Newsmax Finance Insider Larry Kudlow
says Donald Trump offers the best blueprint and is on the “right path” to restore economic growth in the country.
“The main thing for Donald Trump, in my view, is he has a pro-growth plan," he told CNBC.
“We have been suffering," said the CNBC senior contributor, who also hosts a syndicated radio-talk show. "By the way, under Republican and democratic presidents and congresses, we haven't moved real wages since 2000. We haven't moved business investment. We basically have not moved productivity. These are not good," he explained.
“We need different policies to encourage this, particularly on the business side and small-business side, which helps middle-income wage earners," urged Kudlow, who was a former economic adviser to President Ronald Reagan.
“I think the single best thing he came up with is slashing business taxes on large and small companies. I think that is the single best economic growth stimulant," Kudlow said.
The U.S.' 35% corporate-tax rate is the highest in the developed world. the Wall Street Journal
reported. "Since taxes are simply a cost of doing business, our high tax rate means U.S. companies face higher costs than foreign competitors. Trump has proposed to abolish this competitive disadvantage by slashing the top U.S. business tax rate to 15%," WSJ.com reported.
The presumptive GOP nominee says the lower rates will "make corporate inversions unnecessary by making America’s tax rate one of the best in the world."
“And to me that showed me he was on the right path. He is also going to be a major de-regulator," said Kudlow, who is helping fellow conservative economist Stephen Moore rewrite Trump's original plan.
“As a businessman, he is going to be a cost-cutter," he said.
Kudlow also agreed that Trump must watch his "tone" on controversial topics such as immigration, visas and building walls to secure borders. But Kudlow explained that the United States must be more pro-active and aggressive on such security matters.
“We are in a very serious war that threatens this country," he said. "We are in a war for our lives, our democracy and way of living."
However, other respected financial voices aren’t so sure about Trump’s strategy.
A new analysis by Moody’s Analytics has found that “the economy will be significantly weaker if Mr. Trump’s economic proposals are adopted. Income will stagnate, and stock prices and real house values will decline.”
Trump has said he plans “to pull back on globalization and punish companies that move jobs overseas, which might sound good but would actually wreck what growth we have now,” Yahoo Finance
said of the Moody’s analysis.
“Imposing new tariffs on imports from China and Mexico, as Trump wants to do, might lead to retaliatory tariffs on US exports to the same countries, and less trade overall. Tax cuts without corresponding cuts in government spending would increase the federal budget deficit, which is about $600 billion this year, by roughly $1 trillion per year. Deporting 11 million illegal immigrants would reduce the size of the labor force and consumption spending as well,” Yahoo reported.
“The result, says Moody’s, would be a recession that runs from 2018 to 2020. Without any changes, the forecasting firm predicts, the economy would grow by 1.9% in 2019 and 1.6% in 2020. With Trump’s changes, the economy would shrink by 1.5% in 2019, with no growth in 2020. The recession would kill nearly 7 million jobs and send the S&P 500 index about 12% lower than it is today.”
Yahoo also explained that Mark Zandi, chief author of the study, has advised Democrats in the past, "giving Trump cause to claim the analysis is biased."
But for his part, investing icon Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc, has said a Trump presidency wouldn’t be the blow to U.S. business that some fear, Bloomberg
“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting in Omaha, Nebraska.
The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.
Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.
“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Buffett said. “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.”
(Newsmax wire services contributed to this report).
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