Can We Agree on a Way to Stimulate Economic Growth?

Last week I tried to make a simple point. Our government needs to prioritize and focus. My preference is to focus on economic growth and security. My assumption is that either candidate once elected with an earnest goal of promoting growth could find enough support to make progress. My second assumption is that a truly positive outcome would take a lot of focus wherein other issues would have to be put on a back burner. I got lots of responses and advice from you. So let me deal with some of that here.

First, even if I am wrong, I am not going to move to another planet. So forget it.

Second, some of you believe that neither party is capable of focusing on economic growth to the exclusion of other policies. And I agree with you. I can’t see them jumping on the growth wagon either. Whatever party wins and wins enough clout in Congress will begin by immediately jabbing its collective finger into the eye of the other party. If Democrats win the first thing they will do is to make abortion available to women who are not even pregnant. And Republicans in their first 24 hours in power will make it legal for kindergarten kids to carry loaded military weapons to class. Okay I jest, but you get the point. I doubt either party is capable of taking over without at least a few na na nas. This will not put anyone in the mood to join hands in even a few off-key gumbayas for economic growth.

But it is worth talking about. Why can’t one side just stick to making us all a little richer?

Third, even without the predictable eye jabbing, can both parties find a way to agree on an economic growth plan? Again, I am not sure they can do that. What is the best way to promote stronger economic growth that will lift most boats? Fuzzy seems to have a very large boat and I don’t even have a boat. So it sounds pretty challenging.

Okay forget boats for a moment. Here is a wild and crazy suggestion for thinking about a solution. Step 1. Recognize that no party in the discussion will get everything they want. It’s called compromise. If you are like Mr Cruz and won’t play unless you can use your own Tom Brady-signed under-inflated legal pad, then go home and don’t participate. Step 2. Write down all the credible policies that could conceivably improve economic growth in the US in the next few years. Yes, write them all down. Step 3. Prioritize all these possibilities in terms of a realistic appraisal of their impacts on economic growth. To do this step each side could pick a few economists who they believe are not wing-nuts and who could actually sit in a room for more than 7 minutes with economists on the other side of the aisle. Step 4. Put these economists in a locked room with only kimchi, soju, a photo of Margaret Thatcher, and only one week’s supply of Charmin. Step 5. Watch the magic happen and make sure that government legislates anything that a majority of these economists agree to. Step 6. If all that doesn't work go back to step 1. 

It sounds crazy but let’s face it, crazy is about all we have today. If any process was to lead to an even half-way intelligent set of economic policies, we would benefit. So as to totally not cop-out on some details of policies let me end by offering some suggestions.

·       Evaluate the full set of government regulations that negatively impact productivity and labor supply. Those that create the largest detriments should be eliminated for a period of three years.

·       Cut some fat out of every government program. Use that fat to fry some really nice pork chops. Or use it for infrastructure.

·       Do something about spending on Social Security and Medicare. Use those cuts to give some targeted tax cuts and/or subsidies that would directly enhance the replacement of worn out machines, software, and so on.

·       Create tax cuts or subsidies that would make it easier for poor people to work and safely provide for their children. More spending on training and retraining would fit here too. 

·       If any of the above leads to short-term increases in the government deficit or national debt, then permit deficits as high as 5% of GDP for two years. If the growth policies work, the deficit will automatically go back to tolerable levels.

I probably missed something so let me know. That list is provided to show that there are ways to get this done. It is not meant to be exhaustive. Notice that I have attempted to be flexible. If you have read some of my past musings you know that I harp consistently about deficits and debt. In the above I am acknowledging that a compromise might involve a temporary increase in the latter. Wow – I may need a visit to my JD bottle once that gets out. But compromise is compromise. I want to see people seriously ponder economic growth. If we stick to “my way or the highway” I can’t see us making any progress. What do you think?