Four reforms necessary for U.S. to regain edge in economic freedom

U.S. policy-makers should respond to the news that the United States is no longer among the 10 freest economies in the world with a package of pro-growth, pro-market legislation to restore the country's standing, says a new paper from the Heritage Foundation.

The United States slipped to 12th this year in the Heritage Foundation/Wall Street Journal's "Index of Economic Freedom," an annual study that assesses economic opportunity and obstacles to doing business around the world.

Ana Isabel Eiras, an analyst in Heritage's Centre for International Trade and Economics and author of the rankings, says the United States must address four key policy areas to reclaim a top-10 ranking:

Cut corporate tax rates: Corporate taxes contribute to economic stagnation by placing a second tax on wages that were already taxed once; corporate taxes should be eliminated or cut.

Cut government spending: The government is now spending more than $20,000 per household in real dollars and owes $42 trillion to pensioners and users of government health services.

Support free trade, especially at home: Repeal anti-dumping laws and agricultural subsidies and stop protecting inefficient industries like sugar.

Deregulate: Foreigners should be allowed to invest in industries like nuclear energy, communications and maritime and air shipping.

Pro-growth and pro-market legislation will help restore America's top-ten ranking. Policy-makers must take action if the United States wants to re-establish itself as a leader in economic freedom, says Eiras.

Source: News Release, Analyst Offers Steps for U.S. to Regain Leadership in Economic Freedom, Heritage Foundation, January 12, 2005; and Ana Isabel Eiras, Four Reforms to Regain U.S. Leadership in Economic Freedom, Backgrounder #1815, Heritage Foundation, January 11, 2005.

For text: http://www.heritage.org/Press/NewsReleases/Economic_Freedom.cfm

For Eiras text: http://www.heritage.org/Research/TradeandForeignAid/bg1815.cfm

For more on Economic Freedom and Growth: http://www.ncpa.org/iss/int/

Policy Bulletin/ 08 February 2005