By Mona Charen
Friday, October 12. 2012
If Mitt Romney is elected and secures Republican control
of both houses of Congress, the U.S. could be poised for a vertiginous economic
snapback.
To understand how,
consider that the Democratic explanation for our current malaise is utterly
fallacious. Mr. Obama and his allies identify the "Bush tax cuts,"
"two wars that weren't paid for," and "deregulation" as the
causes of America's present economic doldrums. But federal outlays as a
percentage of GDP under George W. Bush averaged 19.6 percent. Under Obama,
spending has ballooned to 24.1 percent of GDP. Much of Bush's spending was
temporary (the two wars, one of which Obama expanded). But Obama's spending on
new entitlements is permanent and bound to increase over time, further
burdening a country already facing an entitlements crisis.
If President Obama
really believed that spending "on a credit card" caused our troubles,
he wouldn't have spent even more than Bush did, would he? He wouldn't have run
up the debt to more than 100 percent of GDP or $16 trillion -- a figure, by the
way, that Mr. Obama didn't know when David Letterman asked.
The Bush-did-it
excuse also evaporates when you consider that the economy was starting to
recover from the 2008 recession by mid-2009. According to Obama Administration
figures, real GDP growth reached about 3 percent at the start of 2010. But it
began to decline later in the year. What happened in 2010? The two signature
initiatives of the Obama presidency were signed into law. Much has been written
about the job-depressing consequences of Obamacare, less about the sclerotic
effects of Dodd/Frank.
Dodd/Frank was the
Democrats' answer to the financial crisis. Written by two men who contributed
handsomely to the housing bubble, the law ignored Fannie and Freddie. It was
supposed to prevent systemic threats to the financial system and prevent
"too big to fail" banks from endangering the economy. Instead, it
enshrined "too big to fail" -- which is why Mitt Romney described it
as a "big kiss" to Wall Street banks.
Just as Obamacare
creates an unaccountable board of 15 "experts" to dictate Medicare
spending decisions, Dodd/Frank gave the new Consumer Financial Protection
Bureau broad authority to regulate banks, credit unions, securities firms and a
variety of other businesses. Yet the CFPB itself is totally unaccountable.
Congress has no oversight as it doesn't have power of the purse. CFPB gets its
funding from the Federal Reserve. By the terms of Dodd/Frank, the president can
remove the bureau's head only under very limited circumstances. And the power
of the courts to review CFPB actions is strictly curtailed. "As a whole,
Dodd-Frank aggregates the power of all three branches of government in one
unelected, unsupervised and unaccountable bureaucrat," explained former
White House Counsel C. Boyden Gray, who is challenging the constitutionality of
the law.
Dodd/Frank weighs
in at more than 1600 pages, and has already spawned more than 8000 pages of
regulations -- about 30 percent of the estimated total. Many small banks
believe Dodd/Frank is putting them out of business. The Wall Street giants can
afford to hire compliance officers, but smaller banks are crippled by the
regulations. Compliance costs are cutting into banks' profit margins and
limiting the capital available for lending.
Beyond compliance
costs, banks and other institutions are stymied by the uncertainty about the 70
percent of Dodd/Frank regulations that have yet to be issued.
Even without tax
reform, Mitt Romney and the Republicans could jumpstart an economic resurgence
if they did just three things: 1) repeal Obamacare, 2) repeal Dodd/Frank and 3)
and reverse the Obama policy of hindering domestic energy production.
As Walter Russell Mead documents in a fascinating series
in the American Interest, the United States stands poised to become the world's
largest producer of fossil fuels. "The energy abundance that helped propel
the United States to global leadership ... is back; if the energy revolution
now taking shape lives up to its full potential, we are headed into a new
century in which the location of the world's energy resources and the structure
of the world's energy trade support American affluence at home and power
abroad."
But it will
require a president not ideologically blinkered by a ruinous commitment to
"green energy."
U.S. businesses
are sitting on an estimated $2 trillion in liquid assets. They've been
frightened into inaction, waiting for a better climate. It may be at hand.
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