There is only one thing I know for certain about President Obama’s American Jobs Act (AJA) and that is that there will be no jobs growth at all until the bill is approved or sent down in flames. This is one of the perverse unintended consequences of trying to micro-manage the economy through tax policy. One can argue back and forth as to the proposed benefits of the bill (a likely outcome); but at the end of the day the number of jobs created by targeted tax incentives and stimulus (the Democratic position) are likely to be offset by tax disincentives to the wealthy job creators (the Republican position). But, although the impact of the final bill is unknown (and perhaps unknowable), the rancorous debates leading to the ultimate passage or defeat of the bill are guaranteed to undermine the confidence of markets (Wall Street) and the American people in general (Main Street) and this lack of confidence will lead to a continuing economic malaise and a possible double dip recession. US corporations have trillions of dollars in cash and the banks have the capability to lend trillions more. This money is not sitting idle waiting for a few targeted tax breaks; it is waiting for an end to the fighting in Washington and, at the very least, a path towards the restoration of confidence (true restoration of confidence will take time).
I propose a truce. The Democratic Senate will reject anything passed by the Republican House. The House will trash anything passed by the Senate. And the President will veto anything meaningful that managed to sneak through both houses. Between hardened ideological opinions and an upcoming election, it is difficult to imagine that anything of substance will be accomplished in the next fourteen months. We appear to be at an inflection point between very big ideas on how to run our government; the so-called liberal concept of bigger government involvement supplemented by Keynesian stimulus versus the so-called conservative concept of limited government bolstered by a strict fiscal policy. It’s like the Bosche and the Allies facing each other across the Valley of the Somme launching devastating but indecisive attacks against one another. No clear winner but much death and destruction. It’s time for a truce.
A truce is not a victory for either side. It is a time to recuperate and heal wounds. True, both sides will be gearing up for what they hope will be the ultimate battle; but that battle will be at the ballot box (as it should be) and not in the halls of Congress where the American people are the true victims of these internecine squabbles. In Congress, we need a temporary compromise not a victory. True, the most fervent ideologues and purists of both sides will reject this idea, disregarding the damage continued bitter fighting causes to the American economy and the harm it causes its citizens.
Most of the current proposals to fix the economy feature short-term benefits while pushing back to long-term pain over a ten year period (as though this were a long term fix while knowing the pain will continue to be pushed further into the future by later Congresses). This semi-permanent aspect of these so-called fixes is one of the root causes of the bitter struggles they engender. Let’s just call a spade a spade and admit that we can’t pass anything meaningful at the moment. Let’s work on a two-year temporary truce that involves compromises by both sides. A temporary compromise should be acceptable to all but the hardest core. The details of the pact are irrelevant so long as a temporary peace is established that will allow US businesses to get back to work and to begin hiring again.
A two-year truce will give the contending parties 14 months to elaborate their vision for the future of America and to try and convince the American people to support them. Perhaps (one can only hope) one of these grand concepts can win a clear mandate in the next elections. And hopefully, the winning side will have won by showing how to restore America’s economic power in a sustainable manner (a concept that neither side has yet articulated). The continuing truce after the elections will allow the winning side time to come up with their detailed plan and to get it enacted.
In the not unlikely scenario that neither side wins a clear mandate, perhaps the leaders of the two major parties will realize that there is no economic consensus among the American people (keeping in mind that it is for their benefit they are sent to Washington) and that, perhaps – just perhaps, the interest of the American people can best be served by their working together. One can only hope.
- Publius, September 17, 2011