Theory 2 Action Podcast
Theory 2 Action Podcast
MM#424--Genesis 41 & One Big Beautiful Law
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What happens when an economy that once roared at 3-4% annual growth limps along at just 1.7% for twenty-five years? lets go on a fascinating journey through America's economic past to illuminate our potential future prosperity.
Drawing powerful parallels between our current moment and the transformative period following Ronald Reagan's 1982 tax cuts, we examine how the newly signed "One Big Beautiful Bill" might spark an economic renaissance reminiscent of the "Seven Fat Years" that followed Reagan's reforms. After decades of bipartisan economic underperformance, this comprehensive legislation makes permanent the 2017 Tax Cuts and Jobs Act while introducing bold new provisions like tax exemptions on tips and overtime pay, full expensing for business equipment and R&D, and crucial infrastructure investments.
The historical evidence is compelling. When Reagan's tax cuts took effect, GDP growth surged to 4.5% in 1983, an extraordinary 7.2% in 1984, and maintained robust momentum for years afterward. Could we be standing at the threshold of a similar economic awakening?
we unpack the ten key provisions of this landmark legislation and explores how they might collectively catalyze growth, productivity, and prosperity across America.
For anyone concerned about America's economic future or curious about how policy shapes prosperity, this episode provides essential context and thought-provoking analysis.
Key Points from the Episode:
• GDP growth has been stagnant at approximately 1.7% for the past 25 years
• Historical context shows America regularly enjoyed 3-4% growth rates before economic decline
• The new bill makes the 2017 Tax Cuts and Jobs Act permanent
• Eliminates federal income tax on tips and overtime pay up to $25,000 for four years
• Provides auto loan interest deductions for US-assembled vehicles
• Includes a $6,000 tax deduction for seniors earning under $75,000
• Permanently allows full expensing of research and development and equipment
• Allocates $45 billion for border enforcement and illegal immigrant removal
• Establishes a $10 billion annual fund for rural healthcare improvements
• Dedicates $1.5 billion to modernize outdated air traffic control systems
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Welcome to the Theory to Action podcast, where we examine the timeless treasures of wisdom from the great books in less time, to help you take action immediately and ultimately to create and lead a flourishing life. Now here's your host, david Kaiser flourishing life.
Speaker 2:Now here's your host, David Kaiser. Hello, I am David, and welcome back to another Mojo Minute, as is our custom. Let's go to our first pull quote. From the peak of spring 1973 until the trough of winter 1982. The GDP of the United States improved at a rate of 1.8% yearly. Over the same period, population increased 1% per year. Economic growth per capita, the single measure of a nation's prosperity, was thus almost stagnant. Not that the nation's inhabitants had decided to take a permanent break. Trading work for leisure, far from it. From 1973 to 1982, the size of the labor force increased from 85 million to 100 million. From 85 million to 100 million, people strove to work ever more, just as the returns to more labor leveled to zero. Feminism's encouragement of women to enter the workforce, the maturation of the last tranche of the baby boomers and immigration of exceptional entrepreneurial quality from Indochina and Cuba ensured a large increase in the number of those seeking jobs. Yet it was all a mad dash. Gdp growth, control for labor force and population growth from 1972 to 1973 to 1982 approximated just one period in American history 1929 to 1940, the Great Depression. The winter of 1982 would prove to be the hinge on which the GDP march of the United States would swing back to the historical norm, the trend memorialized by the phrase post-war prosperity. The quarter century beginning in winter of 1982 would see growth at 3.3% per year, precisely the rate that had held for the quarter century following World War II.
Speaker 2:Reversion to trend the most venerable of all phenomena in statistics was honored in the economic accounts of the United States in the last fifth of the 20th century. In the early years of the 21st, growth at three or four percent per annum has been standard since Alexander Hamilton's hitch as first secretary of the treasury. Until World War I, variation in economic performance was confined to the panics such as 1837, 1857, 1873, 1893, and 1907. Panics characteristically involved bank failures and business collapses, as well as runs on money and pushes into gold. Many people found themselves out of work while the panic held, but such periods usually lasted only a few months. At the most, as in 1873-75 and 1893-95, they lasted for two years. Furthermore, both of these bursts preceded eras of enormous growth. One reason that the robber barons became so wealthy in the Gilded Age is that those who aspired to that mantle bought heavily during times of panic and emerged on the other side as the employers of choice as for prices they held at par for the century prior to the creation of the Fed, the one exception being the greenback inflation spawned by the Civil War, which was resolved by 1879.
Speaker 2:And that comes to us from a fantastic book written by Brian Dmitrievic titled Econoclast the Rebels who Sparked the Supply Side Revolution and Restored American Prosperity, written in 2009. It is a fantastic look of how the 1980s Reagan Revolution became one of the highest periods of growth in our 250 years of being a country. I wanted to share that long quote For two reasons, because of two big nuggets of wisdom. First was that very first paragraph of our quote.
Speaker 2:From the peak of spring of 1973 until the trough of the winter of 1982, the GDP of the United States improved at a rate of 1.8% yearly. Over the same period, population increased one percent per year. Economic growth per capita the single measure of a nation's prosperity sorry, not not single signal. The signal measure of a nation's prosperity was thus almost stagnant. Nation's prosperity was thus almost stagnant and it's important to keep those numbers in mind. Gdp growth of 1.8% yearly from 1973 to 1982. And what has been our GDP growth? Answer 1.7%. What has been the GDP growth per capita? 1.1%. And even if you calculated using another measurement, it can only go as high as 1.2 or 1.3%.
Speaker 2:The point of all these numbers is that for the last 25 years, our economy has sucked. It has sucked badly Under both political parties. Economic leadership was dismal, if not criminal. For 25 years, this US economy has been in shambles. Did you hear that history that we used to have economic growth? Growth at three to four% per annum? Folks, if you watched Michael Jordan back in the day and he consistently scored 30 points per game and then suddenly it is cut in half to 15 points per game, wouldn't you be like, hey, what's up? What's going on? Is he hurt? Let's dig into the numbers. What's happening? Let's get to the bottom of this. Nope, not our national leaders. Everyone just goes along to get along. Well, that has finally changed.
Speaker 2:On July 4th 2025, president Donald Trump, along with Speaker Mike Johnson and Senate Leader John Thune, were at the White House for an incredible signing ceremony. The one big, beautiful bill has, upon the president's signature, become law. Not since Ronald Reagan's signature piece of tax cut legislation in 1982 have we had this significant piece of conservative, supply-side economic legislation signed into law. Yes, we had a brief stint under President Trump in December of 2017 when the first Trump tax cut was put in place, but that wasn't nearly as massive as this bill. This bill is big and here's our top 10 key provisions so far that we have confirmed that's in the bill. First, the permanent extension of the TCJA tax cuts from 2017. These are the individual tax cuts from the Tax Cuts and Jobs Act 2017. They were temporary. They are now made permanent, preventing their expiration in 2025. The key point is they're permanent. That's a huge, huge win for economic growth.
Speaker 2:No taxes on tips or overtime pay Eliminates the federal income tax on tips and overtime pay up to $25,000 each for the next three years 25, 26, 27, and 28. Sorry, didn't know. They made that retroactive, so that is four years, four total years. Dems in the 1980s inserted this tax back into the code and Reagan had to reluctantly sign it to get victories on other measures. Wasn't something he liked, but he took the horse trading and had to reluctantly sign it to get other measures passed. This in the big, beautiful bill is another big win for economic growth. Auto loan interest deduction provides $10,000. Deduction for interest on auto loans for US assembled cars effective back to 2025. That's another four-year growth marker. It's another win for economic growth. The senior tax deduction offers $6,000 tax deduction for seniors earning less than $75,000ive 2025 again for four years. That's another big win for economic growth. The increased SALT deduction cap that raises state and local tax the deduction cap from $10,000 to $40,000 for taxpayers earning under $500,000. Effect effective 2025.
Speaker 2:I listed this one because it's a big deal to those in the Northeast, but it really isn't an economic growth piece at all. I actually wanted to watch this idea play out for the next three midterm cycles. That's the reason I listed it here, just so I could create a placeholder. Business tax incentives permanently allowing full expensing of research and development and equipment, and and this enhances tax credits for US-based semiconductor manufacturing. This is a huge, huge win for economic growth. This one's going to be part of the jumpstart for the economy. Anytime you can allow full expensing for equipment and R&D for corporations, they will invest heavily in their own equipment and R&D. So that's a huge, huge win.
Speaker 2:Border security funding this allocates $45 billion for ICE detention capacity and border enforcement, including mass deportation initiatives. This was a no-brainer. We have to remove illegal immigrants from the country, plain and simple. And then the last three are big just because they provide stability and health for the economy. The Rural Healthcare Investment Fund provides $10 billion annually for rural hospitals and clinic upgrades. This was a measure that the Senate pushed back into. Some conservatives really didn't want it in. But roll hospitals and clinic upgrades provide some pretty good stability in the roll areas.
Speaker 2:Air traffic control modernization this has been on the docket for two or three decades. It allocates $1.5 billion for air traffic control system upgrades. They've been running on like a green monochrome screen for the last 20 years. It's horrific. So we have to upgrade that. Finally we got that funding in there. We can reduce the rest of transportation. Secretary of Transportation Duffy is doing a good job over there. We can reduce that department and find some cost savings elsewhere. But the air traffic control system needed upgraded. And then social program reforms, work requirements for Medicaid, cutting SNAP funding for illegal immigrants and eliminating certain Department of Education programs projected to reduce federal spending in the overall. So again we got to get the illegal immigrants out of the country. They just cannot be on. Number one, they can't be in the country. Number two they cannot be getting health care funding. So that's just a no-brainer. That's a quick run through of the top items of the big beautiful bill. So, based on everything we know right now mid-July of 2025, to keep things very simple we should ask this question After the 1982 Reagan tax cut, what happened to the economy, and can we forecast that out to our own economy?
Speaker 2:Let's go back to the book. The permanent recovery began in the last quarter of 1982. In 1983, gdp growth was 4.5%. In 1984, it was 7.2%. An overheated economy, by any conventional reckoning, was one that grew by 12% in two years. Yet in 1985, reacted by delivering growth of 4.1%. The average rate of growth for those three years was 5.1%. How does 5.1% sound versus 1.8%? Pretty good, just how about a moderate 4%? Even? Still pretty good, right? Perhaps even just 3%? That's still 33% better than what we have been getting for the last two and a half decades.
Speaker 2:Let's go back to the book for one last quote. So what followed 1985? Growth of 3.5% in 86, 3.4% in 87, 4.1% in 88, 3.5% in 89. 1 in 88, 3.5 in 89. The three-year run of 5.1% growth that marked the escape from stagflation moderated to 3.6% for the next four years, both numbers significantly above the trend of post-war prosperity. Indeed, the 4.3% per annum run of growth for the seven years beginning with 1983 was reminiscent of the salad years of post-war prosperity, the years that followed the de facto implementation of the policy mix in 1962.
Speaker 2:Recalling Genesis, robert Bartley called 1983 to 1989 the seven fat years. So in today's Mojo Minute, with the one big beautiful bill signed into law, we can finally say we have a grand old party worth their weight in gold. They have developed a spine not seen since 1995 with welfare reform. But even going back to the days of Reagan, they really leaned into supply side economic policies this time. And we can report, my friends, that the future is looking bright. We have always been on the lookout. We have to always be on the lookout for a pandemic or an unforeseen war or disaster. Let's pray that we don't have any of those shenanigans, because the future is indeed looking bright.
Speaker 2:Let's pray for Genesis 41. Let's pray for those seven fat years that the great Wall Street Journal editorial page and finally editorial of the actual journal, the great and late Robert Bartley, talked about. He also wrote a book by the same name, the Seven Fat Years, about his time at the journal. We're going to pray for those seven years of abundance that we read about in Genesis 41, those seven years of abundance that Joseph interpreted of Pharaoh's dreams. Our country needs seven solid, good years of economic growth, year after year after year, especially after coming through 25 years of famine at 1.8%. Let's pray for Genesis 41. And, folks, the future is looking bright. America at the beginning of a golden age. As always, keep fighting the good fight.
Speaker 1:Thank you for joining us. We hope you enjoyed this Theory to Action podcast. Be sure to check out our show page at TeamMojoAcademycom, where we have everything we discussed in this podcast, as well as other great resources. Until next time, keep getting your mojo on.