by Gary Alexander

June 8, 2021

This will be a year of almost-unprecedented peacetime GDP growth. Not since the opening years of the Korean War has America seen what we will likely see in 2021 – 7% or greater Gross Domestic Product (GDP) growth. As we enter the final month of the second quarter, the Atlanta Federal Reserve says the current quarterly GDP growth is humming along at an annual rate of 10.3%, and it shows no signs of slowing in the second half. If we can keep the supply chains going, we may see record-high growth rates.

However, President Biden’s own economists tell us that his high-fructose spending plans are contributing to this “sugar high,” and I must agree. In presenting his $6 trillion budget package on Friday, May 28, just before a 3-day holiday break – perhaps to avoid close press coverage – White House economists said that this year’s sugar high will disappear right after the mid-term elections. GDP growth will slow to 2.2% in 2023, they said, and then it will average below 1.9% for the next eight years! (See “A Future of Secular Stagnation” Wall Street Journal, June 2, 2021) Wow! They essentially gave up on the entirety of the next decade, with no chance of a rerun of “The Roaring 20s,” Part 2. They’re telling us we can’t possibly be like Ronnie Reagan and grow our way out of this debt. We must tax ourselves out of it. Forget “Morning in America.” We are the setting sun. We are Japan. Get over it! Where’s Biden’s “build back better”?

Biden's Projections and Proposals Bar Charts

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The President also surrendered on budget deficits, which will be well over $1 trillion per year… forever. Even assuming that the corporate tax rate will rise to 28% (now unlikely), his current budget plan projects a 2022 budget deficit of $1.8 trillion, falling to $1.4 trillion in 2023 and staying at that level through 2031.

And that’s without seeing any significant inflation – or interest rate increases! The Biden team’s crystal ball does not see the rate of inflation rising higher than 2.3% over the next 10 years, even after creating unprecedented trillions of crisp new dollars. Interest rates are also expected to remain historically low, creating a “free lunch” of low-cost debt service. Unemployment will remain at a very low 3.8% rate for the rest of the decade, they say, with amazing predictive powers. (According to Jared Bernstein of the president’s Council of Economic Advisers, on CNBC’s Closing Bell on Friday, May 28, one reason for these rosy predictions is that they were compiled back in February, when inflation rates were far lower.)

“But Sir, How Are We to Pay for All These Dreams?”

After this budget came out, Louis Navellier, Tim Hope, and I had a conference call last Tuesday with our favorite economist, Ed Yardeni. By the end of the hour, we were all singing from the same hymnal, but we were singing more blues than the Hallelujah Chorus. At one point, Ed wondered if we were funding our own destruction with Modern Monetary Theory, including this latest $6 trillion budget for FY 2022.

United States Federal Government Outlay and Receipts Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In the 12 months ending March 31, federal outlays were $7.6 trillion. receipts were $3.5t., for a deficit of $4.1t.

Yardeni covered options on how to pay for Biden’s two infrastructure bills of roughly $2 trillion each…

  1. The corporate “pay for.” Raising corporate taxes.
  2. Wealthy “pay for.” Raising taxes on the wealthy.
  3. Capital-gains “pay for.” Raising the capital gains tax rate.
  4. Shareholder “pay for.” Taxing buy-backs and/or dividends.
  5. The SALT “pay for.” State And Local tax reconciliations.

There are some advantages and drawbacks to each, but not even all five combined can meet the demands of Mr. Biden’s spending appetites. What the bean counters in Washington don’t see is that real people respond to policy changes. Punish something and you get less of it. Reward something and you get more of it. Raise taxes and people work less. It’s simple logic, but many economists and lawyers don’t get it.

Take the first example, for instance, raising corporate taxes – including Treasury Secretary Janet Yellen’s idea for setting an international minimum corporate tax rate. Ireland was a very poor nation for a very long time. England helped to make them poor. Britain’s “Corn Laws” in the early 1800s made all grains (not just corn) prohibitively expensive, making Ireland totally dependent on potatoes, so a potato blight in 1845 caused a famine which killed over a million and forced a major migration to America after 1845.

There was great hatred and bloodshed between Ireland and England for centuries. But that doesn’t exist anymore, because some onerous laws were repealed, and Ireland was free to make money by tariff and tax reduction. Ireland has shown the world how consistently low corporate tax rates create good-paying jobs, economic growth, and rising tax revenues. Ireland’s consistently low 12.5% corporate tax rate has generated far more revenue for their government than before. Tax revenue from corporations now account for 13% of their tax revenues and 3% of GDP, up from 5% of revenue and 2% of GDP before the lower 12.5% rate became law. (Source: “Ireland’s Tax Lesson for Biden,” Wall Street Journal, May 28, 2021.)

After these tax cuts, between 1986 and 2006, Irish employment nearly doubled and their “brain drain” was reversed:  Ireland became a magnet for global capital. As the Journal put it, “Even Sinn Fein, the furthest left major party in Ireland, declares it won’t change the corporate rate. Irish politicians know that businesses value certainty, and that Ireland’s low-tax policy has become emblematic of a commitment to consistency.” That’s why Ireland is rejecting Treasury Secretary Yellen’s bid for raising its tax rate.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
What Would Happen if the Fed Tapers?

Sector Spotlight by Jason Bodner
A “Summer of Love” Likely Awaits Unloved Growth Stocks

View Full Archive
Read Past Issues Here

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.