President Biden and Speaker McCarthy are going to meet on Wednesday. It should be fun. We don’t know if it’s a lunch, a cup of coffee, or what, but it could be very productive.
Mr. McCarthy has said he’s going to the meeting to begin the negotiations for a debt ceiling increase coming this summer that must include some budget spending restraint.
Here’s what he said on one of the Sunday talk shows: “I know the president said he didn’t want to have any discussions, but I think it’s very important that our whole government is designed to find compromise. I want to find a reasonable and a responsible way that we can lift the debt ceiling, but take control of this runaway spending.”
Mr. Biden has a different vision. This is from a recent speech: “I will veto everything they send me.”
Well, he can’t veto everything — because the House has the power of the purse. You can’t have a spending bill or a debt bill without the House. So I would say Mr. Biden’s position is both politically hostile and legislatively dumb. I’d also say he knows this and is just posturing.
Poll after poll shows that the public wants spending restraint alongside an orderly increase in the debt ceiling. I mean, every poll shows this.
Also, in that speech last week, Mr. Biden once again was incapable of telling the truth about the economy, saying that when he came into office the economy had been “reeling.” Of course, the economy was actually growing at 6.5 percent with no inflation.
In the past year, the economy has moved into a near recession phase with 1 percent growth, 6.3 percent inflation. The first half had two negative GDP numbers, and frankly the outlook for this year, 2023, is for more negative GDP numbers.
At one point, the inflation rate exceeded 9 percent, wholesale prices were over 10 percent, and that all started when Mr. Biden’s spending binge began in March 2021.
Then, there’s a bizarre tax point Mr. Biden makes, as I’m reminded by the WSJ’s James Freeman. The president says Republicans want to cut taxes for billionaires who pay only 3 percent of their income; then sometimes that gets changed to the wealthiest 400 billionaire families paid an average of 8 percent income. This is baloney. Absolute malarky.
We just had a report from the IRS that shows the top 1 percent of wage earners paid more than 42 percent of all federal income taxes for the most recent year, 2020. That’s what the most successful people paid. Their average tax rate was 26 percent, which is eight times the tax rate faced by the bottom half of taxpayers.
By the way, since the Trump tax cuts, the share of income taxes paid by the top 1 percent has increased. The share paid by the lower quintiles has fallen. So, Mr. Biden's typical left-wing attack on the wealthy overlooks that the U.S. has the most progressive tax code among the largest country economies.
People at the bottom are virtually paying no taxes at all. The bottom 50 percent paid 2.3 percent of all income taxes. The top 50 percent paid 97.7 percent.
Putting all that aside, the Congressional Budget Office predicts the current spending baseline would add nearly $16 trillion to the deficit over the next 10 years. Alongside this, the CBO expects the economy to grow by a meager 1.5 percent yearly. These are bad numbers.
Once again, I ask: What will it take to get back to the 3.5 percent growth rate of the post-World War II period, which lasted more than 50 years, and what will it take to get out of our current secular stagnation?
I don’t pretend to have every answer, but I know a return to a strong prosperity for all Americans will have something to do with less spending, taxing, regulating, and inflating. Were I a GOP House leader, yes, of course, I would take Social Security and Medicare off the table. Yet I would also argue that the Republican approach for lower spending and limited government will grow the economy faster and hold down the inflation rate. High growth, low prices.
The big-spending Democratic approach is low growth, high prices. Let’s not make this message any harder than it needs to be. Save America. Stop the spending.
From Mr. Kudlow’s broadcast on Fox Business News.
Larry Kudlow was the Director of the National Economic Council under President Trump from 2018-2021. His Fox Business show "Kudlow" airs at 4 p.m &. and his radio show airs on 770 ABC from 10:00 a.m. to 1:00 p.m.