The Commerce Department said Wednesday that the U.S. economy grew slightly faster than initially estimated in the third quarter of 2017, and Republicans are taking that as a sign of confidence in President Donald Trump’s fiscal policies.
The department now estimates that the economy grew at an annual rate of 3.3 percent between July and September, up from 3.1 percent in the second quarter. This marks the fastest quarter of economic growth since 2014 and the first period in three years where growth was above 3 percent for back-to-back quarters.
The growth comes amid fresh concerns about North Korea’s nuclear program, widespread doubts about a Republican tax reform bill, new terrorist threats in the U.S. and Europe, and an ongoing investigation of Russian interference in the 2016 election. Despite all that turmoil, Rep. Steve Pearce, R-N.M., said the economy is reflecting the optimism of the American people.
“People want certainty and the Trump administration has given them certainty,” Pearce said. “That is that we’re going to make you follow the law, we’re going to make sure you follow regulations, but we’re also on your side in the matter.”
He pointed to the hundreds of regulations the White House and Congress have eliminated since January as a catalyst for new investment by companies that held back during the Obama administration.
“If we give the tax breaks in addition to the regulatory reforms that Congress has already passed, I think you’re going to see a dramatic increase in the economy,” he said.
Pearce sees particular potential in rebuilding the manufacturing sector if the Republican effort to reduce the corporate tax rate succeeds.
“Manufacturing is where you create wealth,” he said. “That’s where prosperity comes. We’ve transitioned to a 70 percent retail economy, that is we’re just trading our money back and forth, that’s not where prosperity lies. Prosperity, that just means being able to plan for a home in the future, plan for your kids’ education. That’s the value of restarting this manufacturing piece of our economy.”
Rep. Darin LaHood, R-Ill., also credited Trump for the economic progress.
“A lot of individuals, a lot of companies, and a lot of businesses have sat on the sidelines waiting got the time to invest in the economy,” he said. “I think now there’s a lot of optimism when it comes to the economy.”
The goal now is to keep that growth going and even accelerate it.
“Rolling back regulations to help those industries thrive. That is good for the economy, so I think it’s partly the new administration coming, and I think that’s good for all of us, but we can do better,” LaHood said.
President Trump, who traveled to Missouri Wednesday to promote the tax legislation Senate Republicans aim to vote on this week, touted the new economic data on Twitter and promised that tax cuts will boost the economy even more.
Rep. Derek Kilmer, D-Wash., acknowledged that some industries and cities are experiencing a surge in economic activity, but he emphasized that many others are not yet seeing benefits from the strong GDP growth and high consumer confidence.
“There are a lot of large metropolitan areas that are seeing growth, a lot of innovation, a lot of new business creation, and that’s good news,” he said. “Now the challenge is that economic prosperity is not being felt by everyone everywhere.”
Kilmer does not share Pearce’s belief that the tax reform bill under consideration in Congress will provide relief to those who are truly struggling, including residents of his district.
“That’s part of my disappointment with this tax proposal because unfortunately I don’t think enough is being done in this proposal to try to encourage investment in places that really need it,” he said.
Kilmer also warned that the Republican tax plans would add significantly to the national debt over the next decade, creating a potential drag on economic growth.
“I actually think the debt is a problem and taking up tax reform in an irresponsible way that doesn’t help the middle class, that doesn’t encourage economic growth here in the United States, I think is a real mistake,” he said.
According to Rep. Paul Tonko, D-N.Y., much of what is currently driving the economy forward predates Trump’s time in office. He pointed back to the lingering effects of the stimulus passed under President Obama to pull the U.S. out of a recession.
“Since March of ‘09, we have had steady growth of private sector jobs by every month calculation,” he said. “That tells us something right was being done.”
Tonko fears GOP tax policies will now take the economy in the wrong direction. He raised concern with the provisions in the current Senate version of the bill that would repeal the Affordable Care Act’s individual mandate and leave many middle class families paying higher taxes in ten years.
“To go and disrupt what has been a steady progressive return for the economy is foolish policy,” he said. “And to do it in a way that is going to rip away health care from 13 to 14 million people, that is going to tax higher many working and middle income households is not healthy for the economy.”
Republicans maintain that those losing health insurance without the mandate would be doing so because they do not want it and that tax breaks for families that are set to expire in 2025 under the bill would likely be extended by a future Congress.
Tonko called the Republican approach to tax reform “fundamentally flawed” because it heaps benefits on corporations and the wealthy, and he suggested a revenue-neutral bill that focused more on the middle class would have greater impact on the economy.
“I would suggest that you start in the middle and work out, the middle class, those looking to ascend to the middle class, small business, those should have been assisted first and foremost,” he said. “That would have added to the real goal here, and that is to grow the purchasing power of middle income households.”