Wednesday, March 21, 2012

WPK's Grand Bargain


I don't have the details available, but your proposal at a glance bears a striking resemblance to the recommendations of the Simpson Boles  debt reduction commission. In fact, your scheme might even be   more generous on the revenue side than they were. The President refused to follow the recommendations of his own commission because he believed the politics were bad for him and I fault him for that. Telling the American people that borrowing another 6+ trillion bucks is OK is delusional. Refusing to consider any increase in taxes is, in my opinion, eqaully delusional.

So the aggravating question remains how to get there. I don't believe the November election, in which the results are likely to be close and may well produce a divided government, will help much. The politics remain impossible. I fear that in the end, we'll do what governments often do in such situations, which is to inflate our debt away.

Your previous argument that one solution to this mess is to grow our way out of it is well placed. For that to happen however we will need the kind of workforce that can propel the economy forward. We pay a lot attention to education and we spend a lot of money on it, with very mixed results. The German apprenticeship system seems one example of matching skills with needs, but that would take a profiund culture change for both labor and industry to accomplish.


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