Obama & the "New" New Deal

Crossposted at http://rockefellerconservative.blogspot.com/

 

President-elect Obama seems to be using the New Deal as a model for his economic recovery plan. If one takes an honest and historical look at the New Deal it should be clear that there were some parts of it that were successful- the huge investment in infrastructure projects- and parts that were utterly unsuccessful- the tax rate hikes on the wealthy. Hopefully the economic team surrounding Obama has read their history and will avoid repeating the mistakes of FDR.

There is plenty the government can legitamately spend money on to stimulate the economy. However, the emphasis simply needs to be on investment, not bail-outs. Instead of giving our money to GM to reward their poor business practices, we should invest in rebuilding our roads and bridges. Money could go to fund more teachers in poor performing districts specifically targeted towards math and science instruction- a clear investment in our future economic viability.

As for teaxes, some, particularly capital gains rates, should actually be lowered at this time to promote growth, while others should remain at their current rates. However, there is one area where a tax increase could realistically help. One interesting idea was put forth by Amity Shlaes of Bloomberg News:

"It is time to begin taxing –- if only by a few dollars -- the millions of lower earners who pay no tax or get money back. This largely symbolic step would allow citizens to reestablish their connection with the federal government.
Obama has a far better chance of pulling this off than any Republican would. He might package such a tax into a larger work program of community service.
It would be valuable as a form of insurance against overreaching government. In the 1970s and 1980s –- the time of the last tax revolution –- more citizens paid taxes, so more people appreciated the Reagan rate cuts."

Good idea? I think it may be. Many conservatives are against the mandatory community service aspect of Obama's agenda, but they may be willing to swallow it, if, it is rolled into a buy-in of the tax system by millions who, as of now, put in nothing. It is this kind of centrist thinking- increased government investment to infuse the economy with cash for liberals, and a sharing of the tax burden and a lowering of the capital gains rate for the conservatives- that we will need in the coming months and years; lets hope our elected officials agree.