For as long as any of us has been alive, America has had a better way.
Our free market economy, complemented by the freedoms documented in our Bill of Rights, have combined to make America the envy of the world. Our economic strength has also translated into an ability to spread freedom in other parts of the world. Based on the strength of our principles, our economy, our people and our leadership, America won the Cold War without firing a shot.
But what’s happening today? 
Growth is taking place at a glacial place, debt is out of control, incomes are down and unemployment has been chronically high.
“Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country,” former U.S. Senator Phil Gramm wrote last week in The Wall Street Journal. “Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.”
Based on America’s past performance, the Federal Reserve projected that real gross domestic product (GDP) growth for the period 2011-2014 would average 3.8% to 5%. But underperformance has been chronic throughout the Obama presidency. The rate of growth in gross domestic product (GDP), as we’ve previously noted, has been in the range of 2% for the past six years.
For 2014, the Fed projected a growth rate of 4%. Instead, the economy grew at a rate of only 2.4% in 2014.
You can buy every bond on the planet, but if you’re increasing taxes and burying businesses in new regulation, you’re not going to stimulate economic growth. Who would think otherwise?
More Taxes, More Regulation
Gramm wrote that, “The literature on economic development shows that U.S. states and nations tend to prosper when tax rates are low, regulatory burden is restrained by the rule of law, government debt is limited, labor markets are flexible and capital markets are dominated by private decision making. While many other factors are important, economists generally agree on these fundamental conditions.”
That’s just common sense, but apparently common sense can’t penetrate Washington’s bureaucracy. Since 2009, marginal tax rates on ordinary income have increased 24%, tax rates on capital gains and dividends have increased 59% and the estate-tax rate has increased 14%. America still has the world’s highest corporate tax rate. Taxation of foreign earnings has created an incentive for companies to not only keep their investments abroad, but move their corporate headquarters to other countries.
Meanwhile, federal debt exceeds $18 trillion. When interest rates rise – as they must, someday – the cost of servicing the debt will exceed $1 trillion. That’s a trillion dollars in taxes we will all be paying without a cent of it going to provide any sort of public service.
More than 100 million Americans of working age are not participating in the labor force, the number of Americans receiving food stamps has risen by two-thirds since 2009 and the number of people drawing disability insurance is up more than 20%.
The healthcare industry is now managed by the federal government, and the Internet and the banking system are being regulated like utilities. In addition, at the urging of China and Russia, President Obama is arranging for the United Nations to manage the Internet Corp. for Assigned Names and Numbers (ICANN).
In a world where Syria continues to use chemical weapons, in spite of an agreement not to that was brokered by Russia, and Iran is being allowed to continue developing nuclear weapons with America’s blessing, why not also give the world’s despots control over the Internet?
Cuba, one of the world’s most repressive countries, has been removed from the list of state sponsors of terror – and a CNN poll says most Americans agree with the decision.
We now have the Consumer Financial Protection Bureau, which, like our president, doesn’t answer to Congress. And new regulations from the Environmental Protection Agency that will cost billions of dollars to implement, while having virtually no impact on the environment.
So, in America today:
- Economic policy has been handed off to the Federal Reserve Board.
- Higher taxes and new regulations are hampering business growth.
- There have been no new pro-growth policies in the past six years. The largest government spending legislation in history (aka, Keynesian “stimulus” spending) doesn’t count, as most of the money went to funding government entitlements and unemployment benefits.
Last week, the NASDAQ Index and S&P 500 again hit record highs. Go figure.