In recent years, American families have been able to cut down on costs by taking advantage of the goods imported from overseas. Liberal elites may sneer at Wal-Mart, but there is a reason why so many families buy their everyday supplies from this retail giant: it saves them money. Wal-Mart leverages the global marketplace to bring in high quality goods at the lowest prices, which are then passed on to the consumer. As a result, the average American family saves an estimated $2,500 per year by shopping at Wal-Mart. Unfortunately, our progress in liberalizing trade has largely stalled, and, given the rhetoric of many presidential aspirants, may reverse in the next Administration. That’s the wrong direction for American families. If policymakers want to raise living standards for the middle class, they need to maintain a commitment to trade liberalization.
A rebate of a few hundred dollars will certainly be welcome by families across the country, but it has no impact on their future financial prospects and therefore won’t alleviate any feelings of economic insecurity. Workers want a growing, dynamic economy and a tax code that rewards work. Lowering marginal tax rates is the key to rewarding productive activity. For starters, Congress should make the existing tax cuts permanent so that workers will know that a big government-imposed pay cut isn’t in their future. While Senate Democrats push to extend unemployment benefits as a part of the “stimulus,” American families know that those out of work want jobs, not handouts. It may not sound like good progressive politics, but reforming our corporate tax code and lowering the corporate tax rate, which is among the highest in the developed world, would be among the best ways to encourage economic growth and job creation.
This stimulus package is a missed opportunity. Government can’t spend its way into economic prosperity, but policymakers can reverse damaging policies that hinder growth and make life more expensive for American families.