Chris Christie steals the show at Bush 4% growth conference
“Four percent economic growth is not possible without reforming Social Security, Medicare, Medicaid and the tax system.”
– NJ Governor Chris Christie
Former President George W. Bush came to the Big Apple Texas style.
On Tuesday, April 10, I attended a star-studded affair “The 4% Growth Project” organized by the George W. Bush Center. The meeting, well organized by Amity Shlaes, was held at the New York Historical Society.
Everybody who was anybody among New York financial crowd were there: Steve Forbes and Rich Karlgaard from Forbes magazine… Rupert Murdock, John Stossel, and David Asman from Fox News… Larry Kudlow and Maria Bartiromo from CNBC… Paul Gigot and Stephen Moore from the Wall Street Journal.
In addition to President Bush, there were governors from several states and the deputy mayor of New York, but the man who really stole the show was New Jersey Governor Chris Christie. He electrified the audience with his story of turning around his state known for “overtaxing, overspending, and over regulating.” But he was able to balance the budget and start cutting taxes in two short years, despite heavy Democrat control of both houses of government and opposition of the unions.
His most memorable line was from his mother: “Remember, son, it’s better to be respected than to be loved.”
He got a standing ovation from the crowd of several hundred New Yorkers. No wonder he is considered a top Presidential candidate in the future, or perhaps even a vice presidential running mate to Mitt Romney.
House leader Paul Ryan also spoke about his plan to turn the government around in Washington. It is time, he said, to reverse the trend: Our country has gone from a “maker” society to a “taker” society, and a welfare system that used to be a “safety net” and now is a “hammock.”
Here’s my own way of looking at our recent slide: Americans used to be “freedom riders” — now they are “free riders.” (President Bush laughed when I showed him this line.)
Congressman Ryan did make a Freudian slip when he said in his talk, “President Bush favors a ‘government centered’ society, er, I mean, President Obama favors a ‘government centered’ society.”
He apologized for the faux pas, but it does raise an interesting irony. The title of the program was “The 4% Growth Project,” and some cynics in the audience wondered if it was a project to grow government and not the economy.
After all, George W. Bush’s policies did a lot more to spur growth in the State than the private economy. According to Veronique de Rugy of the Mecatus Center at George Mason University, “President Bush increased government spending more than any of the six presidents preceding him, including LBJ. In his last term in office, President Bush increased discretionary outlays by an estimated 48.6 percent. Adjusted for inflation, President Bush more than doubled the federal budget.”
Most economist do not regard the Bush years as pro-growth. In fact, during his eight years in office, the real gross domestic product growth rate averaged 2.1 percent, and he never had a year when the growth rate hit four percent or higher. The stock market went on a roller-coaster to nowhere during 2001-2009.
Both Ronald Reagan and Bill Clinton deserve to be known as “pro-growth” presidents. Four out of the eight years under Reagan saw real GDP grow faster than 4%, and five out of the eight under Clinton.
Still, Amity Shlaes and the Bush Center have gathered together some real experts who know how to rekindle four percent economic growth rates in the United States. This conference specifically focused on tax policy as a way to spur growth. The Bush tax cuts were undoubtedly the most pro-growth policy adopted by the federal government in the early 2000s.
President Bush rightly criticized the Buffett plan to raise taxes on millionaires: “If you raise taxes on the so-called rich,” he said, “you’re really raising taxes on the job creators.” He noted that a tax on the rich is a tax on capital, which plays an essential role in innovation and job creation.
There were several excellent breakout sessions on the best tax policy to adopt, including a flat income tax or consumption tax (Steve Forbes wisely noted that a flat income tax is easier to adopt), and a sharp reduction in the corporate income tax to make America more competitive.
Several experts also warned against value added taxes, alternative minimum taxes, and transaction taxes on stocks. (France will impose a transaction tax on stocks in August, and the experts predicted this would hurt the French stock market.)
I suggested that the US should adopt real tax reform, and not keep tinkering with the tax laws every year. Businesses will do better if they can engage in long-term tax planning. I asked the experts in one panel if they could identify their favorite country with an ideal tax system. Several suggested Hong Kong, which has a flat 18 percent income tax rate and no tax on interest, dividends, or capital gains. When did Hong Kong last change its tax system? Decades ago!
Amity Shlaes told me that a book, “The 4% Growth Project,” will be forthcoming this year that will identify changes in government policy that will lead to four percent economic growth. We could use it!
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