Steve Forbes: Monetary policy, taxes, spending, regulation slow economy
When Steve Forbes, the billionaire owner of a business media empire and former Republican presidential candidate, addressed the Manufacturers' Association of South Central Pennsylvania Wednesday night, he said monetary policy, taxes, government spending and regulation are the four headwinds keeping the U.S. economy from growing much faster.
"This is a new abnormal, and it's not going to last," said Forbes, chairman and editor-in-chief of New York City-based Forbes Media.
Economic growth is at 2 percent, but it should be up around 6 percent, he said at the speech in The Pullo Center at Penn State York.
It's not all bad, Forbes said. The U.S. has a lot of steam pent up in its economy, including its large middle class; digital, industrial and medical technology; and a return of manufacturing from foreign economies, he said.
"You put it all together. ... We are going to again be the manufacturing center of the world," Forbes said.
And that won't come from sheer brawn or suppressing labor rates but from innovation and brain power, he said.
But first, the U.S. needs to tackle those four headwinds, he said.
In monetary policy, the U.S. should peg the value of the dollar to gold and stop overprinting currency, which will prevent inflation and bubble economies, Forbes said.
"In five years, we'll do what we did for 150 years (of the country's history) and that's fix the dollar to gold," he said.
Forbes, a well-known advocate of a national flat tax, said taxes are slowing the economy because they continue to be a cost and penalty on workers, businesses and entrepreneurs -- particularly when the U.S. tax code has more than 9 million words in it and is so convoluted that even most accountants don't understand the whole thing.
His solution: "Kill it, drive a stake through its heart, bury it and hope it never returns to harm the American people."
The tax code should be rewritten based on a 17 percent flat tax where no one pays a dime on the first $46,000 of household income for a family of four and all of the loopholes that pander to various economic classes are removed, Forbes said.
When it comes to spending, the government has a role and needs to spend money on many things, Forbes said, but today's government budgets are over-bloated. He took a stab at stimulus bills, too, saying they're just government taking people's money, "running it through a sausage factory" and giving it to political allies for favors.
As for regulation, Forbes took special aim at the sweet-drink bans and other niche regulations from New York Mayor Michael Bloomberg, the Dodd-Frank federal financial regulations and the federal Patient Protection and Affordable Care Act, also called Obamacare, and its medical device tax. Such regulations, which overburden business yet don't prevent the problems they're intended to solve, are a waste because they hold back free enterprise and limit the choices of consumers and businesses, he said.
He did start off saying that men aren't angels and anarchy isn't the solution either. A free enterprise system with a sensible safety net will work best.
"We all know we need rules and laws," Forbes said, but the American people shouldn't spend the more than the $1.7 trillion they spend now just to comply with them.
In addressing the manufacturers association's 107th annual dinner, Forbes wielded considerable interwoven humor and sharp critiques to make his points. But through it all, he said, he remains an optimist.
"We'll be back on our feet," Forbes said, "and show the world what a free and vibrant people can achieve."
To listen to Jim T. Ryan's interview with Steve Forbes, see Friday's CPBJ Extra blog.