The Congressional Joint Economic Committee (JEC) received the Trump Administration’s outlook on the economy at a hearing this week that featured testimony from Kevin Hassett, chairman of the Council of Economic Advisers.
Hassett explained that while the administration was not satisfied with the current economic growth rate, its tax reform will help improve it, along with its plan to stabilize the regulatory environment.
“It’s not necessarily our actions on tax policy [in recent years] that have harmed us; it is our inaction,” Hassett said. “What happened is the rest of the world cut their corporate taxes. That made their countries much more attractive for the location of multinational plants than our country and we saw the activity move overseas … that means lower demand for workers and lower wages, as well.”
Hassett said the upcoming tax reform plan would spur growth.
“I think that the tax reform that has been negotiated with the White House and Congress is designed optimally to help both [individual and capital],” Hassett said. “On the individual side, by reducing marginal tax rates, it’ll encourage higher labor supply, and on the corporate side by making the U.S. a place where plants want to locate again.”
JEC Chairman Pat Tiberi (R-OH) added that Obama Administration policies constrained the economy’s growth potential. Continuing with the status quo won’t do, he said.
“We so urgently need both tax and regulatory reform,” Tiberi said. “We must restore a more highly functioning market economy that offers hope and opportunity for entrepreneurs, investors and workers, and that removes the artificial constraints on faster economic growth.”
Sen. Mike Lee (R-UT), the JEC vice chair, said over-regulation hurts the economy.
“I keep two stacks of documents in my office here in Washington. One stack is a few inches tall; it’s a few thousand pages long I think for last year it was three thousand pages long. It’s the laws passed by Congress last year. The other stack is 13 feet tall. For last year it was about 96 thousand pages long, and it is last year’s Federal Register, the annual cumulative indexes of federal regulations as they’re released and later finalized,” Lee said. “Those regulations end up costing the American economy about two trillion dollars a year. This is up from just three hundred billion dollars a year twenty years ago when I first started tracking this problem. So, it’s increased roughly seven-fold.”