American Dreams

by Marco Rubio

  These exciting predictions come with a big caveat, however: This second industrial revolution and the bigger economic “pie” it will create won’t necessarily benefit everyone, unless we change the way we prepare Americans for the workforce. Brynjolfsson and McAfee correctly argue that we need to transform our education system to meet the employment needs of this new, innovation-driven economy. Progress will also depend on government getting out of the way and allowing entrepreneurs to keep inventing new ways to combine technology and human labor to create new industries and jobs.

  Today innovation is being stifled by an anti-innovation tax code and by patent trolls who target innovators with actions that are nothing short of legalized extortion. Perhaps most of all, as we’ve discussed, innovation is being held back by a regulatory code that has become a tool for established status quo industries to shut down new and innovative competitors.

  When a group representing the nation’s largest financial firms asked businesspeople why America isn’t producing as many start-ups as it did a decade ago, the businessmen and -women’s second most frequently cited reason (after a lack of qualified workers, which I address in Chapter Four) was government regulation.

  The regulations explosion is a bipartisan creation. Both parties and most presidents have done their share to balloon the federal register from 71,224 pages in 1975 to 174,545 pages in 2012.3 But the current administration has taken federal rule making to new heights. Between 2009 and 2011, the federal government cranked out 106 new regulations, each with an expected cost of at least $100 million a year.4 In 2010 alone, more such “major rules” were enacted than in any year since at least 1997. One study put the costs of regulation during the first five years of the Obama administration at an astounding $500 billion, more than the entire economic output of Sweden or Ireland.5

  Regulations cost us in economic growth and job creation because they are expensive to comply with. It is especially costly for small and new businesses that cannot afford the costs of hiring lawyers to help them comply with complicated regulations. These regulations, and the new ones that keep showing up, also create uncertainty. Potential employers are afraid to grow and even start, because they can’t predict what the rules will be or how much business is going to cost. And so this uncertainty keeps would-be entrepreneurs on the sidelines and existing businesses from expanding.

  For this reason and more, Obamacare has been the single largest impediment to job creation in the United States for the past several years. It is the perfect storm of ever changing federal mandates, costly regulations and aggressive marketplace intrusions. It is difficult to imagine a law more perfectly designed to stifle job creation.

  Not all regulations are bad, of course. Some are necessary. We want to know that the water we’re drinking is clean and the car we’re riding in is safe. But when regulations become too onerous, they function as a hidden tax, making everything we buy more expensive.

  Think I’m exaggerating? The Small Business Administration calculated that the total cost of federal regulation in 2010 was $1.75 trillion. Compare that with the $1.09 trillion the government collected in individual and corporate income taxes that year. In other words, the hidden tax of regulation is about 61 percent higher than the taxes that are out in the open.6

  One of the best ways I know to ease this burden on the American people—not to mention cut down on the crony capitalist habit of using regulations to stifle competition—is to establish a National Regulatory Budget. This would be an absolute dollar limit on what federal regulations could cost the economy in any given year. My plan would create an independent board that would be tasked with estimating the cost of all existing federal regulations. Congress would then be directed to set a ceiling on the amount each agency’s regulations would be allowed to cost the economy. If a proposed regulation took the agency over its budget, it would have to find savings elsewhere by repealing old regulations. This would force federal agencies to enact only those regulations that serve an essential role. Under my plan there would be no more blank checks for regulators and the lawmakers who enable them.

  One of the most promising examples of the power of American innovation is the energy revolution going on in our country today. The United States is now the fastest-growing producer of hydrocarbon energy in the world. We have been the world’s largest producer of natural gas since 2010, and in 2014, thanks to the shale oil boom, we surpassed Saudi Arabia and Russia to become the world’s number one oil producer.7

  This revolution is the product of innovations in energy extraction pioneered in America like fracking. It’s important to note that these innovations, which have resulted in a tripling of our oil and natural gas production in a very short time, are due to both American technological know-how and free-market capitalism. Edward L. Morse, global head of commodities research at Citigroup, recently explained: “In only a few other countries (such as Australia, Canada and the United Kingdom) is there a tradition of an energy sector featuring many independent entrepreneurial companies, as opposed to a few major companies or national champions. And in still fewer countries are there capital markets able and willing to support financially risky exploration and production.”8

  The American energy revolution is potentially good news for both consumers and job seekers, but only if we build the infrastructure necessary to catch up with the innovations in extraction that we’ve pioneered. Production is up, but our construction of pipelines to move that energy to market hasn’t kept up with the pace, largely due to government-created obstacles.

  The Keystone Pipeline debacle is just the beginning. Well-paying construction and trucking jobs are being held up because of an ideological agenda that says energy extraction is always bad, despite the tremendous efforts that have been made to protect the environment. Unlike other necessary infrastructure projects, building pipelines doesn’t involve any taxpayer funding. The private sector stands ready to create these jobs, but government is saying no by throwing up bureaucratic hurdles to the construction of new pipelines. Our regulatory review process produces lots of litigation and red tape, but little else. A case in point: A private company is interested in building a natural gas pipeline into Florida. But before it can even begin construction, it is being forced to spend months under the review of six different federal agencies.

  We can do better than this and still protect our environment. We should explore ways to streamline the regulatory review process for natural gas pipelines. And we must eliminate the barriers that prevent us from exporting natural gas and oil abroad, such as the outdated ban on crude oil exports that dates back to the 1970s.

  Beyond the production of hydrocarbons, it’s also critical that we remain a global pioneer in energy research. Here I will break with some of my more conservative friends and concede that the federal government has a limited but important role in supporting basic research. The Department of Energy operates a system of national labs—think Los Alamos National Laboratory in New Mexico or the Oak Ridge National Laboratory in Tennessee—that have long been a leading source of basic research into things like alternative energy and the human genome. But they currently lack the ability to work with the private sector to translate this research into commercial products and services that will produce American jobs.

  One of the problems has been that the government insists on attempting to dictate which research projects have commercial potential. But if there’s one thing we learned from the Obama administration’s failed taxpayer subsidies of companies like Solyndra, it’s that the government is a lousy venture capitalist. The cutting-edge research being done at the national labs is too valuable to be left to the bureaucrats. Some research has commercial applications; some doesn’t. The job of determining which is which is better left to the market. I have joined with Democratic Senator Chris Coons of Delaware to propose legislation that will make it easier for our labs to work together with private businesses to bring groundbreaking research to
fruition in the marketplace. It’s one more way we can defy the naysayers and maintain America’s innovative edge—and the jobs that go with it—in the twenty-first century.

  Beyond taxes and regulations, another challenge to American investment and innovation is our lack of progress in ensuring access to markets and consumers.

  In the digital age, this competition for access begins on the Internet. Whether it’s selling jeans on Amazon, showcasing your products on Facebook or creating a start-up with Kickstarter, the Web has transformed the way we do business. And this revolution will not slow down. As much of our lives as we already spend online today, Web traffic is expected to be thirteen times higher by 2017.

  The Internet is a political success story as well as an economic one. The Web has not only helped democratic movements across the globe to organize, it has given the world a window on the actions of dictators and tyrants to suppress freedom. Ensuring free and open access to the Internet is not just an economic necessity. It is central to human freedom. Not surprisingly, that openness and access is threatened today. Forty-two countries restrict their own people’s access to the Internet. Many of these countries now want to take their repression global by taking control of how the Internet is governed.

  But the reason the Web is a singular success story in the history of human organization is that it has avoided such government control. It is currently overseen by a diverse group of independent boards, user groups, businesses, nonprofit organizations and others—in other words, it hasn’t been controlled so much as managed. Free from government interference, the Internet has been hailed as the greatest “deregulatory” success of all time.

  But this sort of freedom is the exception rather than the norm. The story of mankind is sadly one where powerful nations try to force their way of life on weaker nations and peoples, or control the means of commerce and trade, primarily land, the seas and the skies. Even today, for totalitarian governments like Russia and China, Internet freedom is increasingly intolerable. These nations say they would like to see the Internet subject to international control, by which they mean the United Nations. But no committee of bureaucrats sitting in Turtle Bay could attempt to control a global network of trillions of Web pages without doing cataclysmic damage. And no international organization that allows Cuba on its “Human Rights Council” should be given the opportunity to try.

  That is why opposing this sort of takeover and preserving Internet freedom must be a top national priority. Internet freedom isn’t just about being able to surf your favorite Web pages; it is about being able to sell your products and services to people all over the world online. In this new century, the harder it is to do that, the harder it will be to grow our economy and create jobs.

  In 2012, I sponsored bipartisan legislation supporting an Internet free of government control. It passed both the Senate and the House without a dissenting vote. This was a good start, but ongoing threats to Internet freedom—including the uncertainty surrounding the Obama administration’s announcement that the United States is relinquishing its role in administering Internet domain names—require more action. The United States must declare unambiguously that the current multi-stakeholder, decentralized model of Internet governance is the official policy of our country. Not only that, but we must prevent the transfer of the administration of domain names to a foreign government or governmental agency.

  The corollary to preserving the freedom to innovate using the Internet is, of course, being able to exercise that freedom. And here, wireless spectrum—the radio waves that allow commerce, as well as cat videos, to be transmitted on the Internet—is essential. With a growing amount of Web traffic now being conducted on wireless devices, spectrum is among our most valuable national resources today.

  But it is also a finite resource. Wireless spectrum is the interstate highway system of the digital world. It is the road we use to “commute” online, and the highway is getting mighty crowded and increasingly subject to traffic jams. As more people come online, the traffic is only going to get worse.

  Thankfully, there is a solution. Today the federal government “owns” what some estimate is almost two thirds of the most valuable and sought-after wireless spectrum. In typical fashion, government being government, the agencies involved are reluctant to share just how much spectrum they have or whether they are using it efficiently. Whatever the exact numbers are, it is unacceptable that sixty federal agencies control more spectrum than is available to a nation in which the number of mobile phone subscriptions is higher than the number of people.

  To fix this, I have introduced legislation that reallocates spectrum used by the federal government to be used by commercial wireless services. The taxpayers will win because the spectrum auctions will raise money for the Treasury. The government will win because it will have its spectrum needs protected and met more efficiently. And the American people will win when our most precious natural resource is put to better use to grow our economy. The resulting innovation will create thousands of jobs.

  Outside of cyberspace, creating new markets for American products is done the old-fashioned way, through carefully crafted trade deals with other nations. The emergence of a global middle class has created more potential customers than ever for our products and services, yet our trade barriers and domestic restrictions keep too many American businesses out of these emerging international markets.

  First and foremost, we need trade policies that make it easier for our products to reach a global network of consumers. When I talk to Americans about expanding trade, I often hear from people who believe that free trade is a destroyer of American jobs. After years of opening up our markets to trade and investment from others but not getting reciprocal access from countries like China, for example, I understand people’s wariness about deals that shortchange American companies.

  Trade deals that are truly two-way streets, however—deals in which access to markets is fair and reciprocal—can be net job creators for Americans. Take the example of my cell phone. Embossed on the back of it are the words “Designed by Apple in California. Assembled in China.” But when all these phones assembled in China are sent here, they have to be off-loaded in American ports. Those are American jobs. Then they have to be transported to distribution centers—more American jobs. Then they have to be transported to stores, where they’re sold—more jobs—at a lower price. Those savings are now available to be spent elsewhere, helping to create still more jobs.

  Forgive the Econ 101 lecture, but it’s an important point. Carefully crafted trade policies could be a boon to tens of thousands of American small businesses, not to mention consumers. That is why I support trade promotional authority for the president. And it’s why I support continued efforts to pursue regional and bilateral trade agreements—such as the Trans-Pacific Partnership with developed economies in Asia and Latin America, and the Transatlantic Trade and Investment Partnership with Europe.

  The need for trade to find new markets for American products reminds us why foreign policy is still important, even at a time when we are rightly focused on the struggles of the middle class here at home. The United States has to be engaged in the world in order to sell its goods and services to the world. We can’t afford to lose markets because a country is afraid of what its more powerful neighbor will do if they trade with us.

  This is exactly what happened in Ukraine. They sought closer economic and political relations with the West, and Russian strongman Vladimir Putin made them pay a price for it—and was allowed to do so by the United States and other free-market powers. In the twenty-first century we have to be able to sell our products and services to any market in the world. By failing to force Putin to pay a price for his naked aggression in Ukraine, we have set an example for other countries with hegemonic aspirations. We are telling not just Russia but China, Iran, North Korea and other countries that it’s okay to intimidate their neighbors if they seek trade and economic rel
ations with us. They now look at Ukraine and they see a cautionary tale that directly affects our economy: If we grow closer to the United States and the West, this is what will happen to us.

  Last but certainly not least, winning the global competition for investment and innovation will require us to win the global competition for talent. We simply cannot remain competitive in the twenty-first century if we are unable to attract and keep the most talented people in the world.

  For as long as there has been an America, we have benefited from the infusion of entrepreneurs, innovators, workers and dreamers who have come to this country from other lands. But today, at a time when so many working-class and middle-class families are struggling, it can fairly be asked: Is it possible to advocate continued immigration while at the same time fighting for an agenda to lift up the working and middle classes? Aren’t these two things at odds with each other? Well, the answer is yes—if we continue on the path we’re on.

  To begin with, our immigration system itself is chaotic. Entire sectors of our southern border are not secure, creating not just an immigration problem but a serious humanitarian and national security one as well. Last summer’s crisis of thousands of unaccompanied minors entering this country proves that both our borders and our immigration system can be overwhelmed very quickly. In addition, many of our immigration laws are simply not enforced or unenforceable. For example, a significant percentage of those here illegally arrived legally, but then overstayed visas. We do not know who most of them are or where they are.