e21 Asks: What Reform is your Highest Priority for 2014?

With Congress reconvening in Washington, D.C. this week, it was only appropriate to ask our readers, “What legislative reform is your highest priority for 2014?” The results had a few surprises, but also met expectations. “Reform of the Affordable Care Act” led the way with 31 percent.

“Entitlement Reform” and “Tax Reform” were close behind with 27 percent and 23 percent, respectively. “Immigration reform” came in fourth with 15 percent. “Rollback of Dodd-Frank regulations” received only 5 percent of the vote.

Ever since October 1, when Healthcare.gov went live, Obamacare has been exposed as an ongoing disaster by media ranging from conservative to liberal. Poor enrollment numbers, multitudes having their health plans cancelled, higher premiums and deductibles under Obamacare, and a dysfunctional website were all top news stories. Earlier this month, we wrote about a new academic study that concluded Obamacare redistributes wealth and hurts productivity. 

Given the negative press that Obamacare has received in the past three months, it is not surprising that e21 readers would most like to see Obamacare reformed in 2014. It may be more surprising that disapproval was not even higher than it was. Despite high levels of support for Obamacare from the Senate’s Democratic majority, reform may be possible. Senate Minority Leader Mitch McConnell (R-KY) offered to extend federal unemployment benefits in exchange for a one-year delay in Obamacare’s individual mandate. 

Voters more interested in entitlement reform were most likely concerned with America’s long-term fiscal situation. Since 2007, entitlement spending has grown to take up an additional seven percentage points of the federal budget. Spending on entitlements now stands at 60 percent of the budget. This figure is projected only to rise in years to come. As entitlement spending increases to unprecedented levels, America’s record-high debt will continue to weigh down the economy in the absence of greater GDP growth..

At 22 percent of the total budget, Social Security is the largest entitlement. In December, we suggested four reforms for Social Security, such as allowing workers to establish voluntary personal accounts with a share of their payroll taxes. If the program’s growth is not addressed, either benefits will have to be cut, or taxes will have to rise. 

Looking at the short-term, Friday’s jobs report was a clear indication that Congress and the White House need to focus more on aiding the economic recovery. Tax reform may be one of the best ways to spur economic growth. Professor Laurence J. Kotlikoff of Boston University studied America’s corporate income tax and found eliminating it would lead to rapid increases in the U.S. income.  This view is shared by entrepreneur Jim Ratcliffe, chairman and CEO of Ineos Group Holdings, in an interview with the Wall Street Journal published January 11. This comes as no surprise, since America’s highest-in-the-developed-world corporate tax rate is 14 percentage points higher than the OECD average. 

Making it easier for businesses to hire would also help attract discouraged workers back into the labor force, increasing labor force participation, which is at a troubling 35 year low. Lowering or eliminating the corporate income tax would encourage businesses to focus less on lobbying and tax compliance and more on cutting prices and improving products—actions that improve the economy.

With 15 percent of the vote, immigration reform was not as high a priority as the reforms mentioned above, but it is still important to a significant portion of the e21 audience. Similar to taxes, immigration reform could go a long way in spurring the job growth needed to escape the recession. Our legal system does not easily allow foreign workers and entrepreneurs to come to America, where they might be able to boost economic growth. Immigrants generally have skills which complement the skills of native-born workers, and bringing their skills into America would help increase our international competitiveness. 

Just five percent of e21 readers were most interested in rolling back Dodd-Frank regulations. Dodd-Frank receives little attention in the news, since its negative effects are complicated to understand and it is dwarfed in the media by Obamacare. Since its passage three and a half years ago, Dodd-Frank has had significant negative effects on banks’ operations. Its compliance costs are high and it gives the government power to regulate both bank and non-bank entities, potentially helping friends and hurting foes. Even though Dodd-Frank is not consistently front-page headlines, the Act still requires significant reform. Simply put, it is too convoluted to succeed. 

Congress has many opportunities to raise the economy’s growth rate. Let us hope our representatives can put their party differences aside to address the needs of our still-ailing economy.