The belated September jobs report significantly beat expectations, suggesting the pro-growth policies enacted by President Donald Trump and Congressional Republicans are beginning to improve the labor market.
The strengthening labor market makes the Federal Reserve’s decision about whether to continue its rate-cutting at its meeting next month difficult. Fed officials are already deeply divided over what to do. And for good reason.
Lowering interest rates further would improve small business access to credit, helping America’s job-creation engine increase investment and hiring. Many small businesses rely on revolving credit lines and loans to finance inventory, expand operations, or simply sustain payroll. With tight lending conditions at regional banks, access to more affordable credit makes the difference for many employers between hiring and holding back. (RELATED: US Job Growth Smashed Expectations In September)
However, with inflation back above 3% and affordability one of the biggest issues facing voters, the Fed needs to be careful. Easing too soon could destroy President Trump’s hard-won inflation gains, rekindle price hikes, and necessitate an even more painful rate hike before next year’s midterms. The Fed faces a narrow path between the needs of small businesses and the broader imperative of keeping inflation anchored.
But monetary policy can only do so much. A better way to strengthen the labor market and control inflation is to transcend the Fed debate and focus on supply-side policy. This summer’s tax cuts — the benefits of which are only beginning to be felt — are Exhibit A.
Thanks to these tax cuts, small businesses now enjoy expanded deductions and a permanent 20% annual earnings write-off. According to JCN’s recent poll, nine in 10 small business owners plan to use their tax cuts to hire, raise wages, expand, or reinvest in their communities.
Consider the story of the 1920 Tavern, a local restaurant in suburban Atlanta. “These tax cuts have been game-changers for small businesses like mine,” owner Jenna Aronowitz told the Atlanta Journal-Constitution. “Savings allowed us to purchase new equipment, new flooring, and tabletops that were hand-made by a local wood maker. They also allowed us to hire more staff and give our longtime employees much-deserved raises.”
Extrapolate similar small business savings nationwide, and you can see why the labor market should strengthen in the months ahead. Ordinary workers are also expected to get their biggest tax refunds ever, improving affordability.
The Trump administration’s energy and environment deregulation has also driven gas prices to their lowest level in several years, putting downward pressure on costs and boosting employment. Energy is one of the biggest costs facing small businesses and families.
Every dollar saved at the pump functions like a tax cut, allowing employers to redirect resources into hiring, inventory, or equipment rather than fuel. And it allows consumers to use their savings elsewhere on Main Street.
Congressional Republicans should double down on these pro-growth policies by passing healthcare reform that reduces medical costs, which, thanks to Obamacare, now make up nearly one-fifth of the economy.
Conservative healthcare solutions such as expanded health savings accounts, direct care, health plan deregulation, and association health plans can finally reduce unaffordable costs. When businesses don’t have to spend as much on employee healthcare plans, they can redirect those funds to boost hiring even further.
Republican tax cuts, regulatory relief, and healthcare reform can do more to control inflation and improve the economy than tinkering with interest rates ever can. It’s time the party leaned into these affordability solutions daily and unapologetically.
Alfredo Ortiz is CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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