News & Politics

Despite Trump's Best Efforts, Economic Freedom Declined in the U.S. Last Year

House Speaker Nancy Pelosi of Calif., tears her copy of President Donald Trump's s State of the Union address after he delivered it to a joint session of Congress on Capitol Hill in Washington, Tuesday, Feb. 4, 2020. Vice President Mike Pence is at left. (AP Photo/Patrick Semansky)

Despite President Donald Trump’s best efforts, economic freedom in the U.S. declined slightly over the past year, even as it increased across the world, according to the Heritage Foundation’s Index of Economic Freedom released Tuesday. The world average freedom score is 61.6, the highest recorded in the 26-year history of the index, more than three points higher than the first average score when the index premiered in 1995.

“This year’s Index highlights a consistent trend we are seeing around the globe – countries which embrace the ideals of capitalism and free markets see higher growth, rising standards of living, decreased poverty and more economic opportunities across the board. Meanwhile, those that embrace socialism, protectionism and other failed big-government economic approaches continue to fall behind, and ultimately deny their people the chance for better lives,” wrote Amb. Terry Miller, Anthony Kim, and James Roberts, editors of the index.

The top six countries for economic freedom (in order) are Singapore, Hong Kong, New Zealand, Australia, Switzerland, and Ireland. North Korea ranks the worst for economic freedom, with Venezuela and Cuba not far behind. Among the 180 countries ranked, scores improved for 124 countries and declined in only 30 countries.

Yet even as economic freedom grew across the world, it declined in the U.S. over the past year and over the past decade. The Heritage Foundation supports the free-market ideas behind many Trump policies, but the index acknowledges America’s rising deficits and debt.

The U.S. has an economic freedom score of 76.6, making its economy the seventeenth-freest in the 2020 index and the third-freest in the 32 ranked countries of the Americas.

“Economic freedom has declined in America over the past decade, primarily because of excessive government spending and intrusive regulation of the health care and financial sectors, although scores have stabilized in recent years,” the index notes. The index is likely referring to Obamacare and the Dodd-Frank bill, countered by President Trump’s regulatory reforms.

“Reckless deficit spending by Congress and the Administration under both parties explains the weakest Index indicators: government spending and fiscal health. Approval of the recently renegotiated NAFTA (now the United States—Mexico—Canada Agreement) should help to ensure continued growth, and resolution of the U.S.—China trade dispute could boost trade freedom,” the Heritage authors explain.

The index gives Trump high marks for cutting regulations and signing the 2017 tax cuts. In fact, the U.S. economic freedom score for the tax burden increased sharply in 2019 due to the tax cuts, which went into effect in 2018.

Heritage Index of Economic Freedom

The Heritage authors also fault Trump for “protectionist trade policies” that will “drag on economic growth if newly applied tariffs are not reversed.” The president would insist that his tariffs are a response to unfair trade policies imposed by other countries, but however well-intentioned (and hopefully temporary), the tariffs do weaken America’s trade freedom.

Heritage Index of Economic Freedom

The congressional elections of 2018 also count against the U.S. economic freedom score. “The Democratic Party took control of the House of Representatives in January 2019, dimming prospects for passage of major legislation affecting economic policy before the 2020 election,” the index notes.

Meanwhile, the index gives the U.S. high marks for judicial effectiveness. The rise of originalist judges and justices has arguably helped America achieve “well-functioning legal frameworks” that “protect the rights of all citizens against infringement of the law by others, including by governments and powerful parties. As an essential component of the rule of law, judicial effectiveness requires efficient and fair judicial systems to ensure that laws are fully respected, with appropriate legal actions taken against violations.”

Heritage Foundation Index of Economic Freedom 

Trump has made vital progress in a few key areas, but without lasting structural change to decrease the size and scope of the bloated federal government, America’s economic freedom will continue to decline. There is no substitute for a Congress dedicated to restoring the limited government envisioned by America’s Founders — and sadly, Democrats have edged farther and farther from that vision toward “progressive” bureaucracy and socialism.

The Index of Economic Freedom highlights the importance of the 2020 election. As Democrats decide between an open “democratic” socialist and a former vice president who supports many of the socialist’s ideas, Trump is pushing America in the right direction, even though he is hamstrung by a divided Congress. The U.S. must get its fiscal house in order and Trump needs to prioritize this for his second term, should he win re-election in November.

Tyler O’Neil is the author of Making Hate Pay: The Corruption of the Southern Poverty Law Center. Follow him on Twitter at @Tyler2ONeil.