Thursday's announcement by the Federal Reserve Board that it would maintain short-term interest rates came after many weeks of intense anticipation and hyperbolic prognostication by financial pundits across the globe. One pundit went as far as to declare that the Fed's decision would determine next year's presidential election.
No doubt, decisions by the Federal Reserve have significant implications for our economy. But the reality is that the power of monetary policy to grow our economy is vastly overestimated. Instead, history tells us that public policy choices have a far greater impact on growing the American economy. And right now, sound public policy decisions are something that are desperately needed -- for America's workers and job creators alike.
This is especially true in light of Thursday's tacit acknowledgment by the Fed of the long season of tepid economic growth we have unfortunately grown accustomed to.
The percentage of Americans participating in the workforce is the lowest it has been since the late 1970s. It takes almost twice as long for the unemployed to find work as it did before the 2008 recession, and those with jobs do not see raises as often as in the past. Overall, new business creation fell by more than 30% during the recession, and the pre-recession pace of growth has yet to be reached since.
Because of these disturbing trends among workers and job creators, Congress should enact sound public policy to jump-start our economy.
First, Congress must end deficit spending. Reckless spending in the past has resulted in perpetual deficit spending in the present. Excessive borrowing and spending threatens economic stability, jeopardizes American power abroad and passes along a mountain of debt to our children and grandchildren. Returning our country to sound fiscal footing will take more than governing via crisis. No more fiscal cliffs, no more deficit spending.
Second, Congress should pass comprehensive tax reform and new trade agreements. Against the headwinds of the slowest recovery since 1960, small business owners are dealing with a tax system that is hopelessly complex, full of provisions that expire every one or two years, riddled with special exemptions, deductions and preferences and filled with new penalties. It is long past time to simplify this byzantine code.
Equally as important to economic growth is trade, which has a clear impact on jobs. Earlier this year, Congress acted to give the President Trade Promotion Authority to negotiate trade agreements with other nations under strict parameters. Congress must now call on the administration to finalize the Trans-Pacific Partnership, submit the agreement for approval in the Senate and engage with other trading partners on additional trade agreements that will create new markets for American businesses.
Finally, Congress must reverse many of the burdensome regulations imposed by the Obama administration. Given that the cost of federally imposed rules approaches nearly $1.9 trillion annually, it should come as little surprise people are slower to start businesses, create jobs and hire new workers.