Robert Hoffman photo
Renew Through Rehab

This week’s House and Senate vote on a short-term deal to re-open the government and extend the federal debt ceiling was the symbolic equivalent of a stroke victim taking his first few tentative yet positive steps in rehab.  It’s not a perfect metaphor to describe the legislative paralysis that has gripped Washington, but it works when we think about what Congress needs to do going forward.  With congressional approval at record lows, and with business uncertainty about this town’s capacity to govern holding back economic progress in measurable ways, a full-throttled rehabilitation in policy-making is long overdue.

The good news is that Washington can move beyond this week’s first steps and this month’s paralysis by engaging in major legislative therapy that will fuel economic renewal.  It’s been done before:

    • A brief federal government shutdown that furloughed 500,000 federal workers one month before the 1984 election preceded nearly two years of bipartisan policy productivity in 1985-86.  This included the landmark Gramm-Rudman-Hollings budget agreement, and landmark reforms of our tax and immigration systems.  These achievements were made by a Democratic House and a Republican-controlled Senate and White House.

    • The 1995-96 government shutdowns, which lasted a combined 27 days amid much partisan rancor, were also followed by several years of significant bipartisan accomplishments.  Most notably among them were welfare reform, and fiscal and tax reforms that led to the first balanced budget in a generation.  That and more were done by a Republican Congress and a Democratic White House.

There’s even more good news:  The current Congress and White House can engage in a level of legislative therapy that will easily surpass the achievements listed above and set our nation’s economy on a path of innovation-driven growth.  A successful therapy plan would include the following:

Comprehensive immigration reform: Congress already has made more progress on comprehensive immigration reform than at any time since 1986.  Already, the Senate Gang-of-Eight bill, and markups of five House bills have been completed.  Enactment of immigration reform will fuel new start-ups and new jobs across the country.

Tax reform: Senate Finance Chair Max Baucus and Ways and Means Chair Dave Camp have crisscrossed the country to build support for bipartisan tax reform, and are poised to begin the legislative process.  The focus for policymakers should be overwhelmingly on how reform will advance economic and job growth, rather than meet a subjective Congressional Budget Office scorecard.  For example, according to one estimate, just reducing the U.S. corporate tax to the average rate of other developed countries could create 581,000 domestic jobs annually for the rest of the decade. Put another way, tax reform should be more about wealth generation for the U.S. economy, rather than wealth extraction for Uncle Sam.

Trade promotion:  U.S. trade officials are nearing completion of a major trans-pacific trade deal, and have begun work on a similar trans-Atlantic agreement, all of which will open new markets for U.S.-made products and services.  Congress needs to first pass trade promotion legislation to give future trade deals a bipartisan path to success.

Patent reform:  Literally trillions of dollars have been lost in the U.S. economy because of frivolous patent lawsuits driven by so-called patent trolls.  A bipartisan effort is underway to improve patent quality and transparency, and reduce the potential for innovation-stifling litigation.

Trade barrier prevention:  Recent revelations of U.S. surveillance practices have prompted foreign governments to pursue country-specific data requirements and unnecessary limits on data innovation.  Action in Washington is needed to demonstrate to other governments that we can protect national security, advance the global economy, and protect civil liberties.

Now, some will caution against such an aggressive rehab agenda because of the near-term focus on the budget, suggesting that Congress can’t walk, chew gum and snap its fingers at the same time.  Yet, prior Congresses have shown great policy dexterity.  A fiscal standoff that prompted a government shutdown in 1986 did not hamper efforts by Congress to complete action at the same time on major immigration and tax legislation.  Also, a 1990 clash on spending and budget reform in the Fall of 1990 did not get in the way of passing major legal immigration reform.

But far more imperative than precedent is our nation’s thirst for policy certainty.  A recent report released by the Peterson Foundation found the current policy uncertainty and crisis-driven approach by government has added 0.6% to our unemployment rate, which translates to 900,000 jobs not being created. 

Plain and simple, a Congress determined to take on the kind of ambitious policy agenda outlined above will provide a boost in business and consumer confidence that bipartisan policy-making is on the mend.  Past Congresses have succeeded to rehabilitate its policy-making muscle in a way that has served the broader national interest.  Let’s challenge the current Congress to do better -- for itself, for our country, and for the world.

Public Policy Tags: Trade & Investment, Tax Policy, Workforce