Having temporarily dodged Debtmageddon, official Washington is heaving a short sigh of relief. Even as the political leaders who crafted the compromise enjoy a brief moment of celebration, there is a prevailing and proper sense that the job is not finished.
For too many years, our nation has been addicted to deficit spending. Politicians have been unable to voluntarily enforce a balanced budget because challenging the beneficiaries of these programs can amount to political suicide. Our nation has made deficit spending a habit, and has become addicted. The addiction leads to two painful consequences: (1) the next dose of stimulus must be increased to have any effect, and (2) kicking the habit and going through withdrawal is difficult and painful. The path to fiscal sobriety will not be easy or short.
As soon as the bill was signed into law, the president called for a renewed focus on jobs, higher wages and faster economic growth. Here’s an idea that would do accomplish all of these objectives without adding a nickel to the national debt: right-size our nation’s regulatory blanket.
Regulations have a legitimate purpose in our society – they step in where the private sector will not or cannot, and they regulate behavior that is advantageous in the short term but detrimental in the long term, or behavior that is unfair. The market is very good at allocating resources to achieve efficiency and growth, but regulation is frequently needed to ensure equity.
Taken too far, however, regulations stifle the very progress that the president has called for. They pile volumes of expensive, time-consuming and often contradictory compliance requirements on the very entities who could otherwise rev up economic growth and create new jobs. Reducing this burden, while still addressing the most critical needs, would turn these job-creators free. No stimulus spending would be required to create this growth, and increased economic growth will lead to higher tax revenues. Furthermore, if the regulatory burden were decreased, the size (and appurtenant cost to taxpayers) of the agencies imposing these requirements could also be revisited, potentially resulting in budgetary savings. Government employment has been on a steady growth trajectory since the Clinton Administration.
Examples of regulatory overreach abound. In January, our organization submitted a letter to the House Committee on Oversight and Government Reform with a long list of stifling regulatory burdens that need to be addressed just within the small segment of the economy that our association represents. Hopefully, Congress will take those issues up soon. There are some possibilities for wins here that don’t need to be partisan.
The president’s January 18 Executive Order was a step in the right direction. Now, it must be aggressively and comprehensively enforced, together with necessary statutory changes by Congress, to more appropriately balance regulatory burdens with the goal of economic growth. Rather than impose more taxes on our struggling economy to cover the nation’s fiscal gap, or hope for another “fix” of deficit-financed stimulus, let’s release the energy and job creating ability of the private sector by getting government off its back.