The Los Angeles Rams announced they were moving to St Louis. President Clinton gave Mexico $20 billion to bail out the peso. Baywatch babe Pamela Anderson married rock-n-roll bad boy Tommy Lee. And, the Index of Economic Freedom made its debut.
It was 1995.
This month, the Wall Street Journal and the Heritage Foundation published the 20th edition of the Index. Its findings starkly rebut President Obama’s State of the Union assertion that “opportunity is who we are.”
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As for his claim that “the defining project of our geneation is to restore that promise [of opportunity]. We know where to start” … well, the index suggests otherwise. At least when it comes to this administration.
In every year of the Obama presidency, America has lost ground in economic freedom. When Mr. Obama first entered the Oval Office, the U.S. ranked sixth in the world. This year it dropped out of the Top 10, tumbling into 12th place.
Indeed, economic freedom has declined for seven straight years in America, and it’s the longest losing streak of any nation in the world. We are no longer even counted among the world’s “free” economies. Two years ago, the Index reported that the U.S. had become merely the land of the “mostly free.”
The Bush-era recession can’t be blamed for this sorry state of affairs. That recession’s impact spread worldwide. Other nations had to grapple with the same challenges, and did so far more successfully.
The president’s speech might lead you to believe the decline results from all the stuff Washington hasn’t done. But that’s got it completely backwards. All of the government initiatives pushed through by the administration — higher taxes, even greater spending and vast new regulatory regimes–have acted like a giant millstone weighing down the American economy.
New and costly regulations in finance, health care and energy sectors have dealt powerful body blows to the economy. Our Index scores have also deteriorated in terms of protection of property rights and freedom from corruption — the kind of problems typically associated with third-world countries.
Reversing the decline would require Washington to do almost the opposite of everything Obama championed in his speech. The path back to a “free” economy would require reducing the size of government, overhauling the tax system, transforming entitlement programs, and rolling back the regulatory chains the White House has clamped on the economy.
Washington can also do much to improve its standing by promoting economic freedom around the world — and that starts with the right trade agenda.
The only trade deals concluded thus far on Obama’s watch were leftovers from the Bush era — and the White House held them up to get special treatment for favored constituencies.
Legislation that would give the president “fast track” authority to negotiate trade deals is pending. But fast track makes sense only if it doesn’t backtrack on requirements that the president negotiate deals that promote free trade and liberalize markets. There is no legitimate place in trade agreements for crony-capitalist provisions that protect favored industries and unions or push partisan political agendas.
Before the president leaves office, he might well send Congress a new trade deal — the Transpacific Trade Partnership, or TTP — for ratification. The TTP is long overdue, but Congress will need to examine any forthcoming pact closely. While a real free trade deal with Asia would be more than welcome, the administration has been far from transparent about what it’s putting in the pact.
Economic freedom is the best engine in the world for creating jobs and prosperity. If America wants more of it, it would do well to wipe the State of the Union address from its memory.
JAMES JAY CARAFANO, a Washington Examiner columnist, is vice president for defense and foreign policy studies at the Heritage Foundation.