The American Economy Deserves Better than Current Regulatory and Tax Policies

A friend and I were talking today about just how difficult it will be to explain current memes to future generations. By and large this is a problem that past generations really didn’t have to deal with.

Sure the 1920s may have a hard time explaining their love of mah-jongg, the 50s would need to make clear why poodle skirts were in fashion, and the 70s should clarify why pet rocks and Sea Monkeys were ever considered cool.

But surely they all have a better explanation that we have for planking, or better yet, Rickrolling someone.

And yet the absurdity of our federal government somehow manages to make today’s internet memes seem downright sane by comparison. Since Democrats have taken the reins in Washington the government continues to grow, but in ways that make less and less sense.

Take Dodd-Frank as an example. Following the economic collapse of 2007, most everyone agreed that some level of reform was needed in the financial sector to attempt to prevent a similar crisis from happening in the future. The Democrats’ solution, best known by its two primary authors Dodd-Frank, doesn’t really address the very visible problems. Rather than eliminate, it enshrined “too big to fail,” and rather than reform Fannie Mae and Freddie Mac, it left them completely alone.

Rather than reform we got more government. A lot more government.

The bill spans 848 pages, but not even that properly reflects its true length. For instance, the “Volcker Rule” that bans restricts proprietary trading, only takes up 11 pages of the law, but the five federal agencies charged to enact it issued a 298 page proposal. For the sake of comparison, The Economist found that “the law that set up America’s banking system in 1965 ran to 29 pages; the Federal Reserve of 1913 went to 32 pages; the Banking Act that transformed finance after the Wall Street Crash, commonly known as the Glass-Steagall Act, spread out to 37 pages.”

To be fair, length is only one, rather crude way to measure its impact on the economy. But the point is, Dodd-Frank, as well as other recent legislation (the 2,000 pages Obamacare bill chief among them) threaten to stifle the economy with so many overlapping rules, red tape, and regulations that businesses won’t know which way is up.

In the Democrats quest to constantly do something, they’ve created a Washington monster that feeds on its citizens. Rather than stop and take a moment to actually identify a problem, establish what government break-down led to the problem, and then take limited steps to address it, Democrats simply tack on some additional bureaucracy or create some new regulatory agency and call the problem solved.

A similar trend can be seen in the tax code where something that should fit on a postcard has grown so large that no one really knows just how big it is (most estimates are around 7 million words spanning roughly 9,500 pages).

Such complexity has real consequences. Take next January as a prime example. As the Washington Post reports:

“On Dec. 31, the George W. Bush-era tax cuts are scheduled to expire, raising tax rates on investment income, estates and gifts, and earnings at all levels. Overnight, the marriage penalty for joint filers will spring back to life, the value of the child tax credit will drop from $1,000 to $500, and the rate everyone pays on the first $8,700 of wages will jump from 10 to 1 percent.

The Social Security payroll tax will pop back up to 6.2 percent from the 4.2 percent under the deal approved Friday by Congress. And new Medicare taxes enacted as part of President Obama’s health-care initiative will for the first time strike high-income households.”

And all of it would come at a crucial time for our nation’s fragile economy. This is not a tax code that looks like it was designed on purpose. It’s a hodgepodge of rules that have been piled one on top of the other until any sense of original purpose was lost.

Meme’s may be difficult to explain, but at least there is some humor in trying. The Democrats recent policies, coupled with their aversion to reform, is impossible to explain, and truly frustrating to try.