The last 16 years have been a real collapse economically in the US, Laffer said. Ronald Reagan did not win in 1980—Carter lost. Ronald Reagan did win in 1984 and 1988. Fast forward to 2008, when Democratic turnout in the election exceeded Republican turnout by 11 million, and the reverse scenario took place in 2016. This represents a volcanic political eruption, where voters changed their pattern dramatically.

Laffer made the case that the stage is set for a new world, with a Republican president and Republican majorities in the Senate, the House, governorships and legislatures—as well as a likelihood of Republican-leaning Supreme Court justices and a Republican Federal Reserve. “This is the world we live in today. This type of concentration of power just doesn't occur” typically.” He said President Trump could do almost nothing and have the economy improve because the bar is so low, and this runway extends for at least the next four years.

It's a no-brainer how to make the economy stronger, said Laffer. First, reduce corporate taxes—the US has the highest corporate tax rate among dozens of countries. Trump says he will cut corporate taxes from 35% to 15%. Second, the US has global, not territorial, corporate tax, which yields the lowest tax revenues of any country of the OECD countries, making us less competitive. Dropping this global distinction will help with revenues, which will be picked up by income and other taxes as a result of the economic stimulus it will provide. “Trump's policies will free economic activity dramatically,” said Laffer. As far as trade goes, Laffer says he believes Trump will not be as protectionist as he could be, and protectionism won't kill the US economy.

Ultimately, Laffer said, “I think the economy will grow incredibly rapidly. All the starts are aligned for enormous growth.” He added that we're in an economic time similar to Harding, Coolidge, Kennedy and Reagan, commenting that if we'd have had Reagan's growth during the Obama years, we would have seen more than $3 trillion in GDP growth. “It's important for government to spend in the best way possible,” using the least damaging tax-collection policies. Taxation and spending “should create an environment for prosperity.”

SAN DIEGO—In studying the country's current economic situation from a historical perspective, the US is poised for enormous growth, predicted economist Arthur Laffer, founder and chairman of Laffer Associates, during the BMC's 21^st Annual Real Estate Conference here yesterday. Laffer kicked off the conference with a presentation entitled, “California's Future Under President Trump and Governor Brown” that was both lively and extremely optimistic.

Laffer began by talking about the state where he lives now, Tennessee, and comparing it to California, where he used to live. In Tennessee, he said, there are no income or death taxes; it has the eighth-lowest property tax in the nation and is the third-lowest tax-burden state in the nation with the highest-credit-rating pension funds that are fully funded. The state also has the fastest growth in employment population, the fourth-best roads in the country and the least number of public employees, along with the highest degree of improvement in math, reading and science for fourth and eighth-graders. “Zero-income-tax states outperform income-tax states,” he said.

Laffer spoke of a worldwide political revolution occurring. He had predicted a Trump win in July 2016, when Trump became the presumptive Republican nominee.

He said one correct measure of the US economy is US gross domestic product. “You need to look at GDP adjusted for inflation (per adult) detrended; that is the correct measure to use.” He added that real DGP has declined relative to trend, and that “we're in the worst economic situation we've been in in decades.”

The last 16 years have been a real collapse economically in the US, Laffer said. Ronald Reagan did not win in 1980—Carter lost. Ronald Reagan did win in 1984 and 1988. Fast forward to 2008, when Democratic turnout in the election exceeded Republican turnout by 11 million, and the reverse scenario took place in 2016. This represents a volcanic political eruption, where voters changed their pattern dramatically.