Matt Cooper wants the Democratic presidential candidates to
"talk
growth".
Democrats need to talk about growth if they want to keep their mojo going…
Democrats who have won have had pro growth agendas. If you look back at the
1992 campaign, Bill Clinton had a set of plans to get the economy moving.
A lot of them went nowhere–the middle class tax cut, the Robert Reichian
idea of having companies of a certain size be mandated to set aside funds
for worker retraining. Those got scuttled when he took office and his modest
"stimulus package" went down to defeat. Eventually the modest recovery
that began at the end of the first Bush administration was goosed along by
Rubinomics–bringing down the deficit substantially with a tax hike and restraining
spending plus a market-assuring emphasis on open trade. That all worked then
and it may not be what’s needed now. I don’t know what is. But growth is not
a given. At some point all the Democrats–more so than the Republicans who
have a Pavlovian reflex about tax cuts, tort reform, and spending discipline–need
to lay out what they want.
The weird thing is that Cooper quite handily manages to destroy his own thesis
here. Clinton might have been president during a period of strong growth, but
that had nothing to do with the "pro growth agenda" he put forward
in 1992. Instead, America had two years of Lloyd Bentsen (remember him?) before
Rubin(omics) finally arrived in 1995.
Conversely, Republicans might have a "Pavlovian reflex about spending
discipline," but they’ve proved much less adept at disciplining their spending
than the Democrats were. I guess those reflexes are overrated.
In other words, what presidential candidates say, in presidential elections,
gives voters absolutely no idea what’s actually going to happen when those candidates
get elected. Clinton wanted those tax cuts, Bush wanted those spending cuts,
and none of those things transpired.
What’s more, today’s fragmented and globalized US economy is much less susceptible
to government interference than at any point in the past. It wasn’t Bush’s fiscal
policy which was responsible for the present slowdown; it was house prices.
The fact is that no one really has a clue what a "pro growth agenda"
would really entail. I’m sure that any politician, if he or she knew for certain
what would induce growth, would do that. But none of them do. And when there’s
no consensus among economists on optimal pro-growth policies, one can hardly
expect voters to work out what a sensible pro-growth policy should look like.
I do think that anti-growth policies (protectionism) are a bad idea. But frankly
I neither want nor need my president to be trying to goose the economy in some
kind of state-mandated manner. The 2008 election is going to be about politics,
not economics: about who the US wants to put forward as its choice for leader
of the free world. Right now, that’s much more important than squabbles over
the optimal level of the capital-gains tax.