Like the “Saturday Night Live” joke that “Generalissimo Francisco Franco is still dead,” the Obama economy is still in the doldrums. In the fourth quarter of 2013, gross domestic product grew at a paltry pace of 2.4 percent, down from prior estimates of 3.2 percent. The recession officially ended in June 2009, but the Obama recovery isn’t much of one and lags well behind other recoveries. The 2009 stimulus plan, even if you buy into Keynesian economics in theory, was ill-designed (no shovel-ready jobs, the president later confessed) and was a waste of time and money. We still are down 6 million jobs from pre-recession levels. There should be policy and political consequences.
So how do we shock the economy into a growth spurt?
First, while generally praised, Ways and Means Chairman Dave Camp’s tax proposal is not as pro-growth as it could be. He and other conservatives should rethink taxes on capital — capital gains, depreciation schedules, etc. It also is time to consider whether we should be talking about a revenue-neutral tax plan. If coupled with entitlement reform, we can do tax reform without worsening our long-term debt. There certainly is no reason, as liberals want, to use it as an excuse to raise taxes on anyone; the economy is feeble enough as it is.
Anti-growth taxes such as the medical-device tax should be put on hold until the economy bounces back. From Minnesota, home of a significant portion of the high-tech medical-device industry, former senator Norm Coleman and Laura Brod write, “The Twin Cities region hosts more than 400 medical technology companies, creating over 34,000 jobs, generating millions of dollars in wages for Minnesotans and revenue for the state. . . . According to a study released last week by AdvaMed, the medical device tax is already responsible for 33,000 fewer jobs, reduced research and development, and manufacturing jobs moving abroad. To protect American jobs, Congressman Erik Paulsen has a bi-partisan bill to repeal the medical device tax, and it recently gained its 270th co-sponsor in the House.” They explain, “The $30 billion medical device tax championed by the president and embraced by his fellow Democrats is not a tax on big business, it is a tax on those small businesses that are dedicated to new technology to improve our health.” The medical-device tax is the worst tax at the worst time. It should be dumped.
In addition, Senate Majority Leader Harry Reid’s refusal to consider fast-track trade authority is an economic abomination. The president has an obligation to press his own party on trade, a no-brainer if one is concerned about revving up the economy. Maybe a GOP Senate majority leader would be more helpful to the president in this regard.
The other no-brainer out there is domestic energy development. The president’s Hollywood “green” donors and left-wing environmentalists would have us block the Keystone XL pipeline, halt domestic energy development and tie the coal industry up in knots. A source of jobs and a source of cheap energy that would act as a price cut for business and consumers is being disregarded.
But the president and/or the Senate Democrats don’t want to do any of this. Instead, they want a tax hike, domestic spending unrelated to short- and medium-term growth stimulation and a massive health-care plan that will result in fewer jobs, lower take-home pay and less growth. It is remarkable that in this economy the Dems insist on a growth-neutral, if not anti-growth, agenda.
Democrats and mainstream media pundits (I repeat myself) would have us believe Obamacare and the economy are separate issues. They are not. Obamacare’s revenue provisions (e.g.. the medical-device tax) are a drag on the economy. Its perverse incentives not to work will push labor participation rates down even further. And with less disposable income because of higher insurance premiums, consumer spending will be suppressed. The point Republicans need to make is that Obamacare is not merely bad health-care policy, it also is rotten economic policy when we can’t afford it.