Seven Missed Opportunities to Double Our Growth
As 2015 winds down, here are seven opportunities Congress missed this year. If we could make them happen in 2016, we could eventually double our economic growth rate from 2% to 4%, enriching Americans and lowering our unemployment rate.
Killing the Export-Import Bank. Congress eliminated the Export-Import Bank in the summer, but put it right back in the December spending bill. The decision is a tribute to corporate lobbying, in particular Boeing BA. After gaining historic majorities in both houses of Congress, the Republican Party — ostensibly the party of small government — showed that it cannot even tackle a small and obscure government program whose main beneficiaries are wealthy businessmen. This does not bode well for current and future promises from Republican candidates.
Immigration Reform. Congress is stalled on immigration reform. Let us hope that immigration reform passes in 2016 to enable more high- and low-skill immigrants to come legally. Immigrants disproportionately fund startups and take low-skill jobs in fruit picking and meat packing industries, jobs that Americans prefer not to do. The world is engaged in a global race for talent, and if it is difficult for talented immigrants to enter America, they will go elsewhere, to our detriment.
Boosting Labor-Force Participation. While the unemployment rate declined by seven-tenths of a percentage point from January to November 2015 (data for December 2015 will be available on Jan. 8), the labor-force participation rate also fell by four-tenths of a percentage point over the same period. If the labor-force participation rate were the same today as it was in 2000, 10.8 million more people would be employed, adding to economic growth. The trend is particularly pronounced among young people, whose participation rate has declined by 4.6 percentage points since 2007, the beginning of the recession. In 2016, we need to attract Americans back into the labor force.
Keystone XL. In 2015 President Obama decided not to approve the Keystone XL pipeline, which could have brought oil from Alberta, Canada, to American refineries. TransCanada filed an application for the pipeline in 2008. The pipeline would have been a boon to U.S. refineries. Construction would have created 20,000 jobs and generated tax revenue for the federal government and several state governments. Plus, pipelines are the safest form of transportation for oil, with the lowest rate of injuries and fatalities, according to the Transportation Department. Regardless of the merits of the pipeline, the administration’s handling of the issue was disappointing. American citizens deserve better than to have proposals delayed for nine years so that projects can become a punching bag for the environmentalist left. The next president should approve Keystone XL.
Pension Reform. The total amount of public pension unfunded liabilities in the United States was $4.7 trillion in 2014, the latest data available, according to State Budget Solutions. Outstanding state and local municipal debt in 2015 was nearly $3 trillion. Little was done in 2015 to shore up pension funds. Public leaders need to raise retirement ages, convert defined benefit plans to defined contribution plans, and structure different plans for new government employees.
Corporate Tax Reform. Congress has once again neglected to pass corporate tax reform. U.S. corporate tax rates are the highest in the industrialized world. The United States is one of seven countries that taxes companies on their worldwide earnings. In 2015 companies such as Pfizer and Baxalta announced plans to merge with foreign companies to lower their tax bills. Corporate tax reforms would spur economic growth by increasing the incentives for consumption, work, production and investment.
Entitlement Reform. The December budget agreement completely neglected entitlement reform, particularly changes to Social Security and Medicare. In 2015, the national debt surpassed $18 trillion for the first time, driven by record federal spending. Over 60% of federal spending is entitlement programs. Every passing day in which entitlement reform is not considered by Congress is a missed opportunity to fix our budget problems.
It is probably too much to hope for that Congress will consider any significant reforms in 2016, since it is a presidential election year. But hope springs eternal. And if the current Congress does not tackle these problems, Americans should elect a new Congress in 2016 that will.
This piece originally appeared in WSJ's MarketWatch
This piece originally appeared in WSJ's MarketWatch