The US economy, indeed the global economy, is on the verge of slipping into a very dark place. We are watching neck-breaking volatility in our financial markets and the VIX (often referred to as the “fear index”) is spiking. Following the “Great Recession” of 2008, the US economy eventually stabilized and began to recover, after wiping out a decade of gains in the Dow Jones Industrial Average. However, that recovery is now in doubt.
In 1981-82, then-President Reagan faced a terrible recessionary period in which unemployment was higher than it is now. However, under his unambiguously pro-growth agenda, the US gross domestic product (GDP) grew out of the recession at over a 7% rate [.xls]. While it is true that President Obama inherited a terrible economy, as did Reagan, his methods have perpetuated an unimaginable debt and deficit problem, as well as an anemic growth rate and unyieldingly high unemployment rate.
Yet sliding into the Big D (Depression) is entirely preventable. After scaling down following the 2008 meltdown, corporations are leaner and more efficient then they have been in some time. This means future growth is more likely to be fueled by hiring. And many corporations have the cash and liquid assets to reinvest in strategic expansion.
The problem is that many of these companies seem unwilling to grow or expand, partly due to fears about the global economy and consumer confidence, but also due to the public policy climate in Washington DC. This climate has been overly burdensome and at times punitive in nature.
A major shift to a pro-growth platform in Washington is needed to ensure the nascent recovery does not slip out of our grasp. For instance, President Obama can immediately:
- Agree to flattening and simplifying our tax system, including lowering corporate tax rates which could lead to a repatriation of tax revenues.
- Remove the presidential decree banning new oil and natural gas drilling in the Gulf Coast.
- Send signals to the health care community that the President is evaluating the unintended consequences of ObamaCare, especially the impact on health insurance premiums, and….
- Support attempts to rein in the National Labor Relations Board (NLRB), which recently sued Boeing Corporation for deciding to locate a plant in South Carolina, a right-to-work state. The fact that a company is being sued by a federal agency for its choice of location, with the tacit support of the administration, makes businesses of all types wonder about the government’s intentions.
These bold actions would go a long way toward reinvigorating the US economy. Although there is no silver bullet, this plan would be a great start, and could help prevent our economy from slipping further. It might even raise President Obama above his recent approval nadir of 39% in the Gallup poll.
To be fair, some challenges have nothing to do with President Obama, including the deterioration of the European Union and the recent crisis in Japan. However, as many former presidents can attest, the sitting US President owns the American economy, for better or worse. While he may try to blame President Bush for his economic troubles (and does often), US voters will definitely be thinking about President Obama during the next voting cycle.
Morgan P. Muchnick is a 2001 graduate of Harvard’s Kennedy School of Government. He previously served as professional staff to Senator Fred Thompson and as a volunteer for Senator Thompson’s presidential campaign. A versn of this article was originally published by Upside Politics.