September 6, 2012
“You know, I would say incomplete.”
—President Barack Obama, September 2012, asked to grade his administration’s handling of the economy
U.S. less competitive during President Obama’s tenure
- Because of President Obama’s failed policies, a new World Economic Forum report shows that U.S. economic competitiveness has dropped.
- The Global Competitiveness Report 2012-2013 ranks countries based on 12 pillars of competitiveness such as strength of institutions, higher education and training, and business sophistication.
- Not surprisingly, President Obama’s policies of record deficits, $6 trillion in added debt, and higher taxes have negatively impacted U.S. competitiveness in recent years, according to the report.
- This year, the United States ranked seventh in the world, falling three spots since 2010.
- Prior to President Obama coming into office, the United States was the number one country for business competitiveness for three consecutive years.
Created in 2004, the rankings are calculated from publicly available data and an opinion survey of executives around the world. This year’s report polled over 15,000 business leaders in 144 economies and contains comprehensive rankings and data tables for over 110 indicators—everything from property rights to restrictions on capital flows to capacity for innovation.
President’s failed policies cause U.S. slide
Fiscal Failures: By far the weakest score in the 2012-2013 Competitiveness Profile for the U.S. was the macroeconomic environment. The U.S. ranked 111th out of 144 economies this year.
- Of the elements in this category, two of the most glaringly negative items were “Government Budget Balance” and “Government Debt” coming in at 140th and 136th respectively. Only a handful of countries in the world have a fiscal picture worse than the U.S. In fact, the Congressional Budget Office (CBO) recently confirmed FY 2012 as the fourth straight year with a $1 trillion deficit and warned that if pending tax increases are not stopped, and arbitrary sequestration cuts are not replaced, the U.S. economy will be plunged into another recession in 2013.
- Moreover, total government debt now stands at $16 trillion, over 100% of GDP; with economic growth slowing, the prosperity of future generations is indeed threatened. Democrats show no intention of reversing this trend.
Incentivizing Stagnation: In the Goods Market Efficiency category, the U.S. ranked 103rd in “Total tax rate” and 68th in “Extent and effect of taxation.” The latter was calculated from survey data asking: “On balance, do taxes limit incentives to work or invest?”
- With a $4 trillion tax increase looming on January 1, 2013, more than 900,000 small business owners could be affected, according to Joint Committee on Taxation (JCT) estimates, while employment in the long-run would fall by 0.5 percent, meaning roughly 710,000 fewer jobs, according to a recent report from accounting firm Ernst & Young.
- Most Americans already know that you can’t help the job seeker by punishing the job creator. President Obama and his allies in Congress apparently believe otherwise. U.S. competitiveness will likely deteriorate further if Democrats raise taxes on anyone during this tepid economic recovery.
Taxes and Regulations Raise the Costs of Business: In the section titled, “The Most Problematic Factors for Doing Business,” U.S. respondents identified “Tax rates” and “Tax regulations” as the 2nd and 3rd most pressing concerns of the 16 factors presented.
- The situation only looks to get worse as Sen. Rob Portman (R-OH) warned in a recent op-ed of a “regulatory cliff” saying, “After three years of bureaucratic excess, the Obama administration has been quietly postponing several multibillion-dollar regulations until after the November election. Those delayed rules, together with more than 130 unfinished mandates under the 2010 Dodd-Frank financial law, could significantly increase the regulatory drag on our economy in 2013.”
For additional information, contact:
The House Republican Conference Policy Office