Wednesday, July 22, 2015
The US Economy Can Grow At 4% But Jeb Bush Won't Like The Method
GDP is simply defined as the total output per person. The US could welcome millions of immigrants and total output could grow at 4%. The anti-immigrant Republicans would not support that approach, and per capita GDP, which is a measure of our standard of living, would drop. China's economy is larger than the US economy because it has a much larger population. Its standard of living is lower because it well below per capita GDP in the US. Since Republicans don't support a huge large scale immigration Jeb Bush, and others like him, are forced to make another argument which few economists accept. Bush and his followers assume that cutting taxes, primarily for the rich, and deregulating the economy will double our growth rate from its current level at around 2%. They also assume that they can cut taxes without running budget deficits. Some even argue that cutting tax rates for the rich will actually increase government tax revenues. Apparently, they would work harder if they could increase their after tax income.