According to Forbes, Amazon founder Jeff Bezos is the second richest man in the world. The only people who are more wealthy are Elon Musk, who has a Tesla, SpaceX, Boring Company, Neuralink, and Solar City empires. So, it is worth paying attention to when these two barons agree that America must take action to dig our way out of the debt hole that was created.
Bezos made noise at a recent New York Times Deal Book Summit by expressing optimism about incoming President Donald Trump’s approach to reducing regulation, saying about the second Trump presidency, “I’m very hopeful that he seems to have a lot of energy around reducing regulation and my point of view, if I can help him do that I’m going to help him because we do have too much regulation in this country. This country is so set up to grow. By the way, all of our economic problems if you look at the deficit, the national debt, and how gigantic it is as a portion of GDP. These are real long-term problems, and you get out of them by out-growing them. You are going to solve the national debt problem by making it a smaller percentage of GDP, not by shrinking the national debt, but by growing the GDP.”
What a victory. Jeff Bezos, the owner of the Washington Post, declared the national debt a major problem and identified reducing regulation as a key element of growing our economy to meet that challenge.
However, Elon Musk’s Department of Government Efficiency focuses on cutting the size and scope of government to control the debt. This includes identifying unconstitutional regulations and killing economic growth without a resulting benefit worth the cost.
While some might want to create a false controversy between Bezos and Musk on what is the appropriate approach, the truth is that President-elect Donald Trump embraces both approaches as they are not mutually exclusive. Coupled with President Trump’s pro-growth tax cut agenda, it can restore America’s economic might.
President Trump’s proposals to end taxes on tips, overtime, and Social Security payments provide a bottom-up stimulation of the economy, driving consumer spending growth. His plan to make the so-called Trump tax cuts permanent allows businesses to plan long-term capital spending with certainty, encouraging additional private business expansion spending. Trump’s plan to cut the corporate tax rate to 15 percent (down from 21 percent) for corporations that employ exclusively Americans will put real dollars into the pockets of Main Street, which are the lifeblood of most small towns. And his plan to reduce capital gains taxes will encourage the risk-taking investment needed to rebuild our nation’s manufacturing and energy infrastructure.
That is growth-oriented.
But the truth is that cutting taxes and stimulating the economy on the supply side is not enough to get our nation’s debt bomb under control. These important tax cuts must also be balanced with action to limit the size and scope of government.
Musk’s DOGE is focused on eliminating costly inefficiencies, waste, and fraud in the federal government and evaluating the overall number of employees and contractors needed to make government work. Most importantly, the regulatory focus driven by recent Supreme Court rulings declaring regulations that exceed congressional intent and those solely reliant on government bureaucrat opinions as to their benefits provides an opening to remove many of the federal government's economic strangleholds rapidly.
Ending economically destructive, constitutionally dubious regulations will encourage private sector investment and ensuing growth, which generates higher wages, larger profits, and more government revenues.
However, when relying upon the federal government's calculation of what makes up the Gross Domestic Product the U.S. Department of Commerce there is a problem. The formula is outdated as it significantly emphasized federal government spending growth as an economic multiplier without taking into account the much greater negative impact of the federal government sucking up $7-9 trillion to buy bonds to pay interest on the $35 trillion national debt. So, the official GDP number may not be the best indicator of real economic growth in the private sector, where wealth is created and capital expenditures drive innovation and expansion.
Studies of the impact of government debt on a country’s economic growth show that too much debt actually creates a drag on the economy. Much like the discovery by Professor Arthur Laffer, very high-income tax rates actually generate less revenue than lower ones, as demonstrated by his famous Laffer Curve.
The truth is that cutting spending and creating growth through ending the regulatory stranglehold and lowering taxes are compatible solutions to the same problem, and President Trump is acting to do all three to tackle an almost $2 trillion annual deficit.
At a time such as this, Jeff Bezos should join with Elon Musk in dedicating himself to constantly promoting Donald Trump’s ruthless regulation-cutting regime to go with shrinking the size of the federal government and lowering taxes as the key to restoring and sustaining America’s economic dominance for the next generation.