Suppose a quiz show host were to ask: “What country enjoys the most economic freedom?” Most Americans probably wouldn’t even hesitate before answering, “The United States.” They’d be wrong.

In fact, according to the 2011 “Index of Economic Freedom,” the U.S. isn’t even in the top five. We come in at number nine – right below Denmark, Ireland and Canada.

Hard to believe, I know. We Americans take justifiable pride in our freedoms. We consider our country an exemplar of liberty. And when it comes to other freedoms (political, for example), we remain a strong leader. But the Index (published annually since 1995 by The Heritage Foundation and The Wall Street Journal) shows that we’re faltering when it comes to money.

Economic freedom, by the way, doesn’t mean simply how free you, as a citizen, are to handle your own money. Other factors influence your liberty in this area, for good or for ill: How well do courts protect your property rights and enforce contracts? To what extent does government manipulate prices through subsidies, tariffs or other means? What restrictions are placed on ownership, access to capital or investment in legitimate business opportunities? Altogether, the Index weighs the data in 10 areas of economic freedom and averages the results to get an overall score.

For the most part, the U.S. is very competitive. But in two areas, it’s been performing poorly: tax rates and government spending. Taxes are at burdensome levels, and the corporate rate here is one of the highest among developed nations. But it’s the spending that’s really dragging down the U.S. score. Government outlays are soaring – increasing by more than $1 trillion in 2009 alone. That leaves citizens with $1 trillion less to spend as they see fit (or, since much of it was borrowed, more for them to pay back at a later date).

This is simply unsustainable. And thanks to big-government programs such as Obamacare, it’s on pace to get worse – much worse.

The president’s health care law calls for massive amounts of new federal spending. It also greatly expands the federal government’s regulatory powers. All of this creates uncertainly in the market – and that’s toxic to economic freedom. Excessive government interventions such as these spook investors, cause public debt to rise, and make businesses less likely to make the investments necessary for economic recovery.

Another factor hurting our chances for a top-10 finish in next year’s Index: The Dodd-Frank financial “reform” bill Congress passed last year. Supporters said it would make financial customers safer; instead, it’s making them poorer. “It is likely to burden our banks and financial markets with new requirements that will raise their cost of doing business—and those costs will be passed on to consumers,” Index Editor Terry Miller said.

How can we turn this around? The first step is obvious: Cut spending and taxes.

The new Congress must get serious about spending less – a lot less. To call it an important issue is an understatement. Many new members were elected on explicit promises to make government more thrifty. They can start by axing the nearly $340 billion in wasteful spending that Heritage identified in its recent Solutions for America plan.

But they’ll need to do more. Lawmakers have to roll back laws and economic policies that hinder economic growth. That means repealing the new health care law. Don’t amend it – repeal it. And if President Obama makes full-blown repeal impossible, Congress should refuse to fund it. Lawmakers should also ratify three pending free-trade agreements without further delay and cut the corporate tax rate from its current level of 35 percent.

In the Index, countries fall into one of five categories, from “free” to “repressed.” For the second year in a row, the United States is ranked as “mostly free.” It’s time to change course and head back to “free.”