The economy has changed radically; Republican priorities have not.
The biggest policy fight left in 2017 is stuck in the 1970s.
Tax reform is lining up like this: Republicans want big, business-friendly tax cuts to spur savings and investments while Democrats complain it’ll blow a hole in the deficit. These terms of debate made sense 30 to 40 years ago. Back then, the economy was stuck in a particular kind of rut. With inflation high and profits low, companies weren’t investing and creating new jobs even as a torrent of new workers was flooding the labor force. Very high interest rates lurked in the background.
Both Republicans and Democrats agreed this nexus of issues was a problem, so they had a debate over what to do. There were ideological disagreements about the prescription but consensus on the diagnosis. In his first term, Ronald Reagan implemented the conservative prescription. In his second term, the much-lauded bipartisan 1986 tax reform bill represented a reasonable high-minded compromise of the two poles of the debate.
But today is different. Corporate profits are high, not low. Inflation is low, not high. The workforce is growing slowly, not quickly. Borrowing is cheap, not expensive.
Everything about the situation has changed— except the tax policy debate. And the result is that Congress’ No. 1 priority has almost nothing to do with the biggest problems facing the country.
We’re having a very familiar argument about taxes
“By immediately lowering the corporate tax rate to 20 percent,” House Speaker Paul Ryan said last week, “this bill will stimulate investment, job creation, and economic growth in the United States.”
Nancy Pelosi, the day before at a Rhode Island fundraiser, slammed the plan in equally familiar terms. “It blows up the deficit while saying it is going to pay for itself,” she said. Read More Here