Despite Big Real Challenges, The Economy Is In Good Shape & Getting Better | Dr. Art Laffer

**Arthur Laffer** (0:00)
I'm very pleased with where the US is, and where I anticipate it will be. I think one of the biggest changes we've had that will affect the future and has not affected the present yet, is Kevin Warsh as Chairman of the Federal Reserve Board.
He will make a material difference, I believe, over the next quarter century. And that is really good news.

**Adam Taggart** (0:30)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart. Very delighted to welcome you here today for another discussion with the fantastic economist, Dr. Arthur Laffer.
He was first to hold the title of Chief Economist at the Office for Management and Budget in the early 1970s. He then later served as a member of President Reagan's Economic Policy Advisory Board. He's perhaps best known for developing the Laffer curve, a model for developing the optimal balance between tax revenues and economic growth. He's also been an economic advisor to most presidents since I think starting with Nixon. Correct me if I'm wrong there, Dr. Laffer, but thank you so much for joining us today.

**Arthur Laffer** (1:14)
Thank you very much, Adam. It's really fun to be back. By the way, I enjoy this show very much. The way you run it and the way you handle it is really good and comfortable and informative.

**Adam Taggart** (1:25)
Well, you're so kind. That is 1000 percent because of the quality of the guests, at which I put you at the top of that list, Dr. Laffer. So thank you, but I'm reflecting the true kudos. Should go right back.

**Arthur Laffer** (1:36)
Well, you don't deduct 900 percent by being the host. Let me tell you, even though we're a thousand, I mean, if it's 100 percent, that means that's my math and me coming out.

**Adam Taggart** (1:47)
Okay. All right. Well, look, a lot of questions to talk about with you, but if we can, let's just start at the top.
What's your current assessment of the US economy? Interestingly, I see more people polarizing on this, where some are saying, no, it's growing, it looks really hardy if you look at these stats, and others who say, no, it's declining if you look at these stats over here. So in a net balance, how's it doing?

**Arthur Laffer** (2:16)
Yeah, I think the US economy is doing extraordinarily well as a broad answer to a question, and I think the prospects are looking good too. I mean, the stock market's been on a tear. We do have some recent changes that I'll talk to you about, especially with regard to the Treasury position a couple of days ago, about doing an operation twist, and then also looking at the Yen, these trying to intervene and hold up the Yen. That's another big issue that I'd love to talk about. But from the standpoint of this economy, we've got it all there in the BBB, the big beautiful bill. We've got the tax rates in position.
We have no taxes on tips, no taxes on overtime. I mean, all of that stuff is well done. 100 percent expensing of capital purchases for the income tax. We have a permanently lowered corporate rate as well as personal income tax rate down to 37 percent. So this economy is poised. It's in great, great shape as far as macroeconomics is concerned.

**Adam Taggart** (3:28)
All right. Well, that's really encouraging to hear. Let me just ask maybe a really simple, maybe too simple question. But if you look at GDP, which I think most people do is a finger to the wind sense for how the economy is doing, it's growing, so that's good. But the growth rates this year have been materially lower than the growth rates last year. So how do you explain your optimism about the economy if the numbers we're seeing are going down? Is it because we're laying the foundation for a future jump in growth ahead? Or nothing else?

**Arthur Laffer** (4:04)
There are a couple of technical reasons which I want to discuss later in the labor market, but let me discuss it right here.
Prior to President Trump's coming back into office, and it took him a while to really set it up. We were having illegal immigration, I don't want to talk about it illegal. We were having immigration levels in the range of about 3.5 million per year coming in. Since he's taken office in the control on the border, we now have out migration of about a million a year. That is a swing from 3.5 to minus 1 million. That's a $4.5 million swing in population growth in there. If you make the wild assumption, probably pretty reasonable, that half of those people are in the labor force or work, what that means is there's a 2.5 million swing in the growth in the labor force per year.