banks for the third opening, as a result of a law requiring that someone on the Fed board have experience in that industry.

But finding a nominee has been difficult in part because of federal ethics rules that require Fed officials to divest of their interest in financial firms. Once a regulatory nominee is selected, the process for security and ethics reviews has been taking about two months.

Write to Ryan Tracy at, Kate Davidson at kate.davidson@wsj.comand Nick Timiraos at

Appeared in the July 11, 2017, print edition as ‘Trump to Appoint Fed Bank Regulator.’