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Some Thoughts on the Economy and the GOP Debate

"While there were some great moments in the latest GOP debate, and some terrific individual performances — Carly Fiorina seemed to grab all the buzz in the aftermath — one thing that barely came up was the economy. It was very much like the first debate.

"The day after the candidates faced off, Fed chair Janet Yellen announced a stand-pat, no-interest-rate-liftoff policy. Now, I don’t expect presidential candidates to be Fed watchers. But Yellen did raise the issue of a still-soft economy, despite all the QE and zero-interest-rate policies. And I think Yellen was right. There will be a time to normalize Fed target rates. But not yet.

"That said, it would have been a good thing if any of the candidates talked about our money. A strong and steady dollar — the world’s unit of account (in theory) — is pro-growth, as we saw in the ’60s, ’80s, and ’90s. A collapsing greenback smothers growth, as we saw in the 2000s.

"I would have loved to have seen one or more of the candidates talk about a strong dollar, a rules-based Fed policy, and international monetary coordination. Alas, it was not to be. Maybe we’ll hear about the dollar at the CNBC debate on October 28. But an opportunity was missed on September 16.

"Interestingly, on the day of the debate, the Census Bureau revealed another round of stagnating incomes for the middle class. But the words “middle class” and “economic growth” were mentioned by the GOP debaters only four or five times, according to AEI economist Jim Pethokoukis. He laments that Republicans have been missing great opportunities to show a modern vision about growth.

"Diana Furchtgott-Roth, the director of Economics21 at the Manhattan Institute, lists a slew of important economic issues that weren’t addressed at the debate, including the minimum wage, regulatory policy, education, and alternatives to Obamacare. There were brief mentions of tax policy, with Governor Huckabee slipping in his fair-tax proposal and Senator Paul touting his 14.5 percent flat tax. But there was no room for Senator Rubio to pit his child tax credit against Jeb Bush’s 20 percent corporate tax rate. Meanwhile, Governor Christie spent his economic time on a plea for reducing Social Security benefits. Ugh.

"There also was no mention of socialist senator Bernie Sanders, who may be the Democratic frontrunner right now. The Wall Street Journal estimates that Sanders’s Greece-like spending spree would come to $18 trillion over a decade. That’s pretty wild. And it gets the Democrats firmly back as the tax-and-spend party. Sanders at various times has proposed income-tax rates of 70 to 90 percent, but not one Republican blasted his tax-and-spend program at the debate.

"Nor did anyone attack Hillary Clinton’s proposal to double the capital-gains tax rate if the asset holding period is not long enough. Her plan is pure anti-growth and anti-risk-taking. It’s just what we don’t need, but no GOP debater took it on."

~ Larry Kudlow, CNBC Senior Contributor

Source: His September 18, 2015 column, posted at National Review Online.

ADDITIONAL INFORMATION: More on Larry Kudlow here. NPR provides a tally of airtime here. For news coverage of the debate, see the Birmingham New here. An annotated transcript of the debate is available from the Washington Post here. The Associated Press does a "fact check," posted at FoxNews.com.


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