Under-the-Radar Issues That Could Affect the 2019 Economy
From an economic growth perspective, 2018 was an exceptional year. Consumers are in a good spot starting in 2019 as inflation remains low, employment is high, and wages are rising. While predictions on the economy’s future vary wildly -- from recession fears to more smooth sailing -- how consumers fare this year will largely be determined by a handful of issues that don’t always grab the big headlines, but nonetheless have a big impact.
Lower drug prices are on the minds of many in Washington. But like many of Washington’s impulses to address a complex problem with a flat-head screwdriver, the latest idea of indexing drug prices to those of foreign countries will hurt far more than it will help, and in the long run patients will suffer. Trump’s HHS Secretary Alex Azar is cozy to the idea now being pushed by Sen. Bernie Sanders (I-VT) that would tie what the U.S. pays for drugs to countries like Canada and the U.K., where they are cheaper.
Drugs are cheaper in other countries largely because governments limit their access in their national health plans. For example, patients in Great Britain have access to fewer cancer drugs than patients in the U.S., and it takes longer for patients to receive them. A pricing index tied to other nations would lead to price caps in America, which would result in choking the lifeblood of research for new cures, and threaten the availability of less profitable drugs for patients who need them. Consumers should raise their voices loudly against these policies.
Consumers will also be impacted by the ongoing battle over net neutrality, centered on the FCC’s decision in 2017 to de-regulate the internet from Title II control. Nine states have already enacted legislation or executive orders requiring internet providers to adhere to net neutrality rules as congressional Democrats push legislation to repeal the FCC order.
A patchwork of regulations will not only raise costs on consumers as providers hack through a regulatory maze, but undermine investment in building out networks as confusion concerning the rules remains in flux. The only viable long-term solution for protecting the internet remains federal legislation that provides clear regulatory guidelines and protects consumer privacy without commandeering the internet from Washington. Evolving technologies require clear and evolved rules to keep us all connected.
Consumers would also greatly benefit from the reins being pulled in on the Consumer Financial Protection Bureau (CFPB), the “independent” Treasury Department agency tasked with policing the financial services industry from predatory practices, but which instead has been utilized as a bureaucratic outpost for anti-business activism that has hurt consumers. New Director Kathy Kraninger has the opportunity to continue the Bureau on a path of overdue reform set by former Acting Director Mick Mulvaney regarding the agency’s procedures, rule-making and enforcement, which will be a welcome change and go a long way to actually protecting consumers. However, with regulation hungry Rep. Maxine Waters’ (D-CA) ascending to the chairmanship of the House Financial Services Committee, a tug-of-war over the agency’s direction is already underway.
Technology remains a cornerstone of our economy, and its importance will grow exponentially in 2019 with the commercial introduction of highly-anticipated 5G wireless technology, offering blazing data speeds over 100 times current rates, which will usher a revolution in new products and services. Key to speeding up 5G in America is the proposed merger of wireless carriers Sprint and T-Mobile.
The Sprint/T-Mobile deal, if approved, will be a huge win for consumers, starting with the reality it creates a third national carrier to challenge the duopoly of AT&T and Verizon. The real payoff comes in the $40 billion investment in 5G technology and infrastructure that will arise from the merger, putting 5G in the hands of consumers faster, and helping America maintain its global leadership in digital technology over foreign competitors. The deal recently got a significant endorsement from the Committee on Foreign Investments in the U.S. (CFIUS), the agency which reviews mergers in terms of impact on national security. CFIUS approval is yet another strong signal this pro-consumer merger should move forward.
And since taxes are one of the two inevitabilities of life, we can’t ignore them here. President Trump’s plans for a Tax Cut Part II are dead in the water (somewhere near Mar-a-Lago), but a potential tax hike looms as Democrats are embracing a carbon tax, a disastrous idea that has caused a revolt in Canada and helping fuel riots in France. A carbon tax will raise costs for consumers across our economy and is the fastest way to pull the brake on economic growth.
The fate of consumers will be impacted by dozens of issues, but Washington would be wise to heed these vital, often below-the-fold issues which will play a big role in determining whether leaders allow the economic momentum to continue, or set America’s consumers in reverse.