It's becoming increasingly clear that the wealth redistribution policies of the Obama administration are failing to revive the economy. Indeed, incomes are falling, jobs are going overseas even while job growth is sluggish here at home, and Americans are growing more dependent on the government.
Ronald Reagan remarked that, "government is not the solution to our problem; government is the problem." It's was true then, and it's true now. Like most problems in public policy, the best way to get the economy back on track is less government — not more. These four solutions offer a prescription for recovery.
1. Rein in government spending.
Every dollar that the government spends is a dollar that the government has to raise through taxes; now or in the future. During tough economic times, people have to tighten their belts, and live within their means — and the government should too. The U.S. government has made a lot of promises that it can't afford to keep: It needs to set priorities in order to determine what government should do, and what should be left to the private sector.
2. Stop giving handouts and eliminate loop holes in the tax code.
When the government gives lucrative handouts to its favorite businesses, it makes it harder for everybody else to compete in the marketplace. These loopholes enable some companies to pay less in income taxes, which ultimately results in less revenue for the government. The burden to pay for these programs falls on everybody else. Those who are left in the tax base have to pick up the difference in the form of higher taxes. Not only are these loopholes unfair, they don't work: These handouts routinely fail to live up to their promise of creating jobs and stimulating economic growth.
3. Lower tax rates across the board.
If taxpayers were allowed to keep more of their money, instead of giving it up through taxes, then they would save, invest, and spend it in the private sector. Similarly, if tax rates were lower for businesses, then they could afford to expand and hire more workers.
Progressive policymakers often try to balance their budgets on the backs of rich people and high-profile companies. For example, the Obama administration supports the Buffett Rule, and state governments want to hike taxes on millionaires. Progressive tax polices don't work — rich people and businesses end up leaving, and they take their tax revenue with them. The U.S. would attract more job creation and business activity — and, consequently, more tax revenue — if policymakers fostered a low-tax environment that encouraged investment and innovation.
4. Cut back red tape that gets in the way of businesses.
When government grows, it gets in the way of starting a business — often in the form of licensing requirements and imposing high regulation costs. What will really drive growth in the economy is making it easier for people to start a business. This will mean they can both earn a living for themselves and employ other people.