(Bloomberg) Donald Trump the real estate developer owes much of his fame to the 1980s. Now Donald Trump the presidential candidate is going back to that decade to call on President Ronald Reagan’s economic team.
As the presumptive Republican nominee gets ready to put out his plan to boost U.S. growth, he’s sought advice from some of the most notable names in Reaganomics, including Arthur Laffer, Larry Kudlow and Stephen Moore. More voters might support Trump if he can persuade them he will bring back some of the economic successes of the era when he penned his bestselling book, “Trump: The Art of the Deal.”
Kudlow and Moore have been working with the campaign on its tax plan, advising Trump to cut some deductions for high-income Americans and “raise money by broadening the tax base,” said Moore, a visiting fellow at the Washington-based Heritage Foundation who served as an economic adviser in Reagan’s administration.
“This is really for the economy and the future of our country, and the most important election since Reagan’s election in 1980,” Moore said. “Every conversation that we have with either Mr. Trump or the Trump campaign staff, we say, ‘This is the JFK-Reagan, supply-side, tax-cutting agenda that worked to cause a big economic boom in the ’60s and ’80s, and we can do it again.’”
Trump’s economic positions have been difficult to pin down, though his thinking on taxes seems to boil down to: lower is better. And he’s declared that he’ll tear up most of the Dodd-Frank Act on financial regulation that was the government’s chief answer to the 2008 crisis. Trump has announced he’ll soon put out a detailed economic plan.
Trump’s tax plans have rankled some who have less-fond memories of the Reagan years. While growth was healthy during the Reagan administration—gross domestic product expanded an average 3.6 percent annualized rate in that time—tax policy did more harm than good, said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former chief economist for Vice President Joe Biden.
“Two things when you pursue the Laffer-Reagan-Kudlow agenda: You end up with a lot less government revenue and bigger deficits, and you exacerbate after-tax income inequality,” Bernstein said. “The best thing you can say about the supply-side tax cuts is they haven’t been an obvious detriment to growth and jobs.”
The U.S. debt as a percentage of GDP jumped to 50 percent by the time Reagan left office, from 31 percent at the start of 1981. It’s now more than 105 percent.
The former Reagan advisers—who along with Steve Forbes founded the Committee to Unleash Prosperity last year and advised much of the 2016 field of Republican candidates—so far have only an informal role with Trump’s campaign. Moore expects “huge amounts of growth” from Trump’s tax ideas. He and Kudlow have worked with Trump’s policy director, Sam Clovis, to share ideas on budget cuts and ways to reduce lost revenue in earlier versions of the plan, the two said.
“We’re just trying to dot some of the I’s and make a few improvements to it,” Moore said. “Mr. Trump seems open to these ideas.”
Trump’s campaign spokeswoman, Hope Hicks, didn’t immediately respond to a request for comment.
The billionaire has promised lower taxes and dropping the business rate to 15 percent, which Kudlow said is “right out of the Reagan playbook” and could be “the single-most stimulative economic-growth policy right now.” Kudlow was quick to add that the candidate hasn’t signed off on the Reagan crew’s tax ideas, though he said Trump told them: “Go and talk to some of my staff.”
Laffer, the former economic adviser to Reagan whose famous Laffer Curve was a mainstay of that White House’s supply-side thinking, isn’t in touch with the campaign as routinely as the others. Earlier this year, he made a trip to speak with Trump at Trump Tower in New York. Laffer said the talk went well and that Trump strikes him as “presidential.”
Not every old Reagan hand has been brimming with praise for Trump. When Martin Feldstein, who led Reagan’s Council of Economic Advisers, was asked by Fox Business Network’s Maria Bartiromo what he thought of Trump’s economic plan, he answered, “I don’t think he knows what his plan is.” He said he thought Trump has “done a wonderful job of marketing himself” but has left a lot of uncertainty about his policies, and Feldstein said he doubted the Republican can beat Democrat Hillary Clinton.
Even the Reagan supporters are leery of Trump’s threats on sweeping trade tariffs. They can support the kind of highly specific sanctions that Reagan used, but not large-scale import taxes. Still, Kudlow said Trump would probably be a strong negotiator on trade agreements.
Trump also has some of the former president’s political muscle behind him. Ed Rollins, who ran Reagan’s 1984 campaign, is helping out the Great America political action committee backing Trump’s run. And Jeffrey Lord, who worked in the Reagan White House’s political arm, wrote a book, “What America Needs: The Case for Trump.” At an April rally, Trump said, whenever Lord is “in a little doubt he says, ‘He reminds me of Ronald Reagan.’ ”
“Philosophically speaking, I just don’t see them as that far apart,” Lord said of Trump and Reagan.
Laffer said the parallel between Reagan and Trump is that both were “greatly underestimated by the population at large.”
“Not one of the elders” got behind candidate Reagan in the beginning, Laffer said. He joked that when Reagan—perceived by critics as a lightweight, a bigot and a war monger—won the 1980 primaries, the Republican establishment “poured on us like a waterfall of cockroaches.”
Trump is “going to make mistakes, but he’s going to do some great things too, and I think you’re going to be very, very pleasantly surprised with a Trump presidency,” Laffer said.
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