Larry Kudlow: Do Americans have the backbone and common sense to restore free enterprise prosperity?
Larry Kudlow: Restoring prosperity is a vital topic for the future of America
FOX Business host Larry Kudlow expresses his concerns about the government and state of the U.S. economy, emphasizing how we need to return to a pro-growth agenda on ‘Kudlow.’
So, permit me to continue our conversation from last night's town hall meeting. The theme of which is, restoring prosperity. It's such a vital topic for the future of America. When you look at the numbers, which very few people seem to do, you can see with great clarity, unfortunately, how we've slumped in the last 20 years.
Now, a quick review. For over 50 years, following World War II, the great American powerhouse economy averaged better than 3.5% growth per year adjusted for inflation. For over 50 years, it wasn't a 10-year flash in the pan, it was long-term prosperity. Frankly, it was the envy of the world. It gave us enormous strength at home and enormous influence abroad.
However, over the past 20 years+, our economy has slumped to less than 2% annual growth. Our inflation rate in these recent decades is more than twice the very low post-war inflation. The prosperity slump of the past two decades probably cost our economy roughly $9 trillion in lost output and income. If we don't restore our historic growth rate, it could cost Americans another roughly $8.5 trillion in the next 10 years in economic losses. These are very big numbers. They could translate to a combined income loss of roughly $75,000 for a typical family. That is another terrible loss. No American should accept these numbers or our economic decline.
So, what's the problem here? The Federal Government keeps getting bigger and bigger. The private sector keeps getting relatively smaller. In fact, the bigger and bigger part includes federal, state and local, which now consumes an incredible 44% of our GDP. 44% is nothing if not big government socialism.
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US facing ‘financial armageddon’ if it doesn’t solve debt limit crisis: Sheila Bair
Former U.S. Federal Deposit Insurance Corporation chairperson Sheila Bair assesses the current debt situation, telling ‘The Claman Countdown’ government is on an ‘unsustainable’ spending path.
At the Federal level, by the by, we've gone from a post-war average of a little less than 19% of GDP up to over 21% in the last two decades and right now federal spending as a share of the economy is 24%. So, think of it this way, the central planners in Washington are winning. The entrepreneurs throughout the countryside are getting beat. This is not good. Too much spending, taxing, regulating, inflating and not enough workfare and working.
Nowadays, you've got a bunch of woke socialists literally strangling the economy. With energy and moving right down the line from corporations to small businesses, even to the gig economy, punishing success, instead of rewarding it. Erecting so many barriers to production, investment and entrepreneurship.
Of course, we’re not growing. You know, Ronald Reagan used to always say: government is the problem, not the solution. Biden believes government is always the solution. John Kerry in Davos is literally screaming out "money, money, money, money" nine times. Folks, that's your money, spent by — you guess it — the federal government.
So, at this point, we find ourselves in an inflationary slump, but it's the tail end of a 20-year slump. This is why, frankly, I strongly support the house republicans in their effort to tie the debt ceiling to spending cuts. Whether it's 3 to 1 or 4 to 1, there must be new restraints, new spending caps, penalties, across the board automatic spending reductions called sequestration, if you don’t meet the new spending caps.
Now, Joe Biden says he won't negotiate and he wants some kind of a clean bill on debt. Here's my forecast: he will fold his cards and cave into Kevin McCarthy’s request of negotiations in a matter of weeks, if not days. Take that to the bank.
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