Your cost of living driven up by policy

 

The cost of living is high, and the people who are now running for president are offering various government solutions - from tax breaks (great) to free college (great for some) to a single-payer health care system (not great).

What few of them have addressed so far is how government is the real cause of the cost of living being so high. Bad policies are driving up the price of just existing in the United States today.

"Government policy mistakes raise the prices of the things that Americans buy," the Heritage Foundation's Salim Furth wrote. "An average American household can expect to pay an extra $4,440 each year thanks to just 12 such policy mistakes that have large costs and few benefits."

Those policy blunders have occurred at the federal, state and local level. The first that Furth outlined is the vehicle emissions rule known as the CAFE standards.

"Cars and trucks sold in the U.S. are subject to the Corporate Average Fuel Economy (CAFE) standards, a set of Byzantine gas-mileage regulations," he explained. "The recent round of gas-mileage regulations added about 10 percent to the cost of vehicles, costing the average household $448 per year. Given their high cost, CAFE standards remain one of the least efficient means of controlling pollution."

In the same way, the Renewable Fuels Standard (the ethanol mandate) also costs each household about $255 per year, because ethanol is an inefficient use of corn - and an even less efficient fuel for vehicles.

Tax policy itself is also a big burden on Americans. They may or may not see it themselves - by having to hire professional help to do their taxes, simply because the process is so complex these days. But that cost is built into every good and service consumers buy. The only thing more complex than an individual tax return is a corporate tax return. Simplifying the tax code could save every American household $230 per year.

Congress' ban on exporting most crude oil is also an unseen cost to every American family. The issue is really a mismatch between what we produce and what we consume.

"Refineries in the Gulf Coast were built to handle heavier crude oil, which is largely imported," Furth explained. "The U.S. is now producing higher-quality crude oil, but the old refineries cannot handle all of the new U.S. oil in a cost-effective way."

Lifting that ban would save an estimated 12 cents on every gallon of gas we use, adding up to about $227 per family.

Some state policies are costing us more, too. One such policy is occupational licensing - something Texas has started to address, but must do more about.

"Occupational licensure costs the average American household $1,033 per year, making it one of the most promising areas for reducing prices," Furth noted.

Even local policies can drive up the cost of living, largely through excessive land-use regulation.

The point here is that presidential candidates should stop telling what their government will do for us, and telling us how they'll get government out of our way.

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