A Business Solution
for Economic Recovery
Business Roundtable has recently issued a “Roadmap for Growth,” a
policy proposal that offers recommendations for economic growth.
The Business Roundtable, an association of
chief executives of leading corporations, has offered policy
recommendations in the areas of fiscal policy, taxation, trade,
education, regulation, energy, and the environment.
The economy, even with the likelihood of having the Bush era tax
cuts renewed, is struggling to fully recover from the “Great
Recession.” The chief concern is the rising unemployment rate which
currently stands at 9.8 percent and the fiscal crisis concerning the
nation’s $13 trillion national debt and growing budget deficits. The
recommendations offered by the Business Roundtable represent a
substantial proposal that will revive the national economy. Economic
revival can only be achieved by unleashing the private sector of the
economy through policies rooted in limited government and free
recent National Commission on Fiscal Responsibility and Reform
reported that “spending is rising and revenues are falling short,
requiring the government to borrow huge sums each year to make up
The Commission reported that in “2010, federal spending was nearly
24 percent of Gross Domestic Product, the value of all goods and
services in the economy.”
The budget deficit for 2010 is expected to be at least $1.3 trillion
and the continuing growth of entitlement programs provides for a
bleak fiscal outlook that must be addressed. Spending on entitlement
programs — Social Security, Medicare, and Medicaid — “currently
accounts for 56 percent of total federal spending,” which will
continue to increase until these programs “would consume the entire
budget so that other national priorities, such as defense, would be
entirely paid for by deficit spending.”
does not include the fiscal impact of the Patient Protection and
Affordable Health Act, or health-care reform, which is expected to
cost trillions in addition to the implications it will have on
businesses across the nation. With the national debt being already
over $13 trillion and “if the unfunded liabilities of Social
Security and Medicare are included, it actually tops $100 trillion,”
which is not sustainable.
Government spending must be cut and entitlement programs must be
reformed. The Business Roundtable is recommending that policymakers
not only bring reform to entitlement programs, but also reduce the
growth of government spending and restore market forces to health
reform is another crucial area that policymakers must address in
order to bring about economic recovery. Although it appears likely
that the Bush era tax cuts will be renewed, taxation is still
hindering economic growth. Sustainable job creation must come from
the private sector of the economy and “to increase the pace of
economic growth and decrease unemployment, American businesses must
have the confidence to invest and hire.”
Policymakers must include further tax
reduction as a policy remedy, including the implementation of a flat
tax. Reducing the corporate, death, and capital gains taxes, among
others, will also have an economic benefit for business growth and
2010, the combined federal and state corporate tax rate in the
United States is 39.2 percent, the second highest in the developed
world and 50 percent higher than the corresponding 25.3 percent
average statutory rate among other Organization of Economic
Cooperation countries,” noted the Business Roundtable.
Reducing the corporate tax would provide an incentive for
businesses, which will not only benefit the economy but also create
jobs. By reducing the corporate tax to 25 percent The Heritage
Foundation estimates that “the number of jobs in the U.S. would grow
on average by 581,000 annually from 2011 to 2020, with 531,000 on
average being created in the private sector each year.
Further tax reform, along with renewing the Bush era tax cuts, would
provide additional certainty for businesses to start investing,
expanding, and hiring additional workers, while allowing for
opportunities of entrepreneurship. These reforms must be long-term
rather than mere temporary tax reductions. History has demonstrated
that across-the-board tax cuts have worked to bring economic growth.
editorial The Washington Times recently wrote that “the
country needs rollback — smaller federal budgets, reduced taxes, and
a brake on adding to the catastrophic debt piled up during the first
two years of Obamanomics.”
This rollback should also include unnecessary and restrictive
regulations and the repeal of the Patient Protection and Affordable
Care Act. The Business Roundtable noted that “a host of new laws and
regulatory actions are restricting their ability to help our economy
This is what is causing the current uncertainty in the economy and
the 9.8 percent unemployment. The solution is not more
Keynesian-style stimulus or quantitative easing by the Federal
Reserve, but perusing policies that are rooted in constitutional
limited government. These are the policies that can solve the
current fiscal crisis and end the uncertainty over the economy.
J. Buchanan noted that Presidents “Harding, Coolidge, Kennedy, and
Reagan all bet on the private sector as the engine of prosperity.
With the exception of President Kennedy all three were conservatives
who utilized limited government means to create economic growth and
prosperity — all policies that are needed now to restore economic
confidence, address the fiscal crisis, and reverse the 9.8 percent
Hendrickson is a Research Analyst at Public Interest Institute.
views expressed herein are those of the author and not necessarily
those of Public Interest Institute or Tax Education Foundation.
They are brought to you in the interest of a better-informed
The National Commission on Fiscal Responsibility and Reform,
The Moment of Truth, December 2010, p. 7.
Robert E. Moffit and Kathryn Nix, The Future of Health
Care Reform: Paul Ryan’s “Roadmap” and its Critics,
Backgrounder, No. 2495, December 3, 2010, The Heritage
Foundation, Washington, D.C., p. 2.
Karen A. Campbell and John L. Ligon, The Economic Impact
of a 25 Percent Corporate Income Tax Rate, WebMemo, No.
3070, December 2, 2010, The Heritage Foundation, Washington,
D.C., p. 1.
“Roadmap for Growth.”