August 2, 2011 Leave a comment
Really enjoyed Ezra’s analysis of the deal in this morning’s Wonkbook:
It’s not just that Congress waited until the last minute, taking an unnecessary risk in a fragile economy. And it’s not just that the tough decisions got punted once again. This is a bad bill at a time when the economy — and the American people — needed a good one. It’s a bill that does too little now, and too little later, and it comes in lieu of an obvious, achievable solution that would have done better.
The two reigning theories of our current economic moment are not opposed to one another. The economy is weak now, with too little demand and too little growth, and threatened by mounting deficits later. The answer, as any economist can tell you and as many told Congress, is simple: do more to support the recovery now and more to cut deficits later. In the short-term, we should expand the payroll tax cut, make a massive investment in infrastructure, continue funding unemployment insurance, and do more to aid the states. In the long-run, we should cut spending in entitlement programs as well as discretionary programs, and raise significant revenues and modernize the tax code by flattening the base and closing loopholes.
These two priorities don’t conflict. In fact, they support each other. Faster growth now will mean smaller deficits later. And politically, more stimulus now would have helped Democrats agree to more deficit reduction later. But our political system isn’t very good at both/and. It’s more suited to either/or.
Yup. In many ways the most frustrating aspect of all of this is that it is fairly obvious what needs to be done, but we have a political inability to get it done. Of course, I would argue that one political party would pretty much make things happen if given the opportunity and the other party seems to be invested in anything– even serious economic damage– that makes Obama’s reelection less likely. Heck, Mitch McConell basically admitted as much.