The Reagan Formula For A Dangerous World

Part I. Trust, But Always Verify

From Ronald Reagan's Cold War diplomacy to Donald Trump's negotiations with Iran, strength and verification remain inseparable.

So here we are again at the Reagan Library, Simi Valley, California. It is a fabulous, fabulous place.

Meanwhile, my first job in politics was the deputy budget director for the Gipper. And to be honest, what I learned during that time in his first term, I’m not sure my political and economic views have really changed much over the past 46 years. 

President Reagan believed in peace through strength. Trump believes in peace through strength. Reagan believed in low taxes to promote growth. Trump believes in low taxes to promote growth. 

They were both staunch advocates of a very light government regulatory touch on the economy, and both men were against unfair trading practices that damaged working Americans. 

Here’s Reagan on peace through strength, in October 1980: “Peace is made by the fact of strength, economic, military and strategic. We must build peace upon strength. There is no other way.”

Wait a minute. There’s even more. Here’s Reagan on trust but verify, in 1987, in remarks with Mikhail Gorbachev:

“We have listened to the wisdom in an old Russian maxim. And I’m sure you’re familiar with it, Mr. General Secretary, though my pronunciation may give you difficulty. The maxim is: Dovorey no provorey — trust, but verify.” 

Gorbachev replied: “You repeat that at every meeting,” which met with laughter. “I like it,” Reagan replied. 

I like it, too. I like it very much. Now, four or five decades later, I also worked for President Trump in his first term as one of his economic advisers. So feature what Mr. Trump said on Iran yesterday, on this whole trust but verify saga.

A reporter asked: “Mr. President, how would you characterize the current state of the talks with Iran? I guess if it were a football field, what yard line would you be on?” 

Mr. Trump replied:  “Well, I think we’re doing very well. They are starting to give us the things that they have to give us, and if they do, that’s great. And if they won’t, then the man on my left is going to finish him off.”

That being War Secretary Pete Hegseth on his left, I’d say that’s a pretty good version of, trust, but verify. Anyway, the ceasefire news today just seems to me to be an extension of Trumpian diplomacy, as Reagan also believed in diplomacy. 

Yet as Reagan would never give in to Gorbachev on producing space based defense in those days called Star Wars, Mr. Trump will never give in to the radical Iranian Islamic regime regarding an end to nuclear weaponry of all kinds and an end to state sponsored terrorism and justice. 

Reagan would never make a bad deal. So also, I believe Mr. Trump will never make a bad deal. So on taxes and economic growth and an end to nuclear terrorism, the two men nearly 40 years apart, faced similar challenges, and both emphasized the need to trust but verify.

II. The Economic Story The Press Keeps Missing

Despite predictions of slowdown and recession, the data point to an economy that continues to grow, create wealth, and defy its critics.

Everybody is talking about $4.50 gasoline at the pump. And all the usual suspects from the lefty press, and of course the Democratic party, and even the business press that ought to know better, anyway, they’re all talking about recession.

Of course they’re against President Trump. They’re against the Iran war. And they love to crow about high energy prices destroying the Trumpian economy.

Only trouble is, not only are we not going into a recession — the economy is booming. It is picking up steam. Profits are the mothers’ milk of stocks and the lifeblood of the economy. And right now profits are soaring by 15 percent.

Here’s Mr. Trump earlier today on the subject: “So the Americans are benefiting. Working today we have the most working and we have 401k’s that their all time high, highest they’ve ever been.” 

Mr. Trump added: “And that goes along with the stock market, which is the highest it’s ever been under my most favored nation agreements. This is something that I wish the media would talk about, because to me, it’s one of the biggest things ever to happen in our country.”

Now I do feel everyone’s pain regarding gas and diesel prices, and fertilizer prices on the farm. Yet it is a small price to pay to get ride of the Gestapo in Iran. Actually, less than 5 percent of consumer spending is affected by gas prices.

Meanwhile, the Atlanta Fed is looking at a huge 4.3 percent increase in second-quarter real GDP. That is a big number.

Under the hood, consumer spending, despite gas prices, is estimated to rise by 2.9 percent annually, and business capital investment by 9.4 percent annually. Wages, which mean more to working folks’ kitchen tables than GDP, are rising above 4 percent when you include hours worked.

Output per person or productivity is up a whopping 2.9 percent over the past year. Almost 3 percent.

And unit labor costs, which is the most basic price indicator in the whole economy, wages less productivity, is up only 1.2 percent over the past year.

The AI footprint is now bigger than the dotcom boom, according to John Carney.

And yes, topline prices are up by around 4 percent, but actually core goods prices, excluding food and energy, only 1.1 percent. So the tariff-flation craze never panned out.

Actually, if it weren’t for a one off bad import number last quarter, GDP would’ve been up 3.2 percent. That’s going to reverse this quarter and will drive the economy even faster. Here’s Treasury Man Scott Bessent earlier today:

“Sir, on the economy, two words: resilience and prosperity. The continued resilience of the economy speaks for itself even during the Iran conflict.”

Meanwhile, the stock market is just booming across the board. The Dow is holding above 50,000. And all the other stock indexes are making record highs, which is a sign of confidence in the future economy.

Did you know, by the way, that in America, total household wealth, which includes mainly stocks, bonds, real estate, and cash, is about $180 trillion. Which is about six times larger than our gross domestic product, or our federal debt in public hands. $180 trillion folks. It’s remarkable.

No country is even remotely close to that number. And on a per person basis, our GDP is more than $90,000. In Communist China, it’s less than $14,000.

The Chinese stock market hasn’t moved in years. And the United States is producing more oil and gas than anyone could ever imagine. We are the biggest supplier in the world today. This is the Trumpian economy. If only somebody would write about it.  

Just think of it.

Lawrence Kudlow is a Fox News Media contributor and host of both “Kudlow” on weekdays and the nationally syndicated “Larry Kudlow Show” each Saturday. This column is adapted from his monologues on “Kudlow.”

World Agenda June 2026

Events next month include the G7 leaders’ summit in France, the kickoff of the FIFA World Cup, SpaceX’s planned record-breaking IPO, the 10th anniversary of the Brexit referendum and Pope Leo’s trip to Spain. Japan’s central bank may raise interest rates, local elections in South Korea will test support for President Lee Jae Myung, and Hollywood will celebrate the centenary of Marilyn Monroe’s birth.

Jun 1, U.S.: Hollywood celebrates the centenary of the birth of Norma Jeane Mortenson, better known as Marilyn Monroe

Jun 3, South Korea: Martial law scandal looms large over local elections that will test support for President Lee Jae Myung’s ruling party after last year's snap election

Jun 6-12, Spain: During his visit Pope Leo XIV will inaugurate the main tower of Barcelona’s Sagrada Família, which also coincides with the 100th anniversary of architect Antoni Gaudi’s death

Jun 11, North America: FIFA World Cup kicks off, jointly hosted by the U.S., Mexico and Canada, the first time it is hosted by three countries

Jun 12, U.S.: SpaceX plans a record-breaking IPO that could become the largest stock market debut in Wall Street history and make Elon Musk the world’s first trillionaire

Jun 15-17, France: President Emmanuel Macron hosts the G7 leaders’ summit amid rising tensions between the U.S. president and many G7 members over the war with Iran and broader foreign-policy disagreements

Jun 15, Japan: Central bank monetary policy meeting considers an increase in interest rates to calm inflation fears, but Prime Minister Sanae Takaichi opposes further hikes stemming from the conflict in the Middle East

Jun 23, UK: On the 10th anniversary of the Brexit referendum, political opinion remains deeply divided, though polling shows a clear majority of Britons regret leaving the EU