Last Friday, President Biden unveiled his $6 trillion budget proposal. Under his plan, government spending will rise to levels not seen since World War II. Large investments in climate change, transportation, and education headline the proposal.
“Build back better” has been a common refrain of the Biden administration. The COVID-19 pandemic crashed much of the economy, but with increasing vaccination rates and recent promising jobs reports it appears that America is ready to reopen.
The federal government can encourage economic growth; mainly, however, this involves doing less, not more.
To encourage entrepreneurship, the administration should focus on reducing regulatory barriers for startups. To enhance competition and give U.S. firms the best access to innovation, the administration should slash tariffs on products that are critical to key U.S. industries (absurdly, the opposite is happening). To encourage innovation in technology, the federal government can eliminate visa caps and onerous barriers for high‐skill foreign workers. And lawmakers should abandon efforts to impose a higher federal minimum wage, so businesses can offer fair market wages commensurate with their particular region.
The best way to encourage economic growth is to remove government barriers. The U.S. economy is recovering. The question is how much an overexuberant expansion of federal policy will slow it down.
