Regulatory uncertainty is a significant factor in the slow recovery from the recession. Once-in-a-generation changes are being made in the regulations governing the health care, financial services, energy and communications industries, which collectively account for a substantial percentage of GDP. Congress also must address the imminent expiration of the Bush tax cuts; probably after the November elections.
At the same time, a sluggish economic recovery is underway, marked by low levels of corporate investment despite the lowest borrowing costs in a half-century. Enterprises are reluctant to invest because they cannot predict the changes in business models, staffing and infrastructure that will be necessary to respond to the regulatory incentives and disincentives government will adopt. Two examples illustrate the problem.