Former Reagan administration economist Art Laffer said on Fox Business on Monday that rising unemployment is the result of “bad policy” and touted the potential for former President Donald Trump's economic plan to restore economic growth.
After announcing a 50-point cut in the federal funds rate last week, Federal Reserve Chairman Jerome Powell said one of the factors behind the rise in unemployment is “cross-border influx.” When Fox host Larry Kudlow pressed Laffer on whether illegal immigration is contributing to the rise in unemployment, Laffer pushed back against Powell's sentiment during his “Kudlow” appearance, highlighting the lack of job growth.
“Not really, he [Powell] “That's a logical inconsistency, Larry. I mean, if unemployment has gone up because of illegal immigration, then surely employment has gone up because of illegal immigration? Some of them get jobs, some don't. But when you look at job growth, Larry, it's gone down dramatically, and that's really the problem,” Laffer said.
“Unemployment — and Trump is absolutely right on this one, by the way — is high unemployment because of bad policy, not because of illegal immigration,” Laffer continued. “Their tax policies, their spending policies are leading to lower economic growth and fewer jobs. This is a real problem.”
Laffer also noted that President Trump's economic policies, such as “no tax on tips” and eliminating taxes on overtime pay, will lead to increased production, employment and income, as well as employment. (Related: Ex-Clinton pollster says Trump must draw 'clear economic contrast' with Harris, who can get by on 'being liked')
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“By the way, Trump's policies would lead to a huge increase in employment. Look at some of the policies on tips. No tax on tips. No tax on overtime. These are all lower marginal tax rates that would have a huge effect on job output. Can you imagine how many more service workers we would have if there was no tax on tips? [much] “How much overtime would they be paid? How much more would they be paid if there was no tax on overtime?” Laffer asked.
“Their marginal tax cuts are great, they've eliminated some of the SALT, and I like the SALT deduction limit, because I'm from Tennessee,” Laffer said, “but if you eliminate it, it will increase the after-tax rate of return for higher-income workers, which will increase employment, production, jobs and income.”
In 2017, the tax reform bill enacted a $10,000 cap on the state and local tax deduction, known as SALT, which was promoted by then-President Trump as part of efforts to boost the economy. According to According to CBS News, President Trump recently announced that he would seek to eliminate the caps imposed by the Tax Cuts and Jobs Act, and the bill would include Expired December 31, 2025.
The unemployment rate fell for the first time since March to 4.2% in August, as the U.S. economy added 142,000 nonfarm payroll jobs, according to data from the Bureau of Labor Statistics (BLS). However, economists had initially expected August's nonfarm payrolls to have risen by 161,000.
According to a recent ABC News/Ipsos post-debate poll, Trump leads Harris by 7 points when it comes to who the public trusts most on economic issues. Trump also leads Harris by 10 points on immigration, while the vice president leads by 9 points on health care and 14 points on abortion. The two are neck and neck on crime and safety.
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