Politics & Policy

Twelve Steps to Economic Recovery

How a Republican Congress could get America working again.

Since the turn of the century, the most accurate predictor of elections has been the electronic prediction markets. On the eve of the election, most of these exchanges suggest with overwhelming odds that the 114th Congress will be controlled by Republicans.

If that’s true, the key challenges for Republican leadership will be how best to take advantage of this opportunity while preventing damage to their brand in the process. It is a mighty challenge with high stakes, because the actions of the 114th Congress and the debate it will unleash will undoubtedly become an important lens through which voters will view the political parties in the 2016 presidential election.

For House and Senate Republicans, I suggest a twelve-step plan, targeting economic recovery, to begin in January 2015. The plan contemplates both houses of Congress passing legislation and presenting it for signature to a president who has previously been shielded by Harry Reid’s Senate from substantive debate.

The plan is not intended to be a wish list of Republican priorities, such as the repeal and replacement of Obamacare, the enactment of comprehensive tax and entitlement reform (as embodied in the Ryan budget or Simpson-Bowles), or firm action on immigration. Too complex for speedy action and susceptible to demagoguery, these things can happen only if the Republicans gain the presidency in 2016 and hold the Congress.

Rather, the plan is simpler and intended to be unquestionable in its ability to spur job creation and growth. Each act can be summarized on a single piece of paper. Targeted to areas where Republicans can quickly agree, each holds the potential for at least a few breakout Democrat votes as well. Some of the policies embedded in the plan — if not brought to a vote in separate acts — could be incorporated through the budget process.

Our current president, reluctant to hand Republicans any kind of legislative victory, may veto many, if not all, of the proposed acts. But the value for Republicans will be in driving the debate and being the guardian of the initiative, and in the plan’s potential to offer a glimpse of the possibilities under a future Republican president. A few might even get this president’s agreement.

Here they are:

1. The War on Terror Resolution, declaring war on the Islamic State, crystallizing our national will, and ending all uncertainty, both domestically and with our allies, regarding the intentions of the United States. And in saying what the president will not say, the Republicans of the 114th Congress will reinforce their seriousness, authenticity, and willingness to be accountable — a stark contrast to the Congresses of recent memory.

2. The Invest in America Act, lowering the corporate tax rate to 20 percent and inviting the world to do business in America. Notwithstanding Hillary Clinton’s recent exhortation “Don’t let anybody tell you that it’s corporations and businesses that create jobs,” the fact is that they do. Globalization in the 21st century means we must compete for the world’s business, and at 35 percent we are under-competitive.

3. The Reinvest in America Act, eliminating tax on the repatriation of overseas profits, which would unleash the potential for $1 to $2 trillion of investment capital to come home. While some might erroneously believe that the return of such previously taxed capital would end up in the pockets of a few black-hatted Monopoly men, it doesn’t work that way. After-tax profits are, by definition, measured after payment of compensation, and are typically deployed in capital expenditure, investment, or R&D, all of which produce jobs and growth.

4. The Stop the Downsizing Act, eliminating the employer mandate in Obamacare and its effective tax on labor. Even Nancy Pelosi has figured out that “what’s in the bill” includes this counterproductive incentive to downsize and replace permanent labor with temporary employment.

5. The Trade with America Act, giving the president trade-promotion authority to negotiate free-trade agreements under the “fast-track” system. Ninety-five percent of our potential customers reside outside our borders, and many eagerly await the opportunity to do business with the United States.

6. The Energy Security and Independence Act, allowing for the export of liquefied natural gas and other refined products and for expanded drilling on federal lands, reduced barriers to hydraulic fracturing, and the approval of the Keystone XL pipeline. In addition to lowering energy costs, increasing manufacturing profits and disposable income, and perpetuating our energy renaissance, this legislation has enormous more potential to tilt the global balance of power further in the direction of the United States.

7. The Less Red Tape Act, requiring a cost/benefit analysis for every new major regulation and congressional approval for any regulation deemed to cost over $100 million. The National Association of Manufacturers currently estimates the annual cost of regulatory compliance at $2 trillion — crowding out economic activity, dampening the appetite for investment, and stifling innovation.

8. The Rational Mortgage Industry Act, amending the charters of Fannie Mae and Freddie Mac to require their complete dismantling within five years. History suggests that government programs are like ticks on a dog — they just get bigger and are hard to kill. Such is the sad and ugly saga of these enablers of the financial crisis who, with Republican leadership, can now find a suitable and respectable burial ground.

9. The Internet Security Act, requiring Internet supervision to remain with the U.S. Department of Commerce. Oversight of domain names may seem innocuous trivialities today, but as the Internet expands in power and reach, so will the strategic value of its policy governance. China and Russia argue, under the guise of fairness and security, for us to cede hegemony, but the real reason for their insistence is the future value of such oversight on a geopolitical chessboard.

10. The Voting Privacy Act, requiring a secret ballot for union elections, thus ending the potential for voter intimidation, bringing transparency to the true nature of the relationship between labor bosses and labor writ large, and protecting America’s job creators.

11. The Stop the Brain Drain Act, increasing the cap on H1-B visas, encouraging immigration for the highly skilled and the highly educated, and enabling the employment multiplier effect triggered by an expanded, highly skilled high-tech workforce.

12. The Fiscal Discipline Act, placing a hiring freeze on all government agencies except the Department of Defense, with a goal of a 10 percent workforce reduction through attrition. This act will send a signal to the world that the United States is finally taking action to rein in its debt and deficits.

— Emil W. Henry Jr. is CEO and managing partner of Tiger Infrastructure Partners. He was assistant secretary of the Treasury for financial institutions from 2005 to 2007.


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