...President Barack Obama formally endorsed legislation Saturday creating an independent commission with the power to force Congress to vote on major deficit reduction steps this year, after the November elections.Although I applaud efforts to reduce the deficit, I can't resist the cheap shot that the votes will be scheduled for after the election. Apparently, most members who support reducing deficits believe that it will be unpopular with constituents. If our elected officials are correct, and there is evidence to suggest that they are, it is our fault and not theirs. Here are just a few ideas that the independent commission might consider that I believe will reduce the deficit and/or increase the dynamic efficiency of the economy.
1. Do away with the Selective Service System (SSS). I know that this is small fry but their is no need for ongoing registration of young men when we have an effective volunteer army and no prospects for a war that would require a draft. If we were ever endangered, the SSS could be reestablished quickly. Besides, I am tired of hearing commercials telling young men of the governmental benefits that they would lose if they don't register.
2. Sell the TV band spectrum, raising between $40 and $60 billion and creating consumer benefits in excess of $50 billion annually. The sale of this spectrum would have the additional benefit of unleashing innovation of a creative sector of the economy (Thomas Hazlett "A letter to the new FCC chair, Mr Julius Genachowski," Financial Times, June 2, 2009).
3. End all ethanol subsides including the forced use of ethanol as a gasoline additive saving taxpayers an estimated $5 billion annually. Consumers would benefit from lower cost fuel and a cleaner environment (John Stossel, "The Many Myths of Ethanol," Real Clear Politics, May 23, 2007 and Jeff St. John, "Corn Ethanol's Subsidy Glut," greentechmedia, Jan. 9, 2009). While we are at it, we should end all price subsidies to farmers.My list is just a start not even touching on non discretionary policy. Feel free to disagree with my list or add items of your own.
4. Repeal Sarbanes Oxley. The bill was passed as emergency legislation in response to a couple of giant accounting sandals. Compliance costs are high, particularly for small firms that are more likely to be innovative, and benefits are low. Ivy Xiying Zhang estimates that the bill lowered stock market values by $1.4 trillion ("Economic Consequences of the Sarbanes-Oxley Act of 2002," Feb. 2005). Roberta Romano suggests that, "The paper's conclusion is that SOX's corporate governance provisions should be stripped of their mandatory force and rendered optional." ("The Sarbanes-Oxley Act and the Making of Quack Corporate Governance," Yale Law Journal, Vol. 114, 2005).
5. Repeal corporate average fuel economy (CAFE) standards. They are an expensive way to promote vehicle fuel efficiency. If the country desires a more efficient fleet, raise taxes on gasoline (Robert Crandall, "Don't Drink the CAFE Kool-Aid," Brookings, Jan. 25, 2010).