Impact of market rally, strong economy on 2020 presidential race
Trump's stock market rally outpacing past presidents; reaction and analysis from market watchers Jeff Sica, Gary Kaltbaum and Melissa Armo.
The dirty, dishonest impeachment process by Democrats cannot obscure a blazing, simple and happy truth: Americans are doing better — much better — under President Trump than they were before he was elected. And with a few strategic policy moves, particularly in health care and taxes, the White House can fire up even more impressive gains in the New Year.
First, let’s look at the record of what has been achieved thus far, an achievement almost no reputable observer forecast three years ago.
Unemployment is at its lowest level in nearly half a century, with minority joblessness plunging. The stock market has hit new highs. The poverty rate has fallen to a 17-year low. More than 6 million Americans have moved off food stamps.
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Wages are rising with the greatest rates of growth among lower-income workers. With new trade deals on the verge of becoming a reality, our economy is poised to boom as never before.
The Trump administration has made impressive and unprecedented strides in attacking growth-suffocating regulations. These nitty-gritty efforts don’t get headlines but they are powerful stimulants for economic progress.
The Trump team has cut more than eight regulations for each new one, resulting in savings of $50 billion, which is expected to grow to $220 billion as these actions are fully implemented. Here’s something Democrats won’t tell you: Deregulation will save each American household an average of $3,100.
Health care policies have also improved. For example, coverage for people with chronic illnesses has been expanded for patients with certain types of HSA-eligible (health savings account) plans. The hugely unpopular ObamaCare individual mandate is gone.
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Three foolish and destructive ObamaCare taxes have been eradicated: the job- and innovation-killing medical device tax; the so-called Cadillac tax that penalized people (including many union workers) whose employers provided them with comprehensive health care coverage; and a pernicious tax on insurance companies that would have led to higher premiums.
The White House is pushing hospitals and health insurance providers to publish prices, thereby enabling consumers to make informed choices and encouraging competition for their business.
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And the future? For 2020, the president can do even more to benefit patients and their families by tackling the root cause of sky-high costs: the lack of robust free markets in health care. The sector is dominated by third parties—insurance companies, government (primarily Medicare and Medicaid) and employers—not individual patients.
Government policies must push policies that put patients — not government bureaucrats and other third parties — in charge. In addition to the move for more pricing transparency, here are other initiatives that would be immensely helpful.
The jungle of restrictions on health savings accounts (HSAs) should be chopped away to make them more responsive to patients’ needs. You should be able to use your HSA to pay for over-the-counter medications, not just prescriptions.
You should be allowed to get your own HSA if your employer doesn’t provide one or even if you don’t have a health insurance policy. (And the same freedom should apply to those on Medicaid.) Contribution restrictions should be scrapped or enormously expanded.
Another welcome White House move would be to push for the abolition of certificate-of-need (CON) laws. Thirty-five states and the District of Columbia now impose CON restrictions on health care entities, forcing them to obtain government permission before they can open or expand facilities or in some cases purchase certain devices or technologies.
Forcing providers to prove a community “needs” a new service — something that can be challenged by existing competitors — limits supply and prevents the competition that would bring down medical costs. Does Starbucks need to get a CON if it wants to open a facility near Dunkin’ Donuts, or does In-N-Out Burger need one if it wants to open a restaurant across from McDonald’s?
The president could also mandate sweeping transparency about the pricing and rebate practices of pharmacy benefit management organizations that many experts believe are a prime cause of high drug prices.
Needless to say, taxation is another ripe area for beneficial change. The original Trump tax cut has been a huge success, leading as it did to higher economic growth, higher wages and the creation of millions of new jobs. An American family in most states earning $75,000 a year saw its tax bill cut by more than $2,000.
While it is unfortunate that the White House is not willing yet to go for the flat tax — the ideal system that would reduce everyone’s taxes, dramatically simplify people’s lives and powerfully propel the economy; more than 30 countries have adopted it — officials are considering what is dubbed tax cut 2.0. Among the ideas under discussion are reducing the 22 percent tax rate to 15 percent to help middle-class earners and reducing the number of brackets from seven to three or four.
A productive package should include cutting the capital gains levy, which helps productive investment and makes equities more attractive to own. This would be good news for the tens of millions of people with 401(k)s and similar plans. It should cut income tax rates across the board, not just the 22 percent bracket, which would help both the economy and take away the sting of the 2017-enacted limits on state and local tax deductions.
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Likewise, the package should include reviving the FICA payroll tax reduction, which was in effect for 2011 and 2012, to insure that everyone who works gets to keep more of what they earn; and reforming and expanding the earned income tax credit (EITC), a method far more efficacious in helping people escape poverty through work and far less harmful to job creation for the unskilled than raising the minimum wage.
Bottom line: The president should build on his splendid achievements with policies that will make our economy — already the most dynamic in the world — even stronger.
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