There’s a lot of media buzz today about a do-nothing Republican Congress that didn’t get a whole bunch of legislation through the shortened session. But there are actually three items that are all pro-growth that matter much more than all the rest of it.
First: The investor tax cuts on dividends and capital gains were extended to 2010. This underpins the Goldilocks economy with the strongest capital formation incentives since Calvin Coolidge.
Second: Treasury Secretary Hank Paulson apparently talked Senators, “Smoot” Schumer and “Hawley” Graham out of a vote on their China bashing 27.5 percent tariff. This could’ve been the worst anti-growth legislation since the Smoot-Hawley tariff passed in 1930, and signed into law by Root Canal Republican Herbert Hoover (who was also dumb enough to sign a tax hike that raised the top rate on personal income to 65 percent from 25 percent.)
Third: There was no immigration legislation passed. So, for the moment, the new Berlin Wall will not be built.
A balanced approach to immigration suits me just fine. But a fence only approach not only won’t work, it would be bad for the economy. (Now I’ve said it.) Remember, over the past twenty years of the high tide of Mexican immigration, the American economy has prospered and flourished.
I like these Mexicans. They go to Catholic Church; They work hard; They’re learning English and they will eventually create a new blue-collar middle class.
Yes, I do worship at the high church of GDP. But I also worship at the high church of Catholic Mass. And therefore I’m able to combine supply-side economics with the teachings of Catholic humanitarianism.
My biggest disappointment with this session of Congress was the marked absence of a strong budget earmark reform bill that would end the cash for legislative favors corruption.
But all things considered, I basically like this session of Congress
In the end, low taxes, free trade, and the free movement of labor and capital will all bolster our Goldilocks economy. And as I’ve said all along, this economy remains the greatest story never told.