Don’t you just love political cross dressing? Last night on CNBC my old boss David Stockman was totally root-canalled as he called for higher taxes and lower spending. Right on spending, but wrong on taxes. Not even a mention of flat-tax reform. And he rejected business tax cuts. Oh my gosh.
Then on the same show left-of-center Washington Post blogger Ezra Klein agreed with me on the need to strengthen the economic power of business to invest and create jobs. Twice I called for a lower corporate tax rate and full cash expensing to unleash businesses large and small. Twice Ezra Klein agreed with me (though he favors more federal aid to state and local governments), and twice Dave Stockman disagreed with me.
If that makes Ezra a pro-growth Democrat, good for him. But Dave Stockman’s deficit obsession is not pro-growth.
Yes, we must curb deficits and borrowing. Absolutely. So let’s have some government austerity. But the growth message has to be part of the story. Flattening business tax rates and speeding up investment-tax write-offs for large and small companies would do more good than anything I can think of to grow the economy and speed up the anemic jobs recovery. I’d like Dave Stockman to have a long dinner with Fed Ex CEO Fred Smith, who has the story right on business and jobs.
Meanwhile, stories coming out of Washington suggest that the Bush tax cuts will not be settled until after the elections in November. This is good news. A tea-party Republican sweep in the midterms might just avoid job- and investor-killing tax hikes.
At the same time, cap-and-trade looks to be off the agenda for now. And deficit-commission honcho Erskine Bowles — who was Bill Clinton’s former chief of staff, and who worked well with the Gingrich Congress to draft a budget-cutting and capital-gains-tax-cutting deal — said yesterday that the government-spending share of GDP should be brought down to 21 percent from 24 percent. That’s progress.