Politico shares its insights on what the right “deal” should look like:
…tax reform that goes way beyond individuals and rates; much deeper Social Security and Medicare changes than currently envisioned; quick movement on trade agreements, including a proposed one with Europe; an energy policy that exploits the oil and gas boom; and allowing foreign-born students with science expertise to stay here and start businesses.
Do this and there could be not an economic recovery — but a boom, many argue.
Just think, if only we’d elected the presidential candidate who ran on that agenda it might even have the support of the people.
Really? I gotta say, I don’t see it. In fact, pretty much everything on that list is a) conventional wisdom in DC and b) largely a distraction from where I think the evidence is actually pointing, as I’ll stress in a moment. To be clear, raising more tax revenues and slowing health care costs are critical in terms of getting our long-term debt situation under control, and immigration reform that provides a path for folks here to stay is also a great idea. A domestic energy boom is already underway and trade agreements do squat for growth (which doesn’t mean they’re not worth it—but their growth potential is hugely overhyped).
What’s holding back growth is inattention to the need for stimulus in the near term in an economy where monetary policy is at least partially hamstrung (zero lower bound), premature fiscal contraction (premature contraculation?), too much income and wealth inequality, and, over the longer term, the lack of a deep investment agenda in public goods, including education and worker training.
It just can’t be said often enough — everything that the DC consensus wants to do is counter-productive to the goals they claim to endorse. In fact, there is ample evidence that an austerity agenda of the magnitude they seem to want will do to the US what it’s already doing to Europe — create the opposite of a boom and instead usher in another recession. So maybe it would be a good idea to start questioning whether or not the goals the DC insiders claim to endorse are really the ones they are after.
It’s not hard to see what that might be. After all, that agenda could have been written by the Chamber of Commerce. In fact, it was. It may seem counter-intuitive to think business people would be in favor of tanking an economy but this explains it very well.