American Competitiveness - Unleashing Our Nation's Spirit - In More Detail

The very essence of our nation’s freedom manifests itself in our unparalleled opportunity to succeed and compete on a global scale. America’s strong work ethic and inherent desire to create our own destiny leaves no doubt that we are up to the challenges posed by competitive forces both at home and abroad. But we must enact smart, sensible policies to provide all individuals a clear pathway to success. Reforming the tax code and creating trade policy that is both free and fair are significant components of our country’s ability to compete as we move forward in the 21st century. In the same vein, we must pursue meaningful and comprehensive changes to our health care system and enact a long-term energy policy that provides a reliable source of supply and reduces our exposure to foreign threats. A bigger, bloated government is not the mechanism through which America will sustain its leadership role in the global economy. Instead, we must reduce the burden of government on America’s entrepreneurs, and we must give our children the skill set to succeed in the future. (1) Reduce the Cost of Doing Business. Over-regulation harms American competitiveness. Politicians and bureaucrats must not tinker with an economy that is the envy of the world. To reduce the cost of doing business, we must pursue four objectives: • Reduce Government Spending and Eliminate Excessive Regulation. Even moderate and liberal public figures have recognized that excessive governmental meddling is stifling our economic system and threatening our ability to compete in the global marketplace. For instance, in New York City, Republican Mayor Michael Bloomberg has worked in concert with Senator Charles Schumer (D-NY) and Governor Eliot Spitzer (D-NY), to focus attention on the threats posed to New York’s status as a world leader in the financial services markets. This joint report noted that the United States stands to lose between $15 and $30 billion in annual revenues unless measures are not adopted to remove impediments to financial services competitiveness. Conducting business in our nation should not be as costly and complex as we have made it. Worker retraining programs must be consolidated and streamlined; our broken health care system must be fixed, and its exploding costs must be contained; federal transportation projects must be focused on issues critical to the national economy, while wasteful pork-laden projects must be eliminated. We must eliminate cumbersome government regulation and spending that harms the average American and impedes our ability to compete worldwide. • Implement Legal Reform. Another impediment to competitiveness is the explosion of legal costs and liability exposure. Our legal system is too uncertain, costly and affects our ability to compete for investment dollars. As we become firmly entrenched in a global economy, it is imperative that our country attract and retain foreign investors to contribute to American growth and job creation. However, foreign companies increasingly are scared away from contributing to our vibrant and dynamic economy because of high litigation risks, the soaring costs of American legal compliance and the inability to avoid frivolous lawsuits. For instance, the Sarbanes-Oxley law requiring higher accountability standards for corporate boards has tripled the auditing costs of small public companies. This enormous expense is unacceptable and is emblematic of system-wide failure. Excessive regulation through our legal system creates a drag on wages and detrimentally impacts the ability of employers to make smart investments in equipment and human resources. We must enact smart reforms of our legal system that reduce the obligations placed on small business owners and eliminate the burdens of defending frivolous litigation. • Lower Tax Rates. To compete internationally, we must lower the corporate tax rate. Our economy is the standard bearer for the developed world and emerging economies. Yet it is untenable that our corporate tax rate – nearly 40% when factoring in state taxes – is one of the highest in the industrialized world and non-competitive even with welfare states like Sweden. Only Japan has marginally higher rates, and its competitiveness failures have been well-documented for over a decade. Studies have shown that a 10% drop in the corporate tax rate would put more than $100 billion in consumers’ pockets and create 200,000 new, good-paying jobs. While I discuss tax policy in a separate position paper, it is inextricably linked with our country’s ability to compete. We must change our tax code to encourage savings and investment, make the Bush tax cuts permanent and repeal the death tax once and for all. • Enforce and Reform Immigration Laws. Illegal immigration results in increased crime rates and threatens our nation’s ability to compete. The federal government is uniquely positioned to enforce immigration laws, and this must be a priority for the next Congress. The existing laws on the books already address many of the immigration challenges our country faces. For instance, we have laws to secure the border, but we must be diligent in enforcing these laws. In addition, we need to discourage “sanctuary” cities by eliminating discretionary federal spending that goes to support those cities. Finally, we need to prosecute “coyotes”, or those who smuggle immigrants across our border. • Detach Health Care Coverage from Employment. See Health Care position papers. (2) Give Families a Real Educational Choice. The second essential building block of competitiveness is education. With the changing global economy and abundance of competitive forces that we now face worldwide, it is imperative that we seek innovative ways to improve our students’ access to quality education and instruction. • Make Schools Compete. The advent of charter schools has increased family choice over how to educate a child. When choice in education is available, the results are overwhelmingly positive schools. In the face of competition, schools are forced to craft innovative education models to attract students. The result is a student better equipped to compete in the global economy. The current dichotomy is illustrated simply by examining K-12 education in relation to our colleges and universities. Because of intense competition at the university level, schools are forced to develop new and better ways to educate in order to attract students. The result is a university system superior to our foreign allies. This competitive dynamic is largely absent in our K-12 education system. • Control Federal Spending. The concept of choice in education, not unlike that in health care, is critical to our nation’s ability to compete. If families have full control over education dollars, the potential for our students to learn is limitless. Charter schools provide a compelling test case example. The flip side of this equation is the failure of central planning over education through federal mandates and oversight. It is unacceptable, and it must change. The federal government jumped into education in the 1960s, and the results since that time are not impressive. We currently spend $500 billion annually on K-12 education – nearly 5% of our economy – and this out-of-control spending has failed to yield long-term results. Math and reading scores are stagnant, and high school students have not fared well in international comparisons. While student achievement has remained flat, spending has increased dramatically. Too often, the thinking in Washington has been to throw money at the problem under the auspices of teacher training or a broad new federal program. Although noble in purpose, I do not support broad federal initiatives, such as the Bush Administration’s American Competitiveness Initiative. The ACI attempts to inject more federal control and bureaucratic involvement in education, and like most government initiatives, results in excessive taxpayer cost. Rather than creating new, expensive federal programs to identify “best practices” in education, our government should bolster achievement through lower regulation and school choice. • Create a School Choice Program. We owe it to all parents of our children to give them the tools to succeed and to compete in an international economy. It is time to enact, once and for all, a school voucher program that gives parents a true choice over where to send their children to school. Over the course of a student’s lifetime, government will spend over $100,000 educating a child. Imagine what could be done if that money were available to families to choose how and where to educate their children. Unquestionably, this would lead to innovation and increases in achievement comparisons worldwide. Even nations with broad social welfare programs, like France, have begun to deregulate education and to allow parents to select their schools. Japan also has embarked on a school decentralization initiative because its competitiveness has suffered since the 1990s. We can learn from our friends in Europe and Asia that the best way to allow our children to succeed is to let families make decisions. The federal government should not engage in central planning over education. We have the world’s leading economy, and our citizens are known for their strong work ethic. Our nation’s ability to compete depends on innovation and education. This cannot be accomplished through broad mandates from Washington, expensive social welfare programs and increased business regulation. We must allow business owners to operate free of unnecessary and cumbersome interference so that they may create jobs and invest in human resources. As your Congressman, I will work tirelessly to get government off the backs of hard-working Americans. Index For additional reading concerning American Competitiveness, and the challenges that we face, please click on the following information materials: (1) April 20, 2006 Heritage Foundation Backgrounder • Dr. Daniel J. Mitchell discusses government policy, America’s competitive ranking, the tax code and education (2) January 22, 2007 Bloomberg/Schumer Report • Moderate New York City Mayor Michael Bloomberg and Democratic Senator Charles Schumer issue a report on American competitiveness, with an emphasis on immigration and regulation as it pertains to the financial services sector. (3) June 30, 1999 Testimony of Stephen Moore (Director of Fiscal Policy Studies) • Mr. Moore discusses before the Budget Committee of the U.S. House of Representatives the impact of corporate welfare. • Testimony discusses how cutting corporate welfare could impact tax policy and savings, as well as how it could reduce political corruption and increase American competitiveness. (4) February 25, 2007 Bill Gates Column • Microsoft Corp. Chairman Bill Gates discusses American competitiveness, with a focus on innovation in education, as well as immigration reform to attract highly-skilled workers to America. (5) President Bush’s American Competitiveness Initiative • President Bush’s February 2006 American Competitiveness Initiative discusses federal investment in science, research, education and workforce retraining.   For the summary version, click here.