The First of a two-part series
Can the American economy revive with the change in the White House? It’s a question being asked across the nation, and across the world.
In 2007, the “Great Recession,” brought about in large part due to policies that compelled financial institutions to provide loans to those without proven means to afford them (a policy begun under President Carter and expanded under President Clinton) caused a major disruption in the U.S. economy. Despite claims to the contrary, America never truly recovered. Growth has failed to average 3% in a decade. During President Obama’s second term, the average growth in the U.S. economy was a mere 2.2%. Middle-income employment remains moribund. Business startups are weak.
Mish’s Global Economic Trend Analysis notes “The number of startup businesses continues to slide. In 1977, the share of US firms that were less than a year old was at 16%. In 2014, the latest data, the percentage was 8%.” The Wall Street Journal reports: “The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market. One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates… government data shows a decades-long slowdown in entrepreneurship. The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a post-recession rebound…The share of employment at such firms, meanwhile, has slipped from nearly 4% to about 2% of private-sector jobs…If the U.S. were creating new firms at the same rate as in the 1980s, that would be the equivalent of more than 200,000 companies and 1.8 million jobs a year.”
The continued sluggishness is not the result of a downward business cycle nor a natural disaster. It is the result of government policies that have overregulated and overtaxed, and provided disincentives to hiring full-time staff.
A Guardian review suggests that changes under the new White House administration will include “…sensible tax reforms, such as an amnesty for multinational companies that repatriate foreign profits, will finally become law. …The Republicans’ hegemony will enable easy agreement on tax cuts… boost to economic growth… will come from deregulation.”
While a number of policy changes could result in significant economic growth, the potential, (according to Trump, the promise) of deregulation may prove to be among the most significant factors.
The House Freedom Caucus has released a large list of what they describe as burdensome regulations that should be repealed within the first 100 days of the Trump Administration. In releasing the list, the office of Caucus Chairman Rep. Mark Meadows (R-N.C.) stated:
“The report contains over 200 rules and regulations, many of which have been implemented by the Obama administration, that have been devastating for working families, businesses, and taxpayers – including the overtime rule, fiduciary regulations, and heavy environmental restrictions. Rep. Meadows has been in touch with members of the Trump transition team and intends to encourage and work with the new administration to roll back these regulations within the first 100 days of President-elect Trump’s term. [According to Rep. Meadows] “These last 8 years, we have seen a disturbing trend of the federal government unnecessarily inserting themselves more and more into the lives of hardworking Americans – and the results have been economically disastrous…When the American people spoke on November 8, they provided conservatives with an opportunity to restore order in our government and to remove the out-of-control bureaucratic red tape that so often stunts the growth of otherwise successful Americans. My colleagues and I look forward to helping President-elect Trump in any way we can as we work toward the most productive ‘first 100 days’ in modern history. To the working people who have felt the burden of these last 8 years so heavily — help is on the way.”
The Report concludes tomorrow