How to Boost the Economy
May 12, 2014
There are four simple ways to boost the U.S. economy and accelerate growth, writes Diana Furchtgott-Roth, senior fellow at the Manhattan Institute.
In the first quarter of 2014, the U.S. grew at just 0.1 percent, with a 12 percent drop in exports and a 6.1 percent decrease in gross private investment. How can the U.S. reverse these trends? Furchtgott-Roth offers four suggestions:
- Fix the Affordable Care Act (ACA). Health care spending grew at record numbers in the first quarter, as the ACA mandated that Americans purchase expensive insurance plans with unnecessary coverage. People should be allowed a broader choice of plans. Moreover, the current system does not incentivize insurance enrollees to shop around and make economical health decisions. According to National Center for Policy Analysis President John Goodman, insurance should cover large, unexpected costs, while people should shop around for routine expenses.
- Allow natural gas exports. The 12 percent drop in exports is the largest that the U.S. has seen since the start of 2009. But by allowing natural gas exports, the U.S. could sell gas to Europe and Asia, undercutting Russia's market. Right now, more than two dozen natural gas export applications are waiting for approval at the Department of Energy, some of which have sat there since 2011 and 2012.
- Reform taxes. By lowering the U.S. corporate tax rate down from 35 to 20 percent, the U.S. would see greater investment from abroad. The depreciation system should also be reformed to allow firms to expense capital equipment purchases rather than depreciate them. Lastly, expanding tax-free savings accounts would further encourage investment.
- Reform immigration. Congress should raise the number of H-1B visas that admit skilled foreigners into the country. Already, the allotment for 2014 was exhausted at the beginning of April. Increasing these visas would encourage innovators to come to the U.S. As the world competes for talent, Furchtgott-Roth writes, the U.S. needs to ensure that the talent comes here.
These latest numbers on the U.S. economy should wake up lawmakers and push them toward reforms that will boost growth.
Source: Diana Furchtgott-Roth, "4 easy ways to boost the U.S. economy," MarketWatch, May 1, 2014.
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