The clock is ticking. Massive tax hikes are threatening to push America’s already declining economic freedom over the “fiscal cliff,” a politician-made economic catastrophe.
President Obama’s proposal to avert the fiscal cliff is a $1.6 trillion tax hike plus new stimulus spending, along with expanded power for himself to raise the debt ceiling without congressional approval. The House Republican leadership has offered a counter to the President’s frivolous proposal, but the counterproposal appears to cave on tax increases and punt on entitlements. Heritage’s Alison Fraser and J. D. Foster point out that “the Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics.”
Such bad policies and economics will have a drastic impact on our economic freedom, which is already in trouble after four years of the “Yes, We Can” Administration’s programs and spending. Since 2008, America’s economic freedom has been declining at alarming rates: America has fallen from fifth freest economy in the world to 10th freest. (continues below chart)
As the Heritage Foundation’s Index of Economic Freedom demonstrates, economic freedom is the path to prosperity. The decline of America’s economic freedom means that our economy is losing its capacity to achieve dynamic and sustained economic growth. That’s bad news for American individuals, families, and entrepreneurs, who will reap fewer rewards for their hard work in the future.
Waning economic freedom means lost opportunities for average Americans. The opportunity cost of bigger government is paid for in the loss of economic vitality. A future with fewer jobs and lower incomes can wait at the bottom of the fiscal cliff, or it can follow just as surely from ill-designed policies to avoid it.
There is a better way. The Heritage Foundation has proposed Saving the American Dream, a sweeping pro-growth tax and spending reform roadmap designed to grow the economy and restructure entitlement programs to provide real economic freedom and long-term security for the American people.
As Heritage’s Kim Holmes noted in Understanding American Prosperity, “All of us—not just our politicians—must be vigilant, determined to safeguard liberty and the American Dream. And that means understanding that the foundation of American prosperity rests in economic freedom.”