We remember when it felt like it was Morning in America. Possibilities seemed endless, and the country hummed with optimism. Today, the opposite is true.
If we are going to pass the American Dream on to future generations, we must go back to the formula that has always made America prosper: respect for freedom and devotion to the public good.
In order to thrive, people need the freedom to pursue their dreams in business, government or policy. When we were starting out in our careers – one of us in medicine, and the other in business – we benefited from a new birth of freedom in the way people saw the role of government.
After decades of high taxes, onerous regulations and steadily increasing government spending, we suddenly had leaders in Washington who understood that the heavy hand of government was only making our problems worse, and that the American people needed the freedom to pursue their passions.
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Ronald Reagan’s solution to the "stagflation" of the 1970s was to cut taxes, letting people keep more of their earnings and giving them an incentive to be more productive. In 1981, the Economic Recovery Tax Act lowered income tax rates across the board and cut the capital gains tax rate from 28% to 20%.
Under Reagan, tax rates fell to their lowest level since the "Roaring 20s" – with similar results. Real GDP growth jumped to 7.2% in 1982, and stayed historically strong throughout the decade.
Unfortunately, taxes are going up right now as the Trump tax cuts expire. Although the income tax rate cuts will last until 2025, and could still be extended by Congress, other tax incentives, such as Opportunity Zone Tax Credits, are already being phased out.
We know where this road leads. During the Obama-Biden administration, characterized by higher taxes and heavier regulations, GDP growth averaged just 1.62%. Last year, GDP growth was a paltry 1.9%.
Remembering Ronald Reagan’s nine most dangerous words in the English language, "I’m from the government and I’m here to help," government regulations also play a big role in our economy. Regulations act like a hidden tax, making it harder for businesses – especially small businesses – to grow (or even stay open).
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President Reagan understood that responsible regulation means balancing the interests of all stakeholders, including business owners and the people they employ.
One of Reagan’s first major acts after taking office was to apply cost-benefit analysis to federal regulations, saving the country over $10 billion per year – at a time when the president could still shock the nation with references to "billion with a ‘b’."
Today, we’re going in the opposite direction. During Joe Biden’s first two years in office, his administration added an estimated $1.2 trillion – with a "t" – in regulatory costs.
Papa John’s never would have been able to succeed like it did without the tax cuts and deregulation of the Reagan era. How many other companies with the same potential that Papa John’s had in the early ’80s are now struggling just to survive because they can’t afford the high taxes and burdensome regulations imposed by the federal government today?
For that matter, how many young adults are struggling just to get themselves established in life? High housing prices aren’t just inconvenient for young people – they raise the bar for would-be entrepreneurs to the point that many people can’t even dream of opening a small business.
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In the 1980s, housing prices were relatively affordable, despite the high interest rates needed to combat lingering inflation from the Keynesian excesses of the preceding decades. Low interest rates and a growing economy contributed to a spike in housing prices in the 1990s and early 2000s, leading to a housing bubble whose burst ushered in the Great Recession.
During the Trump administration, the Department of Housing and Urban Development successfully kept housing prices stable, enabling people to make long-term plans and feel more secure in their pursuit of the American Dream.
We’ve been talking to college students all over the country, and we see unbridled enthusiasm for America despite the country’s economic challenges. Young people want to succeed, but they know they’re facing an uphill battle.
Many of the students we speak with aspire to help their country through public service, which is why the American Cornerstone Institute launched a major initiative to provide aspiring public servants with the training, guidance, and encouragement they need to achieve their dreams.
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Our hope is that these patriots will help usher in a new dawn for America, nudging the federal government in the direction of greater respect for freedom, and in turn unleashing America’s entrepreneurial spirit once again.
Before that can happen, though, we must once again view public policy through the lens of freedom. A prosperous country is one that gives its people the freedom to work, save, invest and spend their money as freely as possible.
That means making the Trump tax cuts permanent and restoring Opportunity Zones and other tax credits to their full value. It also means keeping regulators on a tight leash, and making sure they fully justify every new regulation while watching vigilantly for opportunities to eliminate regulations that are no longer useful or necessary.
At the same time, we must significantly reduce government spending to fight inflation, and, since human flourishing requires fossil fuels, pursue an all-of-the-above energy strategy that will make it cheaper to fuel future economic growth.
It can be Morning in America once again, and the American Dream can survive – but only if our government returns to its founding ideals of respect for freedom and devotion to the common good.
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John Schnatter is the founder and former chairman and CEO of Papa John’s International.
