MU Cerebellum

"Writers, especially when they act in a body and with one direction, have great influence on the public mind." -Edmund Burke

Monday, February 13, 2006

good economy? bad economy?

This post is sort of coming out of nowhere, but with the media constant and relentless harping on the Bush administration causing this so-called "bad" economy, I could not resist posting about it. First, the economy is not "bad." It has had constant growth every quarter since September 2003. The biggest growth in the economy (the GDP) came during the third quarter of 2003, which was a remarkable 8.2 percent. Even though growth has (thankfully) slowed to avoid disasterous economic problems such as inflation, our growth numbers seem dismal compared to that amazing jump just over two years ago. Right now, the United States has the best economy it has seen in over two decades - which just so happens to be when Ronald Reagan was president...

Now really, is the economy all that bad? Well, of course it could be better and here is why. Though we have had extraordinary growth over the past couple years, there are several factors, mostly contributed by the federal government, that has prohibited the economy from further healthier growth. Every year, The Heritage Foundation, a public policy think tank in Washington D.C., releases a yearly "Index of Economic Freedom" that judges the productivity and freedom of each country's economy based on several factors such as fiscal burden, trade policy, government intervention, monetary policy, regulation, and others. Each country receives a ranking based on the average of those factors. Last year, the U.S. stood at #12, the first time ever it has slipped out of the top 10. Luckily, the U.S. has slid back in the top 10 at #9, but a few of its scores are a bit alarming.

According to the report the United States has a high fiscal burden of 3.9 on a 5.0 scale (1.0 being the low, 5.0 being high), because that the top federal tax rate is 35 percent. Sadly that is just .2 points lower than our pseudo-socialist French amis, who came in the #44 spot. The U.S. also scored a 2.0 on regulation, which may seem low, but even a bit over-regulation can have siginificant economic implications, which usually result in bad outcomes. From the report:

The U.S. labor market is one of the world's most flexible. Regulations are applied evenly and consistently. However, many regulations—for example, the Americans with Disabilities Act, various civil rights regulations, environmental laws, health and product safety standards, food and drug labeling requirements, and Sarbanes–Oxley—although well-intentioned, can be onerous. In February 2005, the government approved the Class Action Fairness Act, a bill aimed at reducing the costs that businesses face from class-action lawsuits.

Overall, the Heritage Foundation found the U.S. to be

The U.S. has continued a leadership role in free trade with eight ratified free trade agreements, another signed agreement, and ongoing negotiations with other countries. However, continued use of the "anti-dumping" Byrd Amendment, combined with anti-China rhetoric, indicates an ongoing protectionist mindset.

Despite a high fiscal burden and some over regulation, the economy is strong. It is not fault of the Bush administration that the country has high taxes and is at times overly regulated. It is the fault of past administrations (won't name any names). In fact, Bush has made great efforts to simplify the tax code and lower the tax burden, as well as de-regulate the economy and let the private sector, especially consumers, drive the economy toward success.

Result? More jobs, a stronger Dow, business optimism, economic prosperity.


  • At 1:02 AM, Blogger HB said…

    the deficit gets more and more bothersome nonetheless


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