Where are the Grown-Ups?
Posted by Michael A. Kamperman on September 8, 2010
Today the President gave a speech on the economy purported to build support for his new economic initiatives. In fact he focused on politics. I know there is an election in a few weeks. There are also a couple of million ’99ers’ that will run completely out of their unemployment benefits between now and then. There is still only 1 job opening for every 5 people unemployed. If the President were serious about helping the unemployed he would have the Congressional leadership from both parties in his office negotiating a deal. He has asked Israel and the Palestinians to negotiate, yet he seems incapable of showing grown-up leadership and cutting a deal with the Republicans. I know they’re far apart. They’re not as far apart as people are in the Middle East. His economic proposals are minimalist and seemed designed for political positioning, not for actually putting millions of people back to work. Let’s face it, $50 billion for infrastructure spread over 6 years is a drop in the bucket. And, making the “temporary” R&D tax credits permanent will add little to economic growth. The reason is Congress has annually passed this R&D tax cut on a temporary basis to avoid budget scoring it since 1981. No one thinks the tax credit is ending and making it permanent will not end uncertainty and restore confidence. It’s time for the President and the Republican leadership to sit down and cut a deal, which means some for you and some for me. It’s time for both sides to drop Supply-Side vs Keynesean idealogical purity and cut a deal to get millions of people back to work.
The President should offer to make all of the Bush tax cuts permanent in exchange for a one trillion dollar two year stimulus bill with $250 billion going to infrastructure each year and $250 billion going to aid to the states. Plus, he should demand unemployment benefits be extended for an additional 52 weeks beyond the current 99 and out-of-luck program. If Republicans don’t take teh deal he can blame them for letting the tax cuts expire. They can blame him for more spending. But both sides can claim they cut the best deal they could for their constituents. Importantly, they can claim they have stepped up to protect the American economy. The only way to solve the debt and the deficit is to grow our way out of it.
Sadly, this is not what I see coming. I see a real possibility that the President will not agree to extend the tax cuts for the wealthiest Americans even after the election. I also see the possibility the Republicans will refuse to agree to an agenda that includes more spending and more debt. If my fears come true we could witness the biggest economic policy error by Wahsington in our Nations history. Imagine what the economy will look like if taxes go up in 2011 and stimulus spending ends. The states will be forced to slash and burn their budgets and millions more will end up on the unemployment lines. This game of chicken has to end. Neither side is going to get everything they want. Grown-ups would accept this and move to do the best they can under the circumstances for the American people. Children pout if they don’t get their way. Grown-ups work things out. Are there any grown-ups left in Washington D.C.?
