Ideas for Renewing American Prosperity

Featuring George P. Shultz, Paul Ryan, John H. Cochrane,  Arthur C. Brooks, Michael Milken, Carly Fiorina, Kelly Ayotte.

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Return to Constitutional Government

By George P. Shultz

Let’s get back to governing in the way called for by the Constitution. In the executive branch, this means that the president governs through people who are confirmed by the Senate and can be called upon to testify by the House or the Senate at any time. They are accountable people.

Right now, the White House is full of unconfirmed and unaccountable people responsible for various subjects and, all too often, the cabinet officers work through them. The right way is for the president to regard his cabinet as part of his staff. That way, you have access to the career people—something unavailable to White House staff. I have had the privilege of leading four units of government and, believe me, when you work with career people, they will work with you and they have lots to offer. Among other things, management will improve, something that is sorely needed today. Of course, for this system to work, presidential slots must be filled, so the Senate should give nominees a prompt up or down vote.

Don’t you think it’s also about time Congress lived up to its constitutional duties derived from the power of the purse? Continuing resolutions are a total cop-out. The way to build a budget is to set a framework and then work from the bottom up: Hold hearings, understand what the departments and agencies are doing, and help set priorities. That way, the budget will be up-to-date, and such a process, which is in large part operational in character, will get everyone into more of a problem-solving mode. So, better budgeting will also reduce knee-jerk partisanship.

Our country’s prosperity and self-confidence will improve when we see an executive branch that can set sensible policies and execute them: management matters. And we will be better off if Congress does the hard work involved in executing the power of the purse.

Mr. Shultz is a former secretary of Labor, Treasury and State, and a former director of the Office of Management and Budget.

Fix the Jobs-Killing Tax Code

By Paul Ryan

If I could make just one change in Washington, it would be to fix the tax code.

No other reform would inspire as much confidence because no other policy is as big a drag on our economy. Today, the tax code is about four million words long. Taxpayers spend six billion hours a year just figuring out how to comply. But the tax code is more than confusing; it’s also unfair. Riddled with over $1 trillion in loopholes, the current code punishes free enterprise and rewards political influence. And to top it all off, we impose high marginal tax rates—including the highest corporate tax rate in the industrialized world—which are nothing more than barriers separating working families from job creators.

Instead of pushing people out, we should bring people in. True tax reform would both broaden the base and lower the rates, so small businesses would have room to grow and job creators would come back to our shores. Economist Glenn Hubbard says tax reform could boost economic growth by anywhere from half to a full percentage point a year over a decade. And if economic growth were just half a percentage point larger, the federal government would save an additional $1.57 trillion over 10 years. Only by paying down our debt and growing our economy can we create jobs and increase take-home pay. Only then can we expand opportunity for all.

To pass such a vital reform, after years of gridlock, would show the country that Washington can still get something done. And our country would show the world that, 125 years since The Wall Street Journal began, “free markets and free people” is still the way to go.

Rep. Ryan, a Republican, is chairman of the House Budget Committee.

By John H. Cochrane

America doesn’t need big new economic ideas to get going again. We need to address the hundreds of little common-sense economic problems that everyone agrees need to be fixed. Achieving that goal requires the revival of an old political idea: limited government and the rule of law.

Our tax code is a mess. The budget is a mess. Immigration is a mess. Energy policy is a mess. Much law is a mess. The schools are awful. Boondoggles abound. We still pay farmers not to grow crops. Social programs make work unproductive for many. ObamaCare and Dodd-Frank are monstrous messes. These are self-inflicted wounds, not external problems.

Why are we so stuck? To blame “gridlock,” “partisanship” or “obstructionism” for political immobility is as pointless as blaming “greed” for economic problems.

Washington is stuck because that serves its interests. Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public-employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services. No bank will speak out against Dodd-Frank or the Securities and Exchange Commission. Agencies from the Environmental Protection Agency to the Internal Revenue Service wait in the wings to punish the unwary.

This is crony capitalism, far worse than bureaucratic socialism in many ways, and far more effective for generating money and political power. But it suffocates innovation and competition, the wellsprings of growth.

Not just our robust economy, but 250 years of hard-won liberty are at stake. Yes, courts, media and a few brave politicians can fight it. But in the end, only an outraged electorate will bring change—and growth.

Mr. Cochrane is a professor at the University of Chicago Booth School of Business and a Hoover Institution senior fellow.

Focus on Developing Human Capital

By Michael Milken

The late social scientist Gary Becker once showed that at least three-quarters of national wealth can be found in the knowledge, skills and experience of people—what he called human capital. There are three ways to increase human capital: Expand knowledge and skills through education; extend the length and quality of life by investing in health; and welcome skilled immigrants.

• The focus in education should be on the classroom. We give Oscars to actors, Grammys to singers and Nobel Prizes to scientists. Recognizing that effective teachers and principals are the most important school-based factors influencing student achievement, the Milken Family Foundation launched an awards program nearly 30 years ago to provide similar recognition for great educators. An affiliated public charity, the National Institute for Excellence in Teaching, has developed extensive programs to ensure skilled, motivated and competitively compensated teachers.

• At least half of economic growth since the Industrial Revolution can be traced to improvements in public health and the results of medical research that have more than doubled average lifespans world-wide. We can now prevent or cure many of the infectious diseases that plagued mankind for millennia. America’s greatest health challenge, representing 75% of current health-care spending, is the burden of chronic diseases. Public-health programs emphasizing prevention and wellness will help reduce that burden. And to assure progress against all diseases, the National Institutes of Health budget should be restored at least to the 2003 level, when it was 25% higher in real dollars.

• Immigration restrictions that keep out highly skilled workers, investors and entrepreneurs are counterproductive. These ambitious people can stimulate economic growth and create more jobs for all Americans. We should greet them with open arms.

Policies that expand human capital in these three areas will increase America’s productivity and help sustain our global leadership.

Mr. Milken is chairman of the Milken Institute.

Pull the Plug On Crony Capitalism

By Carly Fiorina

To achieve America’s economic comeback, we need to end the era of crony capitalism where out-of-control, bloated government and big businesses join forces at the expense of main-street entrepreneurs.

As Washington continues to expand overly complex and expensive tax codes and regulations, written by an alliance of corporate lawyers and government bureaucrats, the victims are the small-business owners who are the country’s backbone. As a result of these regulations-on-steroids, innovation, business creation and job growth are being stifled.

Who is looking out for innovative newcomers as well as the neighborhood dry cleaners, the corner taqueria, the coffee shop and the lawn-care company? Not Washington. Government bureaucracies like complexity because it keeps them busy and funded. Americans can see that too much government actually causes the problems that big new programs are meant to solve. Wall Street bailouts, the housing crisis and the tragedy of ObamaCare are just a few examples of overbearing government.

More small businesses are failing and fewer are starting than at any time in the past four decades. This trend must be reversed. Until it is, our economy will not produce the jobs we need, nor will we be ready to lead.

It is time for a great American comeback. We will know we have succeeded when a single mother raising her two kids can easily open a new business in her neighborhood without having to worry about burdensome and costly regulations.

Ms. Fiorina, former CEO of Hewlett-Packardis chairman of the Unlocking Potential Project.

Make a Grand Fiscal Bargain

By Kelly Ayotte

My grandfather, a decorated World War II veteran, recently passed away at age 98. He worked two jobs, provided for six kids, and he never used credit cards. The men and women of the “Greatest Generation” understood that you need to live within your means. They also worked hard to leave the country better off than they found it.

With over $17.5 trillion in debt and tens of trillions more in unfunded liabilities, our nation’s credit card is maxed out. Republicans and Democrats, with presidential leadership, need to finally reach the much talked about, but elusive, grand fiscal agreement that will put America on a strong financial footing and create a pro-growth economic climate.

First, the agreement must address the long-term drivers of the national debt—entitlement programs. Social Security and Medicare are headed for insolvency as early as 2033 and 2026, respectively. If we don’t update these programs to reflect the nation’s changing demographics, they won’t be there for the people who need them.

Second: tax-code reform. The existing code is mired with favoritism and crony capitalism that doesn’t drive economic growth. The code should be made simpler and fairer, with rates reduced for individuals and businesses. Otherwise, we’ll continue to see American companies relocate abroad, costing jobs in the U.S.

Tax reform should also allow U.S. businesses to bring back the trillions parked overseas because of our uncompetitive corporate tax rate—so they can invest here, creating jobs while also adding money to the Treasury for priorities like paying down the debt.

The “Greatest Generation” had the courage to fight for America’s freedom and prosperity. It’s time for our leaders today to honor that sacrifice and secure the futures of generations to come.

Sen. Ayotte, a Republican, represents New Hampshire in the U.S. Senate.

Inspire Real Hope, Not The Bumper-Sticker Kind 

By Arthur C. Brooks

The one thing America needs most right now is hope. I realize how ironic that sounds. After all, “hope” was exactly the theme of President Obama’s winning 2008 presidential campaign. Unfortunately, that promised hope neither elevated the American spirit nor renewed our economy: Six years later, a higher percentage of Americans have lost hope, with more saying the country is “on the wrong track” than when he took office. We are mired in the longest streak of pessimism since Watergate.

The poet Emily Dickinson once defined hope as “the thing with feathers.” Hope as a campaign slogan was even less substantial—little more than a nebulous emotional state associated with what we imagined the president could do for us. A 2008 study in the journal Motivation and Emotion shows that this sort of vague hope is actually negatively associated with a sense of personal agency. It is tied to distant goals that we can’t control, like hitting the lottery or depending on the largess of a faraway government.

Real hope—the practical kind that America has traditionally possessed and needs again—is very different than a bumper sticker. Social scientists describe it as the combination of two phenomena: possibility and responsibility. Real hope is the intersection of “it can be done” and “I can do it if I work hard.” Studies show that this makes individuals likelier to take initiative and earn their success. This is the restless optimism that built our nation.

To revive American growth and confidence, we need real hope, not campaign hype. That requires a policy agenda not of unbounded government, but of jobs, entrepreneurship and education reform. Most important, though, it means leaders who have hope in the American people—to revive our national greatness through private initiative, hard work and personal responsibility.

Mr. Brooks is president of the American Enterprise Institute.

You can read the entire list at the Hoover Institute.  

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