The state of our union: paralysis

Wayne Crews VP for Policy, Competitive Enterprise Institute
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Since, as they say, the world belongs to those who aren’t cursed with self-awareness, tonight a politician will inform you that all the big government you thought you didn’t want, you actually do want.

President Obama’s 2010 State of the Union address will propose new expansions of the state, while simultaneously claiming to heed the pain of unemployment and stagnation still gripping America a year into his presidency.

Economic growth requires something apart from an expanded state, oblivious pop collectivism and new government spending, and yet more stimulus to nowhere.

Economic growth can be achieved only by assurances that Uncle Sam henceforth will keep his hands in his own pockets, that he will reject the model of government steering while the market is forced to row toward crosswind counterproductive political goals that have nothing whatever to do with wealth and job creation or the things people actually want.

Tonight we’ll likely hear about a perverse commission to, not solely cut spending only in a government that consumes nearly half our national output, but to propose tax increases. We’ll hear about a spending “freeze”—but one that locks in today’s gigantic prevailing level that has built in the suicidal lurches in spending over the past two years. He’ll propose ramping up new spending for education—not even a federal role—when he could argue the merits of–brace for it–leaving the money in the states in the first place. The health plan you don’t want? Who are you to decide anyway? What’s the matter with you, were you born naked?

He will insist upon his “cap and trade” climate change agenda. But caps where they might actually have a healthy impact on entrepreneurship, like overall rather than “discretionary” spending caps, aren’t part of the Plan. In fact, Washington is making so many “plans” for us all — heath, energy, education, cybersecurity, smart grid, “net neutrality” online, antitrust interference with everything from Toys-R-Us to IBM—that it’s a wonder anybody works at all.

This is not rocket science. Unfortunately it’s not even civics. It’s just power-hungry mania. I can tell you the State of the Union; it’s paralyzed, with the federal government draining off more than 30 percent of national wealth with taxation and over 4,000 regulations a year from over 50 departments, agencies and commissions.

There’s plenty that could be done, but the answer is a “Liberate to Stimulate” agenda to improve the business environment is necessary, not a spending agenda. That means reducing the commitments and obligations of the federal government, which is something that markets could truly respond favorably to by creating jobs. Steps include:

  • Cap spending at a level as aggressive as the one at which he plans to pretend he will cap carbon emissions; and outline an awareness that future entitlements also must be capped in such a manner in the long run. Imagine the effect of an announcement to cut federal spending 17 percent from 2005 levels, instead of CO2 emissions.
  • Announce that green jobs are a farce and will not be thrust upon a limping economy that can ill afford artificially expensive energy. Liberalize access to energy offshore and safe drilling in land now off limits.
  • Indeed, since everybody’s in the mood for a “Commission,” instead create a commission to deal with entitlements by exploring the idea of not bringing the unborn into the programs at all in the coming decades. Future generations in a proper society could opt out of these horrible programs and have a normal life without government paycheck witholdings so that one can retire genuinely wealth and with health care options beyond today’s imaginings. Public policy forgets we are not immortal, and the ridiculous programs we have in place now need not apply to future generations who choose to opt out.
  • Utter the phrase “supermajority for tax increases”. Announce that anyone else in the administration who utters the term “VAT” will be fired.
  • Freeze the regulations pouring from the dozens of federal agencies. Establish another “commission” to weed out root-and-branch the tens of thousands of rules that throttle entrepreneurialism now. Exempt more businesses from oppressive Sarbanes-Oxley mandates. Announce that the EPA will not regulate carbon, and that while Wall Street will not get away with murder, neither will it be harassed with punitive taxes that are likely unconstitutional anyway.
  • Acknowledge that delegation of unaccountable power to federal agencies is out of control. Recommend that any major or complicated regulation – like net neutrality from the FCC, or a carbon “endangerment” finding at EPA, needs to have an expedited approval by Congress.
  • Stay away from the technology sector: Announce that the federal government will reject coercive “net neutrality,” won’t over-regulate infrastructure in the name of “cybersecurity” (at which the federal government’s own networks fail utterly); announce that the online commerce will not be burdened with crippling “privacy” regulations. Liberalize the H1-B visa process so foreign talent can more easily benefit America.
  • Rather than announcing tonight’s outrageous and expensive rail subsidies – seriously, it’s cheaper for taxpayers if people take the bus, I’m just being honest—establish an aggressive campaign to liberalize from government micro-managing all network and infrastructure industries, which are now artificially segregated into regulatory silos (telephone, electricity, water, sewer, cable, railroad, airline, air traffic control). This would create opportunities for them to work together and jointly invest in new power lines, fiber to the home, roads, bridges, airports, toll roads and more—including rail. The job creation potential of liberalizing infrastructure is hard to overstate.
  • Relax “antitrust” regulation so that firms within and across industry sectors can combine and create business plans to bring capitalism and infrastructure wealth creation to the far higher level that is appropriate to the 21st century.

Obama will announce tax breaks for small business—well, OK; but what about systematically reducing the endless barriers to hiring people in the first place? Regulations mount steadily as a firm grows, such that it’s a wonder anyone gets hired at all. There’s no need to stop with small business; barriers to doing business in America should be reduced for large firms is as well. The bottom line is a healthy State of the Union requires a conscious separation of State and economics. You don’t have to tell the grass to grow, just take the rock off of it.

Wayne Crews is Vice President for Policy and Director of Tech Studies at the Competitive Enterprise Institute, author of the annual Ten Thousand Commandments report, and co-editor of CEI’s semi-annual Agenda for Congress.