Even as the president talks about jobs and his Keynesian gun seems loaded with blanks, the administration keeps rolling out new regulations. So, the president can start by putting the brakes on regulations coming from his own administration.
Just this week, HHS debuted an onerous and unnecessary new health-care mandate on providing birth control that will further drive up the cost of insurance. The administration also recently debuted yet another round of new car-fuel standards that essentially require a 5 percent gain in fuel efficiency every year for the next 15 years, which means higher costs on those cars. The administration also shows no inclination to move quickly to fix bad regulations. In its rush to “fix” the way houses are sold, Washington added a host of new regs governing the appraisal business that are so bad they have essentially blown up the business, and real-estate agents say something like 20 percent of deals are getting scotched these days by bad appraisals.
Does it make any sense that Washington hasn’t rushed to fix a mess like that in this economic environment?
— Steven Malanga is a senior editor of City Journal and a senior fellow at the Manhattan Institute.
The July jobs report has marginally exceeded expectations. Total nonfarm payroll employment rose 117,000 following little growth over the previous two months. It may be tempting to cling to this one glimmer of hope in an economy with tanking stock markets, downward revisions to GDP growth, and consumer confidence at an all-time low. But it is critical to remember that employment responds with a lag to economic data and news.
The slight uptick in employment numbers should not be seen as an up-to-date predictor of future growth; it could represent firms’ out-dated optimism about an economic recovery. A few months ago, the situation in Europe was not so visibly dire, and there was some hope that Congress would pass a deficit-reduction plan based on clear and comprehensive tax and entitlement reform, rather than deferring decisions down the road as the current deal has done. If steps are not taken today to address the jobs issue, the July numbers will have been an aberrant blip.
Tackling jobs creation has to be the biggest priority for the government right now. While the debt-ceiling deal will go some way toward alleviating businesses’ uncertainties about the economy, there is little clarity about the details. Firms are still unsure about the type of tax reform and the areas reserved for spending cuts that may be negotiated as part of the deal. Investors are worried about the possibility of a U.S. downgrade despite the debt ceiling being raised.
Lowering the corporate-tax rate might yield double dividends at this time. Today the U.S. has one of the highest corporate-tax rates in the developed world, and yet it collects one of the lowest corporate-tax revenues (as a share of GDP). Based on research I conducted with colleagues at AEI, there is strong evidence that a reduction in the corporate-tax rate would cause an increase in capital flows and investment in the U.S., higher worker productivity, and higher wages for workers. The budget may benefit from higher corporate-tax revenues, and higher incomes in the hands of workers would act to increase domestic spending. Firms would expand and hire more, thus starting off the cycle of true economic recovery.
— Aparna Mathur is a resident scholar at the American Enterprise Institute.
The economy is ready to roar, but Washington is holding it back. Corporate balance sheets are strong, but the politicians in D.C. are weak at transmitting economic certainty to Wall Street and Main Street. President Obama could fix all of this with a strong, pro-growth message of balanced budgets, freer trade, and tax reform that would lower corporate tax rates and broaden the base. But there is nothing in his actions or his rhetoric that reveal him doing any of that. Fear of losing reelection might sharpen his focus and straighten him out, but absent that, I think political uncertainty will remain a dark cloud hanging over the economy until the November 2012 elections.
— Andrew Roth is vice president of government affairs at the Club for Growth.