Welcome to the New American Economic Revolution

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Welcome to the New American Economic Revolution

After the election of Ronald Reagan in 1981, the U.S. economy experienced one of the greatest booms in its history.  The growth rate averaged nearly 4 percent for seven years from 1982 to 1989.  And the Dow Jones Industrial Average rose from less than 1,000 to more than 10,000 over the next two decades.  This was a period of wealth and job creation that the nation and middle class had seldom seen before. 

Until the results were in front of them, critics called it “voodoo economics” and said it could not and would not work.

Now the question is:  Can it happen again in this era of massive government debt, meager growth, and flat-lined incomes for the middle class?  The answer is “yes.”  With the right set of policy fixes, we can see a return to wage gains, higher profits (which means a bull run on stocks), and rapid growth in output.

Since the official end of the recession, economic growth has averaged an anemic 2 percent, producing the weakest “recovery” since the Great Depression.  Over the past year, growth has slowed to an even more anemic 1.5 percent.  This means barely staying out of recession. 

But fortunately, America can do much better.  And as we have explained in previous issues, the United States is, in fact, poised to ride the Deployment Phase of the Fifth Techno-Economic Revolution into a new era of strong growth.

The 2016 election represents the so-called “flash point” where the ignition spark is finally able to ignite the fuel. 

As everyone recognizes, Donald Trump and Hillary Clinton proposed almost diametrically opposite economic plans.  Clinton wanted to raise taxes.  Trump wanted to cut them.  Clinton vowed to defend President Obama’s “legacy” and double down on job-killers such as Obamacare.  Trump promised that “repeal and replace” will become his top legislative priority.

Now, the Trump team is working with Congressional leaders to force through big changes, and the Trends editors believe these could enable the United States to accelerate its economic growth rate from 1.5 percent to 4 percent for the next five years.  That acceleration would be equivalent to adding another economy the size of Texas to the U.S. 

How will this be accomplished? 

First, Trump will sign the biggest pro-growth tax cut since Ronald Reagan’s 1981 reform.  Trump will simplify the tax code and significantly reduce marginal rates, encouraging investment and economic expansion...

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