You may have heard – the U.S. economy has problems. It’s growing too slowly. Wages are stagnant. Employers want to split for competing countries with better taxes. And too many Americans have failed to benefit from free trade or the digital revolution.
Anybody following the 2016 presidential campaign knows angry voters are fed up and they want something better. But who has solutions? The presidential front-runners, Republican Donald Trump and Democrat Hillary Clinton, are great at ticking off what’s wrong with each other and the shortcomings of the opposing party. But cheery optimism is rare among the candidates.
Some people, however, see a way out of the doldrums. Mark Weinberger, CEO of consulting firm EY, sees a handful of ways Washington could turbocharge the economy once this year’s elections are over. CEOs have been pressing these ideas for years, but a new administration and intensified demand for change might finally crack the logjam inside the Beltway. The highlights:
Corporate tax reform. Both Democrats and Republicans agree on the need to lower the corporate tax rate, eliminate a Chinese menu of deductions and make the U.S. tax code more competitive with those in other countries. “It’ll be huge,” Weinberger says in the video above. “It could add 2 or 3 or 4 points to GDP growth.” The biggest boost would come if Uncle Sam gave big companies an incentive to repatriate roughly $2 billion in profits being held overseas, in lower-tax jurisdictions. If even a portion of that money came back to America, companies would need to find ways to spend or invest it, supplying a very quick boost to the economy. “It’s going to happen,” Weinberger insists. “You can’t be uncompetitive for so long.”
Passing the Trans Pacific Partnership. This is a tough sell, given the headway Trump and Democrat Bernie Sanders have made with angry voters, highlighting the people who lose from trade deals. But many analysts think Congress may pass the TPP during the lame duck session after the November elections. If passed, the TPP could enlarge overseas markets for American producers and boost exports.
More infrastructure spending. Congress already passed a $305 billion highway bill late last year, which ought to be a job creator for the next several years. If U.S. multinationals get a tax break on profits overseas, some of the repatriated money could end up in public-private infrastructure programs that will help rebuild roads, bridges, tunnels and telecom networks. And if Democrats win the White House and at least one branch of Congress, additional infrastructure spending will probably be more likely. This is one of the best ways to directly create jobs while investing in something that will pay off in the future.
Immigration reform. It may be too controversial to pull off, but letting in more skilled workers while coming to terms with 12 million illegals would be a big source of predictability for some companies dependent upon foreign workers. Those 12 million illegals might also be a meaningful source of entrepreneurship if allowed to stay here permanently.
Boosting U.S. growth would obviously help American companies, while also attracting more foreign ones – improving growth even more. “You want to have companies come here,” says Weinberger. “It will bring a lot of jobs and good wages.” Candidates, take note.
