The following originally appeared on Human Events on November 8, 2012
The election is over. Where do we go from here?
The American economy is just as distressed today as it was the day before the election. The concerns that are stifling growth (increased taxes, increased energy costs, and increased health care costs, among others) are still looming and discouraging investment. The government has done all it can to stimulate growth ($800 billion in stimulus, interest rates near zero and the Fed printing money with abandon) yet unemployment hovers around 8 percent, people are dropping out of the workforce at a disturbing rate and GDP growth has stagnated at a feeble 2 percent. Rather than a more traditional cyclical reversal of the 2008 economic downturn, we seem locked in a low growth saw tooth of progress and decline. Our spending remains out of control, our deficits remain over $1 trillion annually and, at over $16 trillion, our debt is at an historic and unsustainable level.
Reach to the private sector
America is like an ailing patient who agrees with his doctor’s diagnosis but refuses the cure. We know we’re ill, we know we’re spending too much, we know we have too much debt and we know this can’t continue; but, we need true leadership if we are to pursue policies that seriously address our problems. A vibrant economy generating and spreading prosperity is far more important to American businesses than a president’s party affiliation. No one wants our current economic stagnation to continue and very few, if any, business leaders are concerned about who get credit for a turnaround. While we may not have voted for him, American businessmen and women want President Obama to adopt policies that will allow us and him to succeed.
Yet, we need a president who understands that while government has a role, it is incapable of creating a self-sustaining cycle of job creation and economic growth. Only the private sector can create such a cycle. As the last four years have demonstrated, even with stimulus and subsidies, the anticipation of growth-discouraging policies can prevent a meaningful recovery.
As a president who has earned the confidence of many and with no pending election to influence his decisions, President Obama is uniquely positioned to make an historic difference for our nation and our future. I would respectfully encourage the president to look at economic growth in a new light; to involve the private sector and to seek innovative policies that accomplish his goals while encouraging private sector growth.
Start with Obamacare
Start with Obamacare. As currently structured, American businesses just can’t afford it. I’m sorry, but that’s the simple reality. Businesses only have so many dollars allocated for discretionary spending. Every additional expense reduces those dollars and discretionary dollars are the ones that businesses invest to grow. The more dollars we can allocate to growth, the more the economy will prosper. If businesses have to spend more on health care there are simply fewer dollars left to invest in growth and job creation.
Businesses are already taking action to reduce their Obamacare-related expenses. As has been widely publicized, to avoid Obamacare’s burdensome expense, American businesses are transitioning from full time labor forces to part time wherever they can because they do not have to provide health care coverage to part time employees. This is a bad result for both employers and employees. We now know that repeal is not an alternative. Yet, surely revisions to address the laws more serious shortcomings are appropriate. Revisions that are supported by both parties and take consideration both the president’s goals and the realistic impact this law is having on economic growth.
Taxes on successful individuals stifle growth
Raising taxes on successful individuals also will stifle growth. Particularly because the incomes of such individuals are often the incomes of their businesses, which are organized as flow through entities such as LLCs or sub-chapter S corporations. A number of alternative less damaging and less divisive means for increasing tax revenues should now be on the table, but so must meaningful reform of entitlement programs. Another look at the president’s Simpson-Bowles Commission’s recommendations is certainly in order. The president once acknowledged that raising taxes in the middle of a recession is a bad idea as it negatively impacts economic growth. That is still the case and, with the election over, a more sober approach to comprehensive tax reform is a realistic possibility. The rapidly approaching fiscal cliff is something both parties want to avoid. This is a truly a unique and remarkable opportunity to implement bi-partisan and comprehensive tax reform but it will require presidential leadership.
Become the Energy President
Finally, energy policy has been a meaningful deterrent to growth. Energy prices are impacted by supply and demand as well as anticipated supply and demand. An anticipated increase in supply can have just as meaningful an impact on prices as an actual increase. Unlike his predecessors over the past 40 years, President Obama has the unique opportunity to put us on a path to North American energy independence. Our public lands hold vast energy reserves. Natural gas is environmentally friendly and abundant. We can now tap into rich oil resources thanks to the fracking process. The Keystone pipeline is something we need and, whether it brings oil to Texas or the Canadian coast for shipment to China, there is going to be a pipeline carrying Canadian oil. One need only visit North Dakota to see the incredible impact domestic energy production can have on the economy producing that energy and the companies that support production.
This is certainly a time of great economic risk. We know we have exceeded the rational limits of our ability to spend and incur debt. We are facing serious and potentially devastating economic choices and consequences. Yet, this is also a time when we are looking at real opportunities to unleash America’s entrepreneurial spirit and restore prosperity. With the right leadership and with the cooperation of the American business community, we can reclaim our place as the most prosperous nation in history. It will take courage, vision and real presidential leadership, but it can be done. Mr. President: It’s in your hands.