Economy Needs Regulatory Reform as Much as Tax Cuts
Tax cuts aren’t the only answer to kickstarting the economy. For consumers, this means higher prices and fewer jobs. The burden from excessive regulation and litigation also slow the economy. Regulatory reform is just as important as tax reform for strengthening the economy.
In response to a slow economy and criticisms of abandoning domestic policy, President Bush unveiled an economic growth package with more than $674 billion in tax cuts as its centerpiece. Congress eventually settled on a tax package of only $320 billion. But this was an important step toward a stronger economy with lower marginal tax rates and a fairer tax code.
Unfortunately, the hidden taxes imposed by regulation have not received the same attention.
Today, Americans face an annual regulatory burden of more than $800 billion – more than $8,000 per household.
When I was in Washington, D.C., I spoke to economist Dr. Wayne Brough, of the Citizens for a Sound Economy, about this. Brough believes “unnecessary and ineffective regulations thwart investment and run counter the administration’s vision of economic growth.”
Regulatory reform is an important component of any plan for economic growth, and the administration should initiate a comprehensive overhaul of the nation’s strained regulatory structure.
The economic regulation on the trucking, railroad and airlines was inefficient. The consumers were hurt in the end by the regulations.
Another area of concern in recent years is the interplay between regulation and litigation.
Increasingly, courts have been establishing policy on a wide range of issues, from tobacco use to privacy policies. In many instances, litigation arises because legislation and regulations are poorly worded, leaving the courts to determine policy.
A more efficient approach would require both Congress and agencies to provide more explicit guidance and language on how regulations are to be implemented.
The FCC’s recent decision on phone competition all but ensures the issue will be tied in courtrooms and the bureaucracy for years to come.
Carbon dioxide emissions restrictions could cost consumers billions of dollars with little to show in terms of benefits.
During 2002, Washington issued a total of 4,000 regulations. Excessive paperwork and burdensome regulations can thwart economic growth and hamper the global competitiveness of the U.S. economy. For consumers, this means higher prices and fewer jobs.
President Bush has provided strong leadership on the need for tax reform. To fully capture the potential gains from those reforms, the president should not overlook the importance of easing the regulatory burden as well.
Regulatory reform is a critical component for strengthening the economy. Like tax reform, it can strengthen incentives to invest and work, providing an outlet for capital new opportunities for employment.
Consumers bear the burden of regulation. Tax reform that offers better incentives for economic growth will yield little if investment and employment opportunities are strangled by red tape and regulation.
Unnecessary and ineffective regulations thwart investment and run counter the administration’s vision of economic growth.
When I attended a conference in Seattle, a businesswoman made this statement: “The government will be only too happy to tax and regulate you out of business.”
It is important to remember that tax reform is important, but regulatory reform is just as vital to a sound economy.
Alice Click, a citizen activist, lives in Point Pleasant, W.Va.