Give the Economy a Deregulatory Stimulus

The U.S. economy has yet to recover, so President Barack Obama naturally wants to hike federal outlays. His favorite justification for spending more is to “stimulate” the economy.  Never mind that $5 trillion in federal deficits during the president’s first term didn’t create an economic boom. His latest gambit is a proposal to “reform” corporate taxes and have Washington spend, er, “invest,” the extra money collected to “create” jobs. 

Unfortunately, government never has been able to create self-sustaining economic growth. If Uncle Sam could buy prosperity, then we should just load up the Air Force’s antiquated B-52s with dollar bills and drop the cash all over America. Everyone would be rich!

A better strategy would be to free the private sector by, for instance, cutting the regulatory burden on U.S. enterprises.  Obviously, or at least, obviously to people outside of Washington, when government makes it more costly to create businesses, develop products, expand operations, employ people, and market goods and services, there will be less commerce, meaning fewer and lower-paying jobs. Reduce the unnecessary burden, get more economic growth.

Clyde Wayne Crews of the Competitive Enterprise Institute, a former Cato scholar, regularly publishes “Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State.”  The latest issue is filled with bad news.

As I explain in my latest article for American Spectator online:

“These days most Americans probably view Uncle Sam’s most important duty as that of sugar daddy—transferring money from taxpayers to basically everyone, ranging from corporations and labor unions to students and retirees. The national government has turned into a vehicle for most everyone to attempt to live at most everyone else’s expense. A system originally created to preserve liberty and limit government has turned into an institution by which the influential loot the productive.

However, nearly as important even if less visible is Washington’s regulatory role. Special interests have learned that they can use federal rulemaking to enrich themselves and/or impoverish their rivals. Doing so has the added advantage of disguising the cost to the public. Added to self-serving regulations are the even more officious nanny-state controls which increasingly appeal to the authoritarian liberals who so often end up in government.”

We are now facing Thomas Hobbes’ Leviathan in Washington: 15 departments, 69 agencies, and 383 civilian sub-agencies, employing 2.84 million people. The Treasury Department, including the IRS, tops the list of Washington regulators with 487 rules completed or in-process last year. Next comes the Commerce Department, centered on corporate welfare, with 415 rules. 

Total regulatory costs run about $1.8 trillion. That’s eight times the collections of the corporate income tax, about half of the federal budget, and more than ten percent of GDP.  This calculation does not include the lost economic growth.

While the president says he wants to create jobs, he is presiding over a regulatory surge. Last year the Federal Register ran 78,961 pages, the fourth highest in U.S. history.  The all-time record was set by the Obama administration in 2010 with 81,405 pages. The second highest total was 81,247 pages two years ago. (George W. Bush set the third highest in 2008.) 

The problem is not just money, but freedom. Ever more of our lives come under some level of government. In addition, law increasingly is being effectively written unelected administrators. Jonathan Turley of George Washington Law School warns of the “rise of fourth branch.” 

Limiting regulation is as important as limiting spending. The way to do both is to have Washington do less. Moreover, rules should require congressional approval, regulations should sunset, and an independent agency should assess regulatory costs and benefits.

The ultimate objective should be to inaugurate a deregulatory stimulus to the economy. That would leave us wealthier and freer.