The Doubters Are Wrong: Boom Times Ahead For The USA | Dr Art Laffer

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**Arthur Laffer** (1:00)
So these are the things I really think I sort of summarize in my five pillars, you know, taxation, government spending, monetary policy, price stability, regulations and trade. And if I if I summarize my five pillars of prosperity correctly, that's where I come out. I am still very optimistic about the prospects for the US economy going forward.

**Adam Taggart** (1:34)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart.
Is the US economy now solidly on the path to a new golden age, as the administration tells us, or have President Trump's aggressive tariff and international military interventions set America's prospects back as a number of critics claim?
I can think of few people better to hear from on this topic than today's guest, who remains one of the key economic advisors to President Trump and his cabinet members. Today, we're fortunate to welcome back to the program economist Dr. Arthur Laffer. He was one of the 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 determining the optimal balance between tax revenues and economic growth. Dr. Laffer, thank you so much for joining us today.

**Arthur Laffer** (2:27)
My pleasure. Keep going. I just love hearing that description. It's so wonderful.
My dad would have loved it, but my mom might have even believed it.

**Adam Taggart** (2:42)
Well, it's just facts. As far as I can tell, you are a very prodigious contributor here, my friend. All right. Well, look, lots of topics to chop through here, not a lot of time. If you don't mind, I'm just going to start sprinting. Sure.
I want to get into inflation, Iran, what's happening to the price of gold, your thoughts on Kevin Warsh, the new Fed chair. Real quick though, it's been a little while since we've talked.
As I remember, you were very optimistic with the new administration coming in about what was possible in terms of how quickly the economy could be returned to prodigious economic growth. It's because you've seen that script before with past presidential administrations who you think got the script right. I know, though, that you are not a fan of tariffs, and tariffs were a big tool that were wielded last year in 2020 In fact, they're still being wielded, I'm sure, but last year was really the year of tariff and trade policy. So let me just start by talking about that with you here. What would have been, in your opinion, the net economic impacts of the key pillars so far of Trump's second term? And let's start with the tariffs and the trade policy.

**Arthur Laffer** (4:02)
Yeah, tariffs are bad. I mean, they hurt economics, they hurt the integration of the world market. Now, we all know we need tariffs.
We shouldn't be selling, let's say, nuclear weapons to Kim Jong-un in North Korea. So, you know, this is all within a context of what's correct and what's good.

**Adam Taggart** (4:20)
You need some trade restrictions.

**Arthur Laffer** (4:22)
You need some trade restrictions, you really do.
And this administration has used some trade restrictions very strongly, for example, immigration has done.
They've also used them as a bargaining chip for trying to achieve peace treaties in Africa, which they've been probably pretty successful, not quite so successful yet in the Ukraine fight. And then also, if you look at it with regard to sanctions on Iran and other ones. So there's the economics of tariffs, quotas, restrictions on trade are extraordinarily clear. They really hurt the world economy, they hurt the US economy, etc. But the other uses of those instruments can in many cases really offset and more than offset the damage done to the economy. So I would say that's where we start off with trade. We also just had a Supreme Court second decision on tariffs. And that second decision says that they cannot be used for the reasons he argued they could be used. He's changed his argument to a different argument to justify tariffs. I don't know how all of that's going to come play out, but it looks like it's going to play out less well for him than we thought a while ago. So I would argue that the tariff issue will be diminished dramatically in the future unless the Supreme Court changes its mind and gives him authority over the tariffs. I personally don't find Trump's use of tariffs for negotiation purposes so terrible. I don't. It's a very important tool and one of the only tools he has to negotiate with foreign countries that's not military or political.