Guess Who Gets Sudden Stimulus From Biden’s Economy
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If it ain’t broke, goes the sage advice, don’t fix it. The economy is booming. Totally booming. They key factor is the explosion of vaccines — well over 200 million, leading to the reopening of the economy. And, I feel compelled to remind, the vaccines arose from President Trump’s Operation Warp Speed.
The booming economy itself was always fundamentally strong, and don’t forget that we are still operating under my former boss’s policy principles of lower taxes, minimal regulation, and energy independence. The Bidens might wreck all of that, but right now it’s sill supply-side economic principles.
The stock market is booming along with everything else. The first half of the year gross domestic product will be up at least 8%, and it could be 10%. It could even be 12%. Which is why I argue, again, if it ain’t broke, don’t fix it. On air Friday, I attributed that phrase to President Bill Clinton. That turned out to be an error.
My good friend Kay Bailey Hutchinson emailed me that it was actually President Reagan’s chief of staff, James A. Baker. I’m happy to correct that point and give credit to one of my long-time mentors. The reason for my confusion was that during the 1996 presidential campaign, I commended frequently on Bill Clinton’s strong economy.
It was, I kept reminding, boosted by a cut in the capital gains tax, and would defeat Bob Dole. Apologies to Senator Dole, but it turned out to be a good Kudlow forecast. Not all of them are, but I digress. The main point is the more the Bidens try to fix this with their so=called transformational policies, the worse it will get.
The Biden program will be an even larger wet blanken thrown on the economic boom. Just leave it alone. Now I want to focus on an additional point. These big stimulus packages passed last December and January are temporarily helping the economy to rise up, and we’re seeing it in the first quarter.
Here, though, is something that I don’t like. And I have to credit my friend Jennifer Nordquist for sending a memo to Kevin Hassett, Larry Lindsey, and myself to show that unfortunately these stimuli are actually stimulating China as much or more than the United States. China’s GDP is up 18% in the first quarter.
It’s led by exports rising 38% to the United States — a record. Meanwhile, U.S. retail sales jumped 14% in the first quarter. So let’s walk through this. Congress, in its wisdom, shelled out nearly $3 trillion in stimulus. The stimis led to surging consumer spending. Unfortunately that went to buying all kinds of goods.
Including Apple’s iPhone, which led to big China growth and exports and a larger American trade deficit with China than ever before. This is not what Americans bargained for. This adds up to major unintended consequences. Do we really want to help China this way? I don’t think so.
And I think from the standpoint of way too much government spending here, which is bad, and rising taxes to pay for it, which is bad, our Chinese stimulus packages are very bad. Right? Don’t they use the money to buy military weapons aimed at us and for cyberhacking and for threatening Taiwan.
And that’s not even to mention human rights, oppression of the Uighers, and suppression of Hong Kong’s democracy. This is another bad reason for all this stimulus stuff.
Correction: Jennifer Nordquist is the individual who sent the memo to Messrs. Hassett, Lindsey, and Kudlow; the name was given incorrectly in the early edition owing to an editing error.