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Sunday, October 23, 2016

Four Ways Congress Can Upgrade Our Credit Rating

Now that Standard & Poors has downgraded the U.S.’s AAA credit rating, it is important to respond boldly and, at the same time, lower expectations.

The first step is for our political leaders to frankly acknowledge the problems at hand: The U.S. economy will face a hard slog for an extended period; the political system is polarized; and, under current policies, the budget deficit will remain intractably large.

To respond to these challenges timidly or not at all would lead to such gloomy outcomes, we might as well think big.

What bold actions are legislatively feasible? A good start toward addressing our fiscal problem over the next decade would be to end all the 2001/2003 tax cuts when they expire at the end of 2012. And to give the economy a more immediate boost, Congress should triple the existing 2 percent payroll tax holiday and extend it for as long as unemployment remains elevated.

Here’s a more specific four-point plan that could be carried out within the political system we have. To those who will scoff that even these proposals are politically impossible, I’d note that the scope for constructive legislation has now become so narrow and the costs of doing nothing so high, we need to make ambitious proposals and hope that the legislative constraints can be adjusted.

First, use this S&P moment to reduce the deficit much more. The changes should be enacted now but not take effect immediately, as the economy remains weak. But we must get it done over the next decade, and we won’t be able to without substantial revenue.

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Copyright 2011 The National Memo
  • Carolyn Sorsen

    Yes, its past time for the Bush tax cuts to disappear.How can I find out more about the progressive reform plan that you have referenced? Especially how indexing SS to increases in longevity would work. Thanks.

  • orkneylad275

    Fine article.

    My only observation is the psychologists, on the basis of valid experiments, tell us that it is most difficult to break a habit and develop a new, good [or at least a better] one. The desire to change an unwanted habit is most important. I doubt that many in Congress, though they see the results of their bad habit of spending without the revenue to cover those expenditures, seriously want to change that habit.

    Unlike substance addiction, they do not experience the consequences of the overspending bad habit on their own bodies. Yes, they may win or lose an election, but they will experience none of health damage of crack, powdered cocaine, heroin, or even the “milder” problems caused by tobacco use, excessive consumption of alcohol, unprotected sex, sharing needles, and the like.

    Too much power, too many perks associated with “serving” in Congress, i.e., reinforcement of their bad habits. Too little will-power to do more than blather on about the necessity of reforming.

    Unfortunately, most citizens, evidently, lack the will-power to impose term limits by electing new members of Congress at reasonable, fixed intervals, say, 3 terms for representatives, 2 terms for senators. We, too, have a bad habit — returning our representatives until they do something egregious — like stowing cash in their freezer, fornicating to the detriment of fulfilling they duties, failing to pay taxes, etc.

  • Theodora30

    I keep hearing about an “infrastructure bank” but have not once heard an explanation about how this would work. How would it be better than our current pork barrel system? Who would decide what projects would be funded and who chooses these people to ensure it would not be more of the same? What kinds of criterion would be used?

    Progressives need to stop talking jargon without making it clear what they mean if they want the public to buy in. It is wrong to assume that people don’t care. That was the assumption of the media when Clinton was president. They always mocked his State of the Union speeches for being too long and too specific but the public always responded positively to them. People who bother to pay attention to the MSM do care about ideas and explanations.