“D The high cost of wait­ing to drain the swamp

Ev­ery day of in­ac­tion costs Amer­i­cans bil­lions in lost pro­duc­tiv­ity

The Washington Times Daily - - OPINION - By Ed Feul­ner Ed Feul­ner is the pres­i­dent of the Her­itage Foun­da­tion (her­itage.org).

rain the swamp!” It was the bat­tle cry of Don­ald Trump’s pres­i­den­tial cam­paign.

Many Re­pub­li­can mem­bers of Congress echoed that call as well, rid­ing it to vic­tory — and con­trol of both leg­isla­tive cham­bers.

The Amer­i­can peo­ple ral­lied around the cry be­cause it re­in­forced their im­pres­sion of what Wash­ing­ton had be­come: a swamp in­fested with spe­cial-in­ter­est groups and power-hun­gry bu­reau­crats.

They ral­lied, too, be­cause it held the prom­ise of get­ting our coun­try back on track — by re­form­ing the tax code, re­peal­ing Oba­macare, cut­ting spend­ing, and elim­i­nat­ing the need­less red tape that sti­fles en­trepreneur­ship and in­no­va­tion.

But more than five months into the new Congress and the new ad­min­is­tra­tion, pre­cious lit­tle drain­ing has oc­curred. The de­lay in ac­tion is not only frus­trat­ing, it’s ex­pen­sive: With the promised re­forms, the U.S. could have cre­ated as much as $5 bil­lion per day in eco­nomic out­put. If noth­ing changes, the swamp will end up cost­ing more than 2 mil­lion prospec­tive jobs over the next decade.

Elites ar­gue that piles of reg­u­la­tions and spe­cial rules keep ev­ery­one safe. But most Amer­i­cans un­der­stand that these poli­cies serve mainly to en­rich spe­cial in­ter­ests and keep up-start en­trepreneurs from gain­ing a foothold.

All the reg­u­la­tion keeps new busi­nesses from of­fer­ing in­no­va­tive goods and ser­vices at lower prices.

All too of­ten, these reg­u­la­tory schemes not only fail to pro­tect con­sumers — they cre­ate huge prob­lems, like fi­nan­cial crises and hous­ing busts. And then the elites point to the prob­lems as proof of the need for even fur­ther gov­ern­men­tal in­ter­ven­tion.

The bailouts lead to new pro­grams and fed­eral agen­cies and, of course, even more rules.

But most Amer­i­cans don’t want more gov­ern­ment. Rather, they want re­lief from big gov­ern­ment so that they can make their own de­ci­sions and im­prove their own com­mu­ni­ties.

There is plenty of ev­i­dence that peo­ple thrive more un­der lim­ited gov­ern­ment than un­der a vastly more in­tru­sive gov­ern­ment.

Had the U.S. econ­omy sim­ply stayed on the same trend dur­ing the Obama years that it had fol­lowed over the pre­vi­ous 25 years, gross do­mes­tic prod­uct (GDP) per per­son would be nearly 10 per­cent higher than it is now.

In­stead, af­ter years of ever-ex­pand­ing gov­ern­ment con­trol and reg­u­la­tion, the econ­omy dropped off a cliff in 2008.

Just get­ting back on the pre­vi­ous trend would be great, but Amer­i­cans can do much bet­ter. At least three ma­jor re­forms are now pos­si­ble that can un­leash the power of the Amer­i­can econ­omy.

• Re­peal Oba­macare: A study by the Na­tional Cen­ter for Pol­icy Anal­y­sis es­ti­mates that re­peal­ing Oba­macare would pro­vide a boost to real GDP of more than 1 per­cent per year over the next decade.

Based on these pro­jec­tions, per­sonal in­come would in­crease by hun­dreds of bil­lions an­nu­ally, and the econ­omy would add nearly 1 mil­lion jobs by the end of the decade.

A sim­ple divi­sion by the num­ber of days sug­gests that the cost of in­ac­tion is nearly $500 mil­lion per day in lost out­put. In terms of jobs, this could trans­late into as many as 250 lost jobs per day (a rel­a­tively small num­ber un­less one of those jobs is yours).

• Shrink reg­u­la­tion: Ad­mit­tedly, this is a her­culean task. The fed­eral gov­ern­ment has been bur­den­ing peo­ple with in­no­va­tion-killing rules for decades, and it is dif­fi­cult to es­ti­mate the eco­nomic ef­fects of a broad dereg­u­la­tion ef­fort.

Two Her­itage Foun­da­tion schol­ars have es­ti­mated the eco­nomic im­pact of re­duc­ing just one of the likely ef­fects of Dodd–Frank: ex­cess bor­row­ing costs.

Their study projects that re­mov­ing these ex­cess costs would grow the GDP by more than 1 per­cent per year for the next decade, and boost cap­i­tal stock by nearly 3 per­cent per year. In­ac­tion on Dodd-Frank costs an­other $500 mil­lion per day.

• Re­form the tax code: Es­ti­mates of tax re­form ben­e­fits vary widely be­cause there are so many ways to im­prove the U.S. tax sys­tem, but sev­eral plans are cur­rently tak­ing shape.

The Tax Foun­da­tion stud­ied the House Re­pub­li­can plan and found that it would in­crease the long-run size of the econ­omy (in terms of GDP) by more than 9 per­cent. They also pro­jected that the Ru­bio-Lee plan would grow the econ­omy by 15 per­cent over the long run.

Mr. Trump’s plan is not fully de­tailed yet, but a de­cent guess is that the ben­e­fits would be some­where near these pro­jec­tions.

The in­crease in jobs, wages and wealth from grow­ing the econ­omy through these types of tax re­forms would be enor­mous. The cost of wait­ing on just tax re­form can be con­ser­va­tively es­ti­mated as ap­proach­ing $2 bil­lion per day in lost out­put.

Re­peal­ing Oba­macare, rolling back the reg­u­la­tory state, and im­ple­ment­ing progrowth tax re­form would be a big shot in the arm to the U.S. econ­omy. Over the next decade, the cu­mu­la­tive ef­fect of mak­ing just those three re­forms could boost GDP any­where from $8 tril­lion to $18 tril­lion.

That trans­lates to a cost of be­tween roughly $2 bil­lion and $5 bil­lion for each day that Amer­i­cans are de­nied these re­forms. In terms of lost jobs, wait­ing costs nearly 1,000 jobs per day.

Some have said that be­cause any leg­isla­tive ac­tion taken this year wouldn’t take ef­fect un­til at least Jan. 1, 2018, it doesn’t mat­ter if it hap­pens now or in Septem­ber. False: The sooner in­vestors and en­trepreneurs can see the changes on the hori­zon, the quicker they can be­gin tak­ing ac­tions that ben­e­fit the econ­omy.

A filled swamp is ex­pen­sive to main­tain. The Amer­i­can peo­ple are wait­ing for Congress to drain it. And they should ex­pect their elected rep­re­sen­ta­tives to stay in Wash­ing­ton and make the real changes they were elected to do.

Most Amer­i­cans don’t want more gov­ern­ment. Rather, they want re­lief from big gov­ern­ment so that they can make their own de­ci­sions and im­prove their own com­mu­ni­ties.

IL­LUS­TRA­TION BY NANCY OHANIAN

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