In the race to get credit for averting the recession, last month President Bush announced his economic stimulus plan to give $100 billion in cash rebates to individuals, plus a temporary cut for business investment taxes.
The rebates aren't really rebates, since many taxpayers aren't getting one while non-taxpayers are. And economists broadly agree that the stimulus plan isnt going to be much of a stimulus.
The truth is that economic growth doesn't result from money being moved around, it comes from enhanced productivity and wealth creation. Sound economic policies incentivize work, savings and investment.
The repeal of Sarbanes-Oxley would stimulate the economy without adding to the national debt or costing the Treasury a dime.
Sarbox was itself the result of the Congress acting on the urge to do something, anything. The crisis then was the financial collapse of Enron and WorldCom. The solution was to impose complex new regulations on the financial and accounting practices of U.S. public corporations.
The benefits of Sarbox have been debatable at best. But Sarbox has been horrendously expensive. The Securities and Exchange Commission, lobbying for the original bill, estimated companies would average $91,000 annually in compliance costs. The actual figure is more like $5 million.
Many public companies have gone private to save regulatory costs and small private startups are selling to conglomerates rather than going public. Sarbox appears to have cost the investors it was supposed to protect approximately $1.4 trillion.
The repeal of Sarbox would be a substantial, permanent boost to the economy. Instead, we get crowd pleasing gimmicks. We can do better.
Tom Patterson is chairman of the Goldwater Institute, a former state legislator and emergency room physician. A longer version of this article originally appeared in the East Valley Tribune.
Cato Institute: The Sarbanes-Oxley Tax
Entrepreneur.com: Sarbanes-Oxley: an overview of current issues and concerns
Wall Street Journal: Bush Stimulus May Have Only Modest Effect