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Gary Shapiro

Gary Shapiro

Posted: July 28, 2010 01:02 PM

Washington's Gain Is the Nation's Loss

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This is the first installment of a two-part series running this week.

Government "Stimulated" Jobs Enrich D.C., But They Hurt All of US

Almost every week I experience a tale of two cities as I travel from Washington, D.C., to Detroit to see my wife and toddler son.

For Washington, it is the best of times. Today's U.S. Department of Labor numbers reflect that the Washington area's 6.4 percent unemployment is the lowest of any large area in the nation. Washington area home prices are up nine percent.

The Washington economy is super-charged by the inflow of new federal government money and the legal and lobbying business generated by a government proposing and issuing new laws and rules. Even the quiet mission of Washington associations is growing as Americans realize that vital interests are at stake as the federal government rushes to legislate and regulate. Americans outside Washington are paying more to Washington experts to explain lengthy 2,000-page bills as well as multitudes of proposed rules coming from the federal government.

More than 10,000 lobbyists are formally registered to lobby the federal government (and this certainly understates the number who lobby but do not meet the 20 percent lobbying threshold before formal filing is required). Interest groups, including unions, businesses and the AARP, reported spending $3.5 billion to influence the federal government in 2009, and likely a higher amount will be reported in 2010.

Washington litigators will soon flood the D.C. federal courts with lawsuits in a desperate attempt to stave off new federal rules harmful to business. American Bar Association statistics reveal that the number of "active, resident" lawyers in Washington, D.C., jumped from 46,689 in 2008 to 48,456 in 2009. This is the second highest increase in the nation with only New York adding more lawyers. (Washington, D.C. now has one lawyer for every 12 D.C. residents! This is more than ten times the rate of the next most-lawyered state, New York, which has one lawyer for every 127 citizens).

Why the large increase in lawyers and lobbying? The Obama Administration and Congress have been legislating and regulating to a degree never seen before in most of our lives. This has fueled the Washington economy making it the nation's healthiest metropolitan area by almost every definition. And the Washington boom will continue as the federal government hires thousands of new employees to meet the mandates of the health care and financial "reform" bills.

The Washington area is among the wealthiest in the country. It has thousands of million-dollar-plus homes and is awash in imported luxury cars and high-end stores. Forbes.com reports that six of the ten wealthiest counties in the nation surround Washington, D.C. The average family makes six figures in a few Washington area counties. It is the best of times for many in the Washington area.

For Detroit, and virtually every other major U.S. metropolitan area, it is the worst of times. The unprecedented number of "for sale" signs, high unemployment and flaccid business environment, tell a tale of decline.

The relative opulence of Washington compared to the distress of the rest of the country epitomizes a challenged nation. More, it is difficult to find any American business executive who is not concerned about the prospects for the U.S. economy. Corporate America not only has reversed its natural optimism, many believe the federal government is making it worse. If the Republican leadership does not seek to retake Congress on a pro-jobs platform outside the Washington Beltway, a mile-wide window of opportunity is being missed.

Business owners who create jobs are frustrated. They don't understand why Washington is making life more difficult for them. They are perplexed with new requirements like the health-care law mandating every business report to the IRS information on any purchase exceeding $600. They see all sorts of federal payroll taxes rising next year, and they don't understand why American corporate taxes are the second highest in the developed world.

A dozen national business leaders I met with Tuesday agreed that their represented industries have been hurt by the well-meaning efforts of the federal government to help the economy. The complex stimulus packages, bail-outs, health care and financial "overhaul" laws combined with a hyper-regulatory environment give their industries little confidence to hire or invest in the United States.

Heap on threats of tax increases, new rules, an increasingly restrictive union agenda and a protectionist environment, job creators view the federal government's recent activism as harmful. An anti-free market and anti-employer environment has their industries looking at overseas investment for growth. Business executives from large and small companies view the United States as an increasingly hostile place to do business.

The lack of business confidence, investment and jobs creation is not surprising given how our political leaders have demonized the very businesses whose investment, profits and growth create jobs. The word "corporate" is too often combined with the word "greed." Profits are considered evil or excessive. The "free market" has shifted from a positive description of the American economic system to pejorative. The "invisible hand" of the free market is being replaced entirely by a visible hand of what politicians think a market should look like.

Our American edge in entrepreneurial activity and innovation is threatened by our own government. New burdens and taxes are being added without considering real business and job creation implications.

We have to pivot quickly to make this the best of times for every American, not just for those of us lucky enough to be part of the Washington economy.

Later this week, I will provide specific suggestions on what needs to be done to reverse the Washington anti-jobs, anti-business agenda. These suggestions will not increase the deficit and will improve the economy and create productive jobs.

Gary Shapiro is the president and CEO of the Consumer Electronics Association.

 
 
 

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