Saturday, June 25, 2011

Partisanship and the Economy

Thomas Friedman's column this week in The New York Times makes the valid point that neither party's ideology will fix our economic woes.

The truth is, we need to do four things at once if we have any hope of maintaining American greatness: We need more stimulus to keep the economy from slipping back into recession. But we need to combine that stimulus with a credible, legislated, long-term plan for cutting spending and getting the deficit under control — e.g., the Simpson-Bowles deficit-reduction plan. And we need to raise new revenues in order to reinvest in the sources of our strength: education, infrastructure and government-funded research to push out the boundaries of knowledge.

The Democrats are ready for more stimulus but have refused to signal any serious willingness to cut entitlements, like Medicare, that we know are unsustainable in their present form. The Republicans are all for spending cuts but refuse to accept any tax increases that we need to pay for the past and invest in the future. So what we’re basically saying as a country is that unless the market or Mother Nature make us pay, we are going to hand this whole bill over to our children.

This is true so far as it goes and former Reagan budget official David Stockman's recent Times op-ed agrees. However, Friedman's column implies a false equivalence between the destructive partisanship of the two parties. The truth is that the Democrats are at least closer to realistic and have shown a willingness to compromise while the GOP seems willing to ride ideological rigidity all the way down. Stockman makes this distinction in another recent article.

The Republican Party is being reckless in historic proportions, reckless to the extreme.

Conservative blogger Andrew Sullivan explains in light of Eric Cantor's (R-VA) recent withdrawal from debt ceiling negotiations.

They see this ideologically, i.e. not politically. But the political facts are these. Federal tax revenues are at a 50-year low; marginal rates are lower for many than they were when Reagan was president. In a divided government, any achievement requires some sacrifice from both sides. And yet the GOP is insisting that its side offers no sacrifice, even as the other party controls the Senate and the White House. Their own party, moreover, contributed dramatically to the debt we now face. And there is no clear evidence that raising revenues will lead to economic decline. Ronald Reagan's tax hike to deal with a much smaller debt in 1982, as Bruce Bartlett shows, preceded a burst in growth. The tough budget calls, including tax hikes, of GHW Bush and Bill Clinton led the way to economic growth far outpassing that after George W. Bush's bankrupting tax cut.

--Ballard Burgher

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