As a rule, Presidents tend to have less of an influence on economic success than they’re given credit for. Likewise, they often shoulder too much of the blame when our country’s financial systems turn south.
But more and more, we’re finding the burdensome shackles of government debt and spending have become onerous burdens on business growth.
Bernie Marcus, the co-founder of Home Depot, one of the fastest growing companies in U.S. history, penned an article insisting that it was unnecessary and costly government regulations that have hamstrung business growth.
In it, he points out that in Obama’s first term, the government had issued 10,000 new regulations on business at an estimated $16 billion in cost.
To me, though, Marcus’ most persuasive moment comes at the evocation of Bill Clinton’s tenure as president, the left’s archetype example for why liberalism can lead to economic growth.
President Clinton required government agencies to better account for the cost of regulations, worked with Congress to reduce unnecessary regulatory burdens on banks, championed free trade agreements and liberalized regulations on airlines. The result? Over 22 million jobs created, a budget surplus and a slowdown in the rate of growth of the federal debt.
Furthermore, Clinton actually lowered taxes on businesses while increasing revenue because companies were encouraged to re-invest. It turns out, Bill Clinton, the perfect liberal, found success using conservative principles.
Anti-regulation stances are inherently non-nonsensical, just like pro-regulation stances. The regulations have to make sense and be cost-efficient, but when the president believes simply in punishing businesses and allowing government to spend whatever it wants, those principles fly out the window.
The second part of the liberal mythology surrounding government and business is debt and taxes. More than regulations, government spending as it relates to taxes can be a crucial driver of the economy in both a positive and negative direction.
In an outstanding article for the Wall Street Journal, Kevin Brady and Jim DeMint show concisely and clearly that the European model of government with its heavy debt and spending, cannot work long-term.
Compared with the 10 U.S. states with the lowest rates of economic growth since 1990, the states with the highest rates of growth had smaller unfunded pension ratios (by 26%); lower debt ratios (by 18%); less tax revenue collected (by 22%); and lower welfare benefits (by 31%). Our report also shows that over the last decade, states with no income tax have much higher rates of job growth and population growth than states with the highest income taxes.
The numbers speak for themselves. Less power in the hands of unions, lower debt and lower taxes work to support business. Welfare being paid out at a lower rate is actually a function of the economic success.
You can cut government spending on social programs simply by removing the restrictions on businesses. The reason is simple: the more people who have jobs, the fewer people who need welfare and the fewer dollars government has to spend paying for it.
It’s the perfect governmental win-win.
Failure after failure in Europe has, for reasons that escape me, only hardened liberal resolve about progressive tax policy, government spending and regulations on businesses.
The larger government becomes, the greater a role it takes in our economic system, the bigger a hindrance it becomes to business. No longer can we look at the New Deal and talk about the wonders of government spending to boost the economy.
Our world’s financial systems have become too competitive, too complex and too intertwined for any single government to spend its country’s way out of economic downturns.
We stand on the precipice of financial ruin and liberals seem intent on giving us a giant shove off into the gorge of irrevocable debt burdens and perpetually stagnating growth.
The only way to avoid such a fate is to firmly walk back liberal financial mythology and educate the country (and in this case, it appears, the world) on the dangers of government intervention.