How to Accelerate the Economic Recovery

WMC News Column

By
Kurt R. Bauer, WMC President/CEO

It looks like the U.S. economy grew somewhere between 2.5 and 3 percent in 2013. That falls short of what most economists predicted for the year.  But there is a silver lining: The economy grew despite wrongheaded federal policies that have hobbled the recovery.

That fact demonstrates just of how resilient the U.S. economy is and why there is reason to be optimistic for 2014.  But if policymakers really want to unleash the job-, opportunity- and wealth-creating power of free enterprise, they should embrace the following policies:

Tap Natural Resources: Energy is the lifeblood of a developed economy and the insatiable demand for it, especially oil, has led to the transfer of trillions in U.S. wealth to oil-rich nations, including some that are unfriendly to the U.S.

But now the technology (hydraulic fracturing) exists to affordably and safely extract oil and natural gas from America’s vast shale deposits. It is a geological gift and one that, if fully utilized, could drive the economic recovery and do more than anything else to make U.S. businesses, especially manufacturers, globally competitive for decades to come.

As an added benefit, Wisconsin’s economy is getting a substantial boost from the U.S. energy boom. Our state doesn’t have shale oil or gas, but we do have deposits of the coarse sand that happens to be perfect for hydraulic fracturing and we manufacture much of the equipment used in the process as well.  Wisconsin now has at least 150 sand mines and processing facilities, up from just 10 a few years ago. In all, the energy boom has created about 20,000 Wisconsin jobs.

Reduce Government Spending and Taxes: Some deride not spending more than you receive in revenue as austerity.  I think its common sense. Fueled by years of trillion dollar deficit spending, the U.S. national debt is now $17 trillion.  Interest rates will eventually rise and when they do U.S. debt payments will balloon and crowd out what little discretionary spending there is in the federal budget.

Canada used the substantial revenue generated from developing its oil sands resources to reduce its national debt and lower its corporate tax rate to 15 percent.  At 35 percent, the U.S. rate is the highest in the industrialized world.  

Washington should follow Ottawa’s example.

Create Regulatory Certainty: U.S. businesses need relief from the staggering $1.8 trillion it costs per year to comply with regulations.

One giant step towards that goal would be to adopt the REINS Act, which would reassert congressional oversight of federal regulatory agencies, like the Environmental Protection Agency, National Labor Relations Board, Internal Revenue Service and the Occupational Safety and Health Administration. Those agencies have been among the most aggressive in expanding regulations by executive fiat at the expense of U.S. businesses and economic growth.

Most Wisconsin businesses would also support repealing ObamaCare, according to WMC’s most recent membership survey.  Even with the delayed implementation of the employer mandate until 2015, the law’s complexity and the uncertainty it has created is costing the economy jobs and retarding investment.

Align Education and Training with Needs of the Economy: Even if the U.S. cut its corporate tax rate, slashed regulatory burdens, reformed or repealed ObamaCare, eliminated frivolous lawsuits on business, and secured abundant and affordable energy supplies; we will still need a skilled and motivated workforce.  Without it, everything else is window dressing.

There continues to be a misalignment between the jobs Americans seek and are trained for versus the positions the economy needs. It’s called the skills gap. But there is also an enthusiasm gap, which I define as a general lack of interest in specific jobs or a drift away from what David Azerrad from the Heritage Foundation calls the “culture of work.”

As the U.S. workforce continues to age and birthrates fall below replacement levels in some regions, including Wisconsin, this problem will only get worse.

One solution is immigration reform that allows foreign students to use their high quality U.S. education for the benefit of U.S. companies. Forcing them to leave due to an inadequate Visa program foolishly sends some of the world’s most talented people into the waiting arms of America’s competitors. There is also a need for a similar guest worker program for lesser skilled, but nonetheless in demand foreigners.  

Protect and Continue State Level Reforms: Wisconsin’s transformation from an anti-business to a pro-business state is impressive, but incomplete. More reforms are needed, including harmonizing the state and federal versions of the Family Medical Leave Act.  Currently, Wisconsin businesses have to comply with both laws, which is unnecessarily costly, confusing and burdensome.

Wisconsin’s economic destiny is tied to the national and global economies, but that isn’t an excuse to take our foot off the reform accelerator.

 

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Founded in 1911, Wisconsin Manufacturers & Commerce (WMC) is the state’s chamber of commerce and largest business trade association representing more than 3,500 businesses of every size and from every sector of the economy.