Thursday, October 17, 2013

Democrats next move to improve Economy: 3 Steps!

As one who is always trying to offer solutions, with a strong dose of criticism of course, I thought Ezra Klein's 3 point solution to improve our economy hit the mark. It takes another tax hike out of the equation, and instead grows the economy through infrastructure improvement, jobs, and tax reform. 

In fact, I'm totally on board with Ezra's plan. I'm hoping a few Democratic politicians pick up on it:
To put it plainly, Democrats aren't going to persuade Republicans to lift sequestration in return for a mix of entitlement cuts and tax increases.  At this point, the Republican opposition to taxes has nothing to do with policy. It has nothing to do with the economy. It’s religion. It’s dogma. It’s identity. Refusing to raise taxes is what it means to be a Republican in this day and age. Republicans are cannibalizing everything they care about -- defense, deficit reduction, their chances of retaking the Senate -- to keep taxes low. The Republican obsession with taxes is an opportunity for Democrats to exploit, not an example for them to mimic.

As Larry Summers wrote the Congressional Budget Office’s numbers suggest that “an increase of just 0.2 percent in annual growth would entirely eliminate the projected long-term budget gap.” The budget debate, in other words, should be a growth debate.

Three Strategies:
First, Democrats should realize that sequestration is the best opportunity they’ll ever have to cut defense spending, and that a dollar in defense cuts is exactly as effective as a dollar in new revenue at relieving pressure on social services. Why Democrats have decided that cutting the incentives rich people have to donate to charity, buy big homes or live in blue states is so much better than cutting defense spending escapes me.

Second, Democrats should realize the objective need for tax increases is less than it was in 2011. As they note, the deficit has fallen, and fast. Health-care costs are down. The CBO’s budget projections are much sunnier.

Third, they should see their leverage clearly: Republicans badly want entitlement cuts, replace sequestration,  and tax reform but they don’t want them enough to trade for taxes.  
Democrats should use their leverage to get immigration reform and infrastructure investment … They mean vastly more to the economy and to people’s lives than slightly higher taxes on rich people. Today’s Republican Party might simply say no to these kinds of broader deals. If so, then at least Democrats tried every compromise possible, and it’s that much clearer that Republicans simply refuse to make any concessions at all.

But if Democrats don’t try because they refuse to admit that sequestration was a strategic error and taxes aren't going to go up for the next few years -- well, that’ll just mean piling one mistake on top of another.

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