Respected conservative economist Stephen Moore says our nation’s fiscal health was damaged by two terrible developments in 2015: the Republican “betrayal” on federal spending and the ongoing exodus of American companies that refuse to keep paying the highest business taxes in the industrialized world.
Moore is a senior economic contributor at FreedomWorks and is a distinguished visiting fellow at the Heritage Foundation. This past year he also advised multiple presidential candidates on their tax reform plans and was the principle author of the flat tax proposal offered by Sen. Rand Paul, R-Ky.
For Moore, the worst economic development of the year is also the most recent. He is appalled that Republican majorities in the House and Senate allowed the $1.1 trillion omnibus to pass easily.
“It was a betrayal. The Republicans won the House and won the Senate promising voters they would get control of the budget, that they would be fiscally responsible, that they would help balance the budget and that they believed in limited government. We got none of that,” said Moore.
While House Speaker Paul Ryan, R-Wis., characterized the omnibus as a compromise that scored wins for Republicans on lifting the crude oil export ban, tightening rules in the visa waiver program and strengthening the military, Moore says there’s no question Democrats won this fight.
“This was a huge, huge win for Nancy Pelosi and Harry Reid and Barack Obama. They got all their social programs, the climate change agenda, the green energy stuff, Planned Parenthood. All of that stuff was funded. They laughed all the way to the bank,” said Moore.
He says Republicans even rubber stamped Obama initiatives they had earlier branded as unconstitutional.
“All the executive actions that he’s taken on immigration, sanctuary cities, on health care on labor issues and I could go down the line, all these things the Republicans have been complaining about quite rightly about Obama being an imperial president and walking all over the Congress, now Congress turns around and funds all that stuff,” said Moore.
“Shame on Republicans who control the purse strings, for agreeing to something that busts our budget at a time when we have an $18.5 trillion national debt,” said Moore, who believes GOP leaders simply tried to avoid a fight near a budget deadline.
“I think they were terrified of a government shutdown so they negotiated very poorly. They told Barack Obama in effect, ‘Please President Obama, don’t shut down the government. We’ll give you anything that you want. You can spend whatever you want. Just don’t shut down the government and make us look bad. Of course, Obama then walked all over them,” said Moore.
Republicans across the board were quick to point out that Ryan had little choice but to cut a bad deal because most of the process had been conducted while former Speaker John Boehner was still in office. Both Ryan and Senate Majority Leader Mitch McConnell, R-Ky., vow to follow regular order next year and pass 12 separate appropriations bills that will adhere to GOP principle.
Moore, noting that he is a Cubs fan who hopes for a championship year after year, isn’t holding his breath on the vow of upcoming spending discipline.
“I’ve been hearing the same thing for the last 20 years from Republicans. ‘Next year we’re going to get the budget under control. Next year we’re going to go back to regular order. Next year we’re going to balance the budget.’ Excuse me if I’m not to persuaded by that after all these years. If they were going to be so fiscally conscientious, why didn’t they do that this year rather than next year,” said Moore.
However, Moore says all of Washington is responsible for the emerging crisis in our economy of big businesses heading to the exits over high tax rates. Citing Burger King and Pfizer already moving headquarters out of the U.S. and Apple threatening to do the same, Moore says lawmakers have to address the business tax issue.
“We’ve got to do something about this now. This is an urgent problem. The alarms should be going off. We have to cut our corporate tax rate from 35 percent down to 20 or 15 or lower. We’ve got to make the tax system simpler. We’ve got to cut our capital gains and dividend tax on investment and we have to do it to make America more competitive and to create jobs,” said Moore.
He says the impact of inaction is obvious.
“We’re not going to have any Fortune 500 companies left in the United States. They’re going to go to Canada. They’re going to go to China. They’re going to go to India. They’re going to go to Mexico. They’re not going to be in the United States if we have the highest tax rate in the world. It’s that simple,” said Moore.
Moore says this is an issue where Republicans are infinitely superior to Democrats, stating that Obama has proven to be no friend to business and that Hillary Clinton is touting redistribution instead of growth. He believes many of the GOP candidates have good tax plans but will not endorse at this time.
While very unlikely to back Donald Trump, Moore says he does enjoy one aspect of the front-runner’s campaign.
“I don’t agree with Donald Trump on a lot of issues, but I have to say the thing I love about him is that all my liberal friends hate him,” laughed Moore.
Another economic headline from recent days suggests interest rate hikes will be a part of the calculation in 2016. Moore says it matters but not nearly as much as other issues.
“The problem with our economy right now is not our monetary policy. The problem with our economy is the tax system, it’s the regulatory choke hold on our businesses. It’s Obamacare. It’s the fact we don’t have someone in the White House who is pro-business and wants our businesses to succeed,” said Moore.
He’s not optimistic about making much progress in 2016, but Moore believes the right president could steer things in a much better direction in 2017.
“We have to have a pro-America energy policy. We have to have a new tax system that’s competitive. We’ve got to fix our health care system in a way that uses free enterprise. If we do those things in 2017 with a new president, I think this economy could really soar,” said Moore.
“I think we could see enormous growth in the economy because American companies are the best companies in the world today,” he said.