Why is it that so many economists still believe that if the government spends your money, it's OK, but if you keep more of your own money through tax cuts, it's not OK?
Take inflation: A group of 16 Nobel Prize–winning economists signed a letter yesterday endorsing Joe Biden, basically because they believe Donald Trump's tax cuts will increase inflation.
These are Nobel Prize winners. Trump tax cuts are inflationary, but Biden's enormous spending and borrowing is somehow not inflationary. Get it? Of course not. Most of those Nobelists are liberal, left-of-center Democrats.
Here's Ronald Reagan 40-plus years ago in 1981 asking the same questions.
FORMER PRESIDENT REAGAN: They never answer one question that I keep asking — and you've probably heard me ask it. Why is it inflationary if the people keep their own money and spend it the way they want to, and it's not inflationary if the government takes it and spends it the way it wants to?
I hope Trump asks Biden directly in tomorrow's CNN Presidential Debate whether he'd support the Trump plan for tax-free tips for all those waitresses, maître-d's, golf caddies, Uber drivers and the millions of others in the gig economy that rely on tips.
Let's see if Trump can smoke Biden out early. But, then, back to the foolishness of the 16 Nobel economists...
When Donald Trump was president he cut taxes, opened the fossil fuel spigots, rolled back business red tape regulations, and the inflation rate for his entire term was... wait for it... 1.9% at an annual rate for four years.
Joe Biden, on the other hand, has been a huge federal spender, a tax-hiker, an anti-business regulator who is waging war on fossil fuels. And his inflation rate… hang on a second... wait a minute... 6 percent at an annual rate.
That's three times Trump's pace. So, if Trump is pledging to essentially repeat his first-term policies, why is inflation suddenly going to ratchet up?
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On the other hand, when Joe Biden intends to deepen his first-term policies, why do we think inflation is going to come down? We've had a laboratory test of two different economic policies with two different inflation outcomes, and yet all these eminent Nobelists want to ignore the plain facts. Why is this?
Well, one reason is that liberals believe in the power of big government. Conservatives believe in the power of individuals. Liberals believe in the power of regulation, while conservatives believe in the power of free markets.
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And, finally, liberals love the idea of redistribution, which we used to call "taking from Peter to give to Paul." Conservatives believe in rewarding success, by what we used to call growing the economic pie larger.
So, in tomorrow night's CNN Presidential Debate, voters are going to see two very different economic philosophies. But, you know what, you can't have two completely different sets of factoids.
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The facts are on Mr. Trump's side. The Nobel Prize winners are totally wrong. I believe economic freedom always wins, while economic collectivism and central planning always lose.
This article is adapted from Larry Kudlow’s opening commentary on the June 26, 2024, edition of "Kudlow."
