VIDEO: Stephen Moore and Jonathan Williams Discuss ALEC Resolution Calling for Trump Tax Cuts to be Made Permanent
I'm very worried about the national economy right now. We have a president who is pushing all the wrong buttons and that has a negative effect. We're skating right now on the verge of a recession.
FreedomWorks Economist Steven Moore and ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams sat down with ALEC Public Affairs Director Catherine Mortensen this week to talk about progressive’s proposals to “undo” the 2017 Tax Cuts and Jobs Act which President Trump signed into law. Below are highlights from the conversation.
Catherine Mortensen: Let’s start by listening to a short clip of Sen. Majority Leader Chuck Schumer.
Chuck Schumer video clip: “If you want to get rid of inflation, the only way to do it is to undo a lot of the Trump tax cuts and raise rates.”
Catherine Mortensen: I would say that is some crazy jujitsu to come up with raising taxes as a solution for families suffering under high inflation.
Jonathan Williams: It is unbelievable that they would consider raising taxes in the midst of this crisis we’re facing right now. Steve and I have talked about this for a long time now – the threat of stagflation. That’s exactly what we’re seeing. What Sen. Schumer just talked about, he can’t event get his own caucus behind him because he has people like Joe Manchin and Kyrsten Sinema saying no to higher tax rates. Thank God that they did or otherwise would be in much worse shape than we’re at today. With that negative 1.4 percent GDP number that just came out last week. These are incredibly dangerous times.
Steven Moore: I think it’s important for people, especially our ALEC members to understand clearly why we’ve seen inflation go from 1.5 percent when Trump left office in January of 2021 to now somewhere between 8 and 8.5 percent under Biden in just 15 months. That’s an incredible feat to screw up the economy that quickly.
I believe the biggest factor behind this tidal wave of inflation has been the runaway government spending. First there was $1 or $2 trillion that was spent at the end of the Trump administration. And then Biden came in with $3 trillion of additional spending. His American Recovery Act, which was just really a blue state bailout, had a price of $1.9 trillion. And then they passed this sham infrastructure bill, which was really the green New Deal. That was another $1.1 trillion. So that’s $3 trillion on top of the trillions of dollars that were already in the pipeline. We just flooded the American economy with all these dollars. And that is the very definition of inflation.
Milton Friedman taught us this 50 years ago, inflation is when you have more money in the economy and fewer goods, you’re going to have higher prices. And I would add to that, by the way that Biden’s war on American energy has also had an extremely negative effect on prices because energy is one of the things that drive up costs for everything else.
Job number one in Washington right now is get inflation back down to two, three, I’d even take 4 percent at this point. I think the target should be about 2 percent. That means cut government spending.
Catherine Mortensen: Going back to the Trump tax cuts, who really benefited from them?
Jonathan Williams: The vast majority of Americans benefited from the Trump tax cuts. Steve and I and ALEC members across the country made the case that there were so many pro-growth elements to these tax cuts. And that’s why we saw some of the record low unemployment rates. We had such a booming economy before the government lockdowns during COVID. Low- and middle-income Americans saw some of the greatest benefits. One of the reasons for that was the doubling of the standard deduction. We saw the expansion of childcare tax credits. We stopped the subsidy to high tax states by capping the S.A.L.T. deduction, which was unlimited before the Trump tax cuts. Now it is capped at $10,000 annually. The vast majority of those benefits were going to high income individuals and a majority of the benefits went to just four states.
Steven Moore: Following the Trump tax cuts, we saw record low unemployment and poverty rates for Blacks and Latinos in the country’s history. So, I don’t really understand the logic of reversing a policy that has been so beneficial to so many Americans.
Catherine Mortensen: What role can states play in protecting the Trump tax cuts?
Jonathan Williams: The states can pass the ALEC model policy, a resolution urging Congress to make the Trump tax cuts permanent. The individual tax rates are set to expire at the end of 2025. States need to have the permanency of low tax rates. I think states realize that their voice is very important in this tax policy debate and getting the economy moving again.
Steve Moore: I’m very worried about the national economy right now. We have a president who is pushing all the wrong buttons and that has a negative effect. We’re skating right now on the verge of a recession. You know, the first quarter, as Jonathan mentioned, was negative. The official definition of recession is two quarters. I don’t think the second quarter is going to be negative, but we’re skating on the edge of that. And when you have people like Chuck Schumer and Joe Biden and Nancy Pelosi and AOC keep talking about raising taxes, calling for more government spending and regulation This is a precarious time for the economy. I think we can still avoid a recession. But we’ve got to have policies in Washington to bring the inflation rate down. And it would be great if our state legislators from ALEC would really send that message: get inflation down, you’re killing everything.