Incumbent Congressman Gerry Connolly (D-VA) recently warned us that the message of fiscal responsibility caused several European politicians to lose their elections. Clearly, career-politician Connolly is only concerned about winning his election. I am concerned about America’s future, and I believe America can learn a lot from the current European crisis.
Experts are increasingly saying that it is inevitable that Greece will leave the Eurozone, and they estimate that this will result in a $1 trillion hit to the European economy. The problem appears to be quickly spiraling out of control. Interest rates are skyrocketing in Greece andelsewhere while bank customers are withdrawing their deposits.
For the moment, the U.S. is seen as a relative safe-haven, and as a result, our interest rates are falling even further. But while a 30-year mortgage is now just 3.75%, our economy is still not responding. This is the weakest recovery since the Great Depression, and hundreds of thousands of Americans have been forced out of the workforce. Millions are unemployed, millions more are underemployed, and economic growth is anemic—nowhere near the pace needed to even match population growth.
In the U.S., interest rates and taxes are lower than ever while government spending is higher than ever, and yet, with massive federal stimulus, our economy is not responding. Big government liberal Congressman Connolly seems to think that there can be only one answer—more and more stimulus—but Europe is demonstrating the inherent problem with that approach. Luckily, there is a better way.
The solution to our economic woes is not to have more of the same; it is to fix the fundamental flaws in our economic model. There are three major areas in need of reform:
1. We need to pursue the development of our own energy resources and create high-paying jobs in the U.S. rather than sending our energy dollars overseas. Even from an environmental perspective, it makes more sense to drill for oil here, where it will be done in a more environmentally friendly way than in Saudi Arabia or Mexico.
2. We need to reduce existing overregulation, which is burdening small and medium sized businesses. The small business has always been the economic powerhouse of our economy, creating 70% of the jobs, but as our government has added more and more regulatory burdens, it is increasingly difficult for these businesses to get started, to keep up with new regulations, to earn a profit, to grow, and to hire more workers.
3. We desperately need to reform our tax system, especially our corporate tax code. Perhaps Congressman Connolly is pleased that America now has the highest corporate tax rate in the world. I am not. Corporate income taxes are regressive and hurt our international competitiveness, killing jobs and investment. Further, the code is designed to favor the mega-corporations. According to the IRS, on average, small corporations only receive an 8% reduction in their taxes due to tax credits, while the largest firms (those with revenues over $250 billion) average a 37% reduction in their taxes! We must level this playing field in order to allow small businesses to thrive once again, ideally by eliminating the corporate income tax entirely and replacing it with a simpler system.
America can thrive once again without selling out our future, but we need to reform our regulatory policies to make this happen. Will you join me in this quest?