As chairman and vice chairman of the bicameral Joint Economic Committee (JEC), we are tasked with evaluating the recommendations of the annual Economic Report of the President, which Council of Economic Advisers Chairman Jason Furman recently testified in defense of before the JEC.
Despite the efforts of the president's report to depict the economic conditions nearly six years into this recovery in the best possible light, our formal response, the 2015 Joint Economic Report, notes that our economy remains stuck in second gear.
While economic conditions have improved somewhat, particularly over this past year, when compared with other recoveries since 1960, the Obama recovery is near the bottom of every major gauge of economic performance. This "growth gap" can be measured in terms of real disposable personal income, private-sector jobs and real gross domestic product.
Most critically, real GDP grew by 2.4% in 2014. As a result, real GDP grew an average 2.3% annually during the recovery after the most recent recession. By comparison, real GDP grew an average 4% in post-1960 recoveries. To reach the average of other recoveries, the economy would need to grow at an annual rate of 7.4% for the rest of President Obama's time in office.
Part of this gap can be attributed to the historic factors identified by Chairman Furman. However, we disagree with some of his prescriptions for how to close this gap going forward.
For example, he suggests that one of the factors necessary to strengthen income growth for middle-class Americans involves addressing income inequality.
In contrast, we believe that increasing economic mobility is more important to improve not just income growth, but broader economic well-being for all Americans.
Among several ideas, Furman suggests raising the minimum wage and increasing education spending. But these policies would fail to deliver on the administration's promised benefits and, in the case of the minimum wage, would result in reduced job opportunities.
Instead, we believe closing this growth gap will require aggressive action on pro-growth policies. As we detail in our report to Congress, there are three areas where we find immediate opportunity to kick-start our economy — comprehensive tax reform, trade agreements and regulatory relief.
First, the need for comprehensive, pro-growth tax reform could not be more clear.
With a tax code of nearly 4 million words and compliance costs to American families and businesses of $168 billion a year, it is not surprising that 9 out of 10 Americans turn to paid preparers or computer software to calculate their tax burden.
Pro-growth tax reform would simplify the tax code for individuals and families, reduce the corporate rate, lower individual rates paid by small businesses and make our international tax system more competitive in the global market.
Second, we must expand access to more markets through effective, accountable and fair trade agreements.
Congress should pass Trade Promotion Authority and President Obama should use that tool to complete important trade agreements like the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership to expand market access for American goods and services.
Since export industries typically pay wages that are at least 15% higher than other jobs, expanding trade opportunities would boost wages for millions of American workers and help to shrink the growth gap.
Finally, we must stem the rising tide of regulatory red tape.
According to the Small Business Administration, the annual cost of complying with federal regulations exceeds $1.75 trillion, disproportionately affecting small businesses and amounting to more than $10,500 per American worker.
Meanwhile, the number of pages in the Code of Federal Regulations has expanded from 71,224 in 1975 to 175,496 in 2013. To reduce superfluous regulations, federal agencies should review and remove outdated and ineffective rules and should carefully evaluate the cost-benefit of any proposed new rule.
On many of these policies, the Obama administration has indicated a willingness to work with Congress. Enacting trade promotion authorization is one area; perhaps pro-growth tax reform is another.
In other areas, the philosophical differences simply are too great. President Obama's actions have indicated that regulatory reform and a right-sizing of the federal government largely is not possible unless there is a new resident at 1600 Pennsylvania Ave.
Given these limitations, we are committed to finding common ground where it exists, while promoting a comprehensive, pro-growth agenda that closes the unacceptable growth gap that persists under this administration.• Republicans Coats and Brady represent Indiana and Texas respectively.