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Obama’s Dependency Economy

Heritages Index of Dependence on Government shows a steep rise in American reliance on government: The burgeoning of flagship entitlement programs and the shrinking number of taxpayers who have any financial stake in the government threaten to bankrupt the government which has led to an increasing interest across the political spectrum in the growth of dependency-creating initiatives.

And one of the strongest dependency-creating special interests, government unions, reached a key tipping this year. As Heritages own James Sherk was the first to document, government union workers now out number those in the private sector. Edsall explains what this means for the American people: The consequences of this shift are profound. A majority of the American labor movement is now directly dependent on tax dollars. In terms of political orientation, these workers can now be described as tax consumers as well as tax payers. For these workers, a tax increase may result in a slightly smaller paycheck but, more importantly, the hike means more money is available to pay for raises and new benefits.

There is an alternative to the Obama dependency economy. We do not have to subject ourselves to chronically high unemployment and an ever-increasing government workforce. As bad as the media makes this recession seem, job losses were actually far worse in the 2001 recession. The difference this time around is that the private sector has not created new jobs to replace the lost ones as fast as it did the last time around. Reduced hiring is particularly acute among small businesses: they account for 36% of the net job losses in this recession compared to just 12% in 2001.

What small businesses need to start hiring is less government intervention in the economy, not more. To promote entrepreneurship Congress could: Freeze all proposed tax hikes and costly regula­tions until unemployment falls below 7 percent; Freeze spending and rescind unspent stimulus funds; Reform business regulations, such as repealing Section 404 of the SarbanesOxley Act in order to reduce excessive auditing costs; Reform the tort system to lower costs and uncer­tainty facing businesses; Remove barriers to domestic energy production in Alaska and the Outer Continental Shelf; Repeal the job-killing DavisBacon Act; Pass pending free-trade agreements; and Reduce taxes on companies foreign earnings if they repatriate those earnings to the United States.

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