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Ready, Set, Punt

July 13, 2011

by J. Andrew Zalucky

Well, this is very puzzling.

What should we make of Mitch McConnell’s recent debt-ceiling proposal? Should we really hand the President the power to raise the debt ceiling on his own? I understand its meant as only a temporary measure to last until the 2012 elections. I understand he’s offering it up only as a means to an end- the end being a reassurance to the markets that something can be done to raise the debt limit.

But from a rhetorical standpoint, isn’t it a bit absurd? Let me get this straight: a conservative is proposing a solution which would centralize the reigns of fiscal policy squarely in the hands of Executive Branch. Even worse, some other conservatives have suggested that we do not need to raise the debt ceiling, because we can just have the treasury department find ways to save and allocate the funds needed. As the Washington Post’s Ezra Klein pointed out on MSNBC last week, this would also be an enormous hand-over of power to the executive branch. Give the treasury the authority to decide which checks go out? And all this from the party of “small government”? This is not to suggest that Liberals should be for this either, as it would squash any notion of deliberation or proceduralism. (By the way, I highly suggest you read Ezra’s piece on the budget deals made by previous administrations. You may find some of the data very surprising…)

Even if this is just a rhetorical exercise, its a very cynical one which will upset a lot of tea-partiers and movement conservatives. Being neither of these, this isn’t really my problem. However, if there Washington does not cut a deal soon, this will be become a problem for everyone. It would be much better for McConnell to stand firm on spending cuts and re-structuring of social programs and while opening himself up to raising more revenue.

Political motivations aside, there is little to suggest that an end to certain corporate subsidies, capital-gains exemptions, and other loopholes would be such a bad idea. In a way, these changes would represent less government interference in the marketplace. And yes, perhaps a lower corporate tax would help too (compared to many European nations, ours is rather high, imagine that!). Few people, even among Liberals, would suggest raising marginal income taxes up when such a measure could put a dent in aggregate demand. Still, something needs to be done to bring more money into the system, that is unless you want the Atlantic to start looking like the Mediterranean*.

*Metaphorically speaking of course. I’m sure the Mediterranean is gorgeous this time of year.
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