Almost uniformly, voters reported on Tuesday that the economy was a significant concern. Since 2008, we've seen precious little improvement outside of Wall Street. Yes, the markets are doing well, but ordinary Americans, and even the middle upper class and professional classes are not. This is an elite economy that has certainly expanded wealth for the upper .001 percent, but it has left the industrious middle behind. There is almost no comparison between the economy now and in 2007. Everything now is far more expensive that it was before the recession. That is bad news for ordinary folks who need milk for their toddlers, gas for their commute and meat on the dinner table. There are a myriad of reasons that our economy is still failing. The fundamentals are not strong and have not been strong for more than a decade. We have ceded our manufacturing base to Mexico and China along with the high paying jobs that used to be the backbone of our society. We have over regulated the existing employers and, of course, we have an incredibly confusing and oppressive tax system. I am expecting the GOP to put forward a positive agenda over the next two years that will provide real relief from the malaise we feel now. Here are, in my humble opinion, the five places to start.
1. The Regulatory Reform Act
I would start with regulatory reform. Regulatory agencies have broad powers to implement legislation passed through Congress. So, for example, Congress passes a law that says, generally, "protect the environment." They then write into that law the names of the agencies tasked with "protecting the environment," and then provide "enabling powers" to those agencies to act on their behalf and give effect to the new, broadly stated law. Those agencies, such as the EPA, then engage in "rule making." "Rule making" is a deliberative process designed to create and implement "regulations" that then have the force of law. When rule making is challenged, the federal courts review the process to determine whether the federal agency overstepped its bounds. However, federal courts give great deference to agency determinations, which include fact findings, statutory interpretation, and divining Congress' intent where there is ambiguity.
Over the last 6 years, President Obama has become a master of using regulatory agencies to change the law in a way that Congress never intended nor approved. It really is inappropriate, but to be fair, Obama is not the first President to do it. Nevertheless, it has revealed to most Americans a dark and shady process that usurps power from the electorate and places it in the hands of bureaucrats. I think most Americans oppose this and would like to see federal regulatory power reigned in.
To that end, the Republicans should propose legislation that limits the rule making power of federal agencies. "Deference" should be replaced in the law with a more stringent standard of review, such as "reasonably necessary to effect the stated purpose of the act," or "without which the legislation would be unable to be implemented." The current standards give too much power to the agencies to make law.
In addition to that, Congress should revise the interpretive powers of federal agencies to preclude them from exercising any power that is not specifically provided for in the legislation. The norm for federal agencies now is to do whatever they want and wait for a court to hold that they exceeded their mandate. Congress has the power, however, to limit federal agencies to only those actions which are specifically enumerated in the legislation. Congress should also have immediate standing to challenge all interpretations of its laws so long as a substantial minority believe the agency is acting contrary to Congress' intent. In other words, greater Congressional oversight of the regulatory process is needed.
Finally, Congress should amend the mission of each agency. As President Obama himself pointed out as a candidate, we have 23 agencies regulating salmon. It is time for Congress to step in and retask each agency in such a manner as to drive it towards a more limited principal purpose.
2. Tax Reform
It is without question that our tax code is nearly impossible to understand. Anecdotally, we hear of the Secretary of the Treasury being unable to accurately file a return. IRS agents are filing inaccurate returns and owe back taxes. Small businesses devote thousands of precious dollars a year to accountants and lawyers to decipher and limit tax exposure. It has been time to amend the tax code for decades.
We should start with the premise that production and productivity are good. A tax code that burdens production and productivity is counterproductive. Likewise, most of us believe that savings are important. Savings allow us to weather storms without needing assistance. Savings allow us to send our kids to college. Savings allow us to fix the transmission in our car when it suddenly dies. A consumption tax encourages savings. The most reasonable tax reform I've seen that encourages productivity and savings is the value added tax. Basically, it is a national sales tax. You buy something, you pay a sales tax on it that goes to the federal government. The government uses that to fund our nation. There are many sources online that do a good job of explaining how such a tax would work and what the drawbacks may be. I encourage you to research the issue for yourselves.
Even if you can't get on board with a consumption tax supplanting the income tax, it is universally recognized that the tax code must be simplified. That at least means that, to the extent we tax income, we need to limit deductions and tax rates. There is so little benefit to trying to use the tax code to micromanage citizen's behavior that it basically has become worthless. It is also patronizing and arrogant to have a government spending its time using the tax code to tell us how we should or should not behave. It really isn't up to them. It is up to us, and we should take away their power to use our own blood, sweat and tears to micromanage us.
3. Labor Reform
As most of you know, I am a labor and employment lawyer. I have had the unique opportunity to see the function of our labor laws up close. While I generally oppose unions, I have also seen the unintended consequences of the massive loss of manufacturing jobs in this country. Manufacturing jobs are really, really good jobs. They tend to be stable, high-paying, require little formal education, and provide employees with a sense of ownership and belonging in the greater economy. For thirty years, Republicans and Democrats fought over the scope and protections that should be afforded to workers. Conservatives and businesses became tired of having government and employees tell them how to run their businesses. At the same time, many liberals became "citizens of the world" rather than advocates for American jobs. The result was catastrophic. Liberals and conservatives joined together to gut our manufacturing economy. Liberals were glad to see jobs go to "developing nations" and conservatives finally got their wish - to destroy the labor unions. Never has a country slit its own throat so quickly nor so willingly.
A country that doesn't produce anything is not a powerful country. We are now a service based economy. We serve dinner at the local Applebee's, we service accounts, we service sales, we service foreign manufacturing companies that do their manufacturing overseas. China makes stuff, and we buy it. That is a formula for decline and it must be reversed.
Republicans should propose common sense labor reforms that make it easier and more profitable for companies to manufacture in America without interference from unions and government. Ultimately, the owner of the company gets to run the company, not the employees. That said, there are ways to protect employees while protecting the rights of the owners to run their businesses as they see fit. I know this is a board statement, and it would take too long to detail the ways to accomplish this, but it must be done in order to revitalize our economy. And besides, I'd rather have to deal with a unionized job in America than a job in China.
4. Double Down on Privacy and Free Speech
Most American's believe that government is out of control because it is, in fact, out of control. Government at all levels has been using its police power to discourage ordinary Americans from exercising fundamental rights. Over the past five years, for example, the federal government has used the IRS, ATF, FBI, OSHA and EPA to harass political groups that apply for tax exempt status to push their ideological agendas. If you want to speak up, you get audited. If you want to raise money for a particular political cause, your business gets a surprise visit from OSHA. If you disagree with the current power structure and want to form an organization to challenge that, you get a visit from the ATF to make sure you have all the necessary paperwork for your firearms. At the very least, an issue advocate must comply with an encyclopedia full of rules and regulations or else risk arrest and jail time.
Meanwhile, the NSA gathers all electronic communications and voice calls in the world. This is being done under the auspices of national security. I doubt that, but okay. Even if that is the case, it is not the "good guys"we currently have in charge at the NSA I am worried about (assuming they are all good guys). I am worried about the bad guys getting hold of this information and using it for nefarious purposes, such as industrial espionage, blackmail, gaining political leverage, and deterring undesired speech.
Issue advocacy is core free speech. The general thuggery and ludicrous introduction of ambiguous regulations is specifically intended to chill political speech. Someone doesn't want you to voice your opinion, so they use the vast power of the government to scare you into submission. This trend is one of the most un-American developments in the history of our country. It is absolutely incumbent on our political leaders to put an end to this. There are several reforms I would suggest. First, political speech should be exempt from all regulation. That means no more campaign finance laws, no more Federal Election Commission regulating Youtube videos, and no more IRS agents determining tax exempt status for some political group. Second, there need to be serious and painful sanctions for officials who attempt to interfere with someone's constitutional right to free speech. Government officials, bureaucrats and agency heads should be stripped of immunity from private lawsuits brought as a result of their abuse of power. Many government officials believe that they can do whatever they want because, ultimately, they are immune from any consequences for any lapse in judgment. It is time to hold these people to account, and an individual or group who feels they have been retaliated against because of their political views should be allowed to sue everyone involved.
5. Energy Reform
It has always been the case historically that where there are high gas prices and high taxes, the economy struggles. The opposite is also true. Where energy is cheap and taxes are low, the economy has boomed. Energy is the force multiplier for the average American. Without energy, we cannot get to work, cook our food, or do those projects around the house. Cheap energy is not a bad thing, although the elites would like us to think that it is. Cheap energy is so fundamental to our society, in fact, that finding and developing it represents a full 10th of our economy. For years we've had the EPA and various other government agencies interfering with progress. While there are serious concerns about the environmental impact energy production has, those concerns should not paralyze us. The Keystone Pipeline, for example, should be approved. Congress should act to take that decision out of the hands of the EPA and the Department of State and then approve it themselves.
Moreover, however, Congress should act to remove regulations that are hampering growth in this sector. As we get better at fracking, we will be able to flood the market with new oil, which will ultimately drive down the price. Cheap oil is good. It takes power away from despots and terrorists in the Middle East and Russia. It allows the average family to spend more money on clothes or school books, instead of putting that additional $100 in the gas tank every week. Cheap gas, cheap heat, cheap power all work to make the lives of all Americans better.
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