The Big-Bang Story of U.S. Private Business

At RealClearPolitics one of my favorite living economists, Lawrence Kudlow, brings us the latest economic numbers relating to investments, jobs and economic growth in the US. The picture is a very good one with all of the major indicators looking very solid. Jobs are up; the economy is hot; inflation moderate and investment booming. And of course you will hear none of this from The Elite Media Monoculture because it does not fit the liberal socialist template of capitalist oppression. Fortunately the Angry Left is not in charge of my money or yours. And thus we all get to keep more of the money we have earned from our own hard work.

Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent? In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy, and much larger than the total economic size of nations like India, Mexico, Ireland, and Belgium.

This is an extraordinary fact, although you may be reading it here first. Most in the mainstream media would rather tout the faults of American capitalism than sing its praises. And of course, the media will almost always discuss supply-side tax cuts in negative terms, such as big budget deficits and static revenue losses. But here's another suppressed fact: Since the 2003 tax cuts, tax-revenue collections from the expanding economy have been surging at double-digit rates while the deficit is constantly being revised downward.

For those who bother to look, the economic power of lower-tax-rate incentives is once again working its magic. While most reporters obsess about a mild slowdown in housing, the big-bang story is a high-sizzle pick-up in private business investment, which is directly traceable to Bush's tax reform. It was private investment that was hardest hit in the early-decade stock market plunge and the aftermath of the 9/11 terrorist bombings. So team Bush's wise men correctly targeted investment in order to slash the after-tax cost of capital and rejuvenate investment incentives.