Permit me to continue our conversation on 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 see with great clarity, unfortunately, how we’ve slumped in the last 20-plus years. 

A quick review: For more than 50 years, following World War II, the great American powerhouse economy averaged better than 3.5 percent growth per year adjusted for inflation. That 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.

Over the past 20-plus years, though, our economy has slumped to less than 2 percent annual growth. Our inflation rate in these recent decades is more than twice the low post-war inflation. 

The prosperity slump of the past two decades probably cost our economy roughly $9 trillion in lost output and income, and if we don’t restore our historic growth rate it could cost Americans another roughly $8.5 trillion in economic loss. 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. 

What’s the problem here? The federal government keeps getting bigger, and the private sector keeps getting relatively smaller. In fact, the bigger part includes federal, state, and local, which now consume an incredible 44 percent of our GDP. That number is nothing if not big-government socialism.

At the federal level, we’ve gone from a post-war average of a little less than 19 percent of GDP up to more than 21 percent in the last two decades, and now we are at 24 percent of GDP. Think of it this way: The central planners in Washington are winning. 

The entrepreneurs throughout the country are losing. This is not good. Too much spending, taxing, regulating, and inflating, and not enough workfare. Nowadays, you’ve got a bunch of woke socialists literally strangling the economy. 

Starting with energy and moving right down the line — from corporations to small businesses, to the gig economy — they are punishing success instead of rewarding it. They are erecting so many barriers to production, investment, and entrepreneurship. 

Reagan used to always say: Government is the problem, not the solution. President Biden believes government is always the solution. 

The climate tsar, John Kerry, was literally screaming “money, money, money” nine times while in Davos. That’s your money, taxpayers, spent by — you guessed it — the 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 I strongly support the House Republicans in their effort to tie the debt ceiling to spending cuts. There must be new restraints and caps, and across-the-board, automatic spending cuts as penalties.

Mr. Biden says he won’t negotiate and he wants a clean bill on debt. Here’s my forecast: He will fold his cards and cave in to Speaker McCarthy’s request for negotiations in a matter of weeks, if not days. Take that to the bank. 

Finally, the public is just as worried about the state of our economy as I am. A TIPP-insights poll shows that by 51 percent to 31 percent, Americans believe the U.S. is evolving into a big-government socialist state. Another part of that poll shows that by 57 percent to 35 percent, Americans are unwilling to pay higher taxes to support more social programs. 

So, we have a problem here. People are super worried that America’s going socialist, and they don’t like it one bit. So, of course I’m going to say: Free-market capitalism beats big-government socialism throughout history. The question is, do people throughout this country, of all political stripes, have the backbone and the common sense to restore free-enterprise prosperity? Know what? I’m betting they do.

From Mr. Kudlow’s broadcast on Fox Business News.