We see little chance that the next president and congressional leaders will take sensible steps to improve the economy for all Americans.
We may not be Nostradamus, but we’ve been compiling an impressive track record of accurate predictions over the past year. We correctly predicted that ISIS would adopt a “far enemy” strategy before the Paris attacks, that the Republican Party would come unglued (this seems less impressive in hindsight), that the West would need a plan for dealing with the “leftovers” as ISIS’ losses on the battlefield mounted, and that President Obama’s anti-inversion regulations would be challenged for exceeding his legal authority (like his immigration policies). This latter prediction was confirmed last week when the Chamber of Commerce sued to invalidate the regulations, which reflect the utter failure of Congress and the President to cooperate on corporate tax reform.
As we previously argued, corporate tax reform is about as close to a “no-brainer” as it gets in federal public policy. We would love to predict that the incoming president and congressional leaders will solve this problem in first 100 days. There is ample room for a bipartisan deal and the economic benefits of repatriating trillions of dollars and improving our global competitiveness would be widespread and immediate.
Similarly, we would love to predict that the next president’s 100-day economic plan would include fixing infrastructure funding and spending. Here too, there is ample room for a bipartisan deal. No Labels has documented broad support for a proposal to raise the gas tax and split the increased revenue in thirds to reduce income taxes, reduce the deficit, and fund the highway trust fund. Such a policy would produce economic benefits for all Americans (and aid the environment).
Lastly, in a rational world where elected officials put country before party and problem solving before personal gain, our next president and congressional leaders would make and adhere to a commitment to “regular order” in the budgeting and appropriations process. Simply restoring a practice that was once routine would enable businesses across the country to eliminate unnecessary costs, plan more effectively, and invest more aggressively. This simple step, which would not cost the government a penny, would contribute to economic growth. Indeed, if our next president and congressional leaders accomplished only these 3 simple reforms and literally nothing else for the next four years, our economy would be much stronger than it is today for all Americans.
Robert M. Gates, our acclaimed former Secretary of Defense, remains “optimistic” that the right kinds of leaders can overcome the “government gridlock” and “political paralysis” that have prevented economic growth. Sadly, these leaders are in short supply. Although Mrs. Clinton and Mr. Trump have discussed corporate taxation and infrastructure spending, neither has offered an approach that is likely to gain congressional support; rather, they appear to be doubling-down on policy prescriptions that have proven to be non-starters in the past. To predict progress on sensible economic policy reforms, therefore, would seriously threaten our streak. So, today we’re going to play it safe and predict the status quo – anemic economic growth and no progress on these three policy issues in 2017 – and root against ourselves starting in January.