Newspaper article International Herald Tribune

Tough Calls That Aren't That Tough

Newspaper article International Herald Tribune

Tough Calls That Aren't That Tough

Article excerpt

Many of America's problems can be solved by putting idle resources to work or redirecting wasteful spending.

Referring to the host of painful economic choices the United States is said to confront, President Barack Obama recently said, "I won't pretend the path I'm offering is quick or easy."

The Republican presidential candidate, Mitt Romney, and his running mate, Paul D. Ryan, have also repeatedly stressed that they would not duck the tough issues.

Well and good, except for one thing: The United States does not actually face difficult economic choices. Many problems will be expensive to solve, yet Americans can solve them without requiring painful sacrifices from anyone.

Disrupting the status quo will not appeal to many lobbyists and some ideologues. But these remedies rest on solid evidence and common sense.

Begin with unemployment. Millions of Americans remain out of work only because employers can already produce more than enough to meet depressed demand. The obvious remedy is to increase total spending. Although economic stimulus has become a controversial topic in the abstract, a few simple observations should persuade every sensible legislator to support a specific type of higher spending: accelerated refurbishment of the crumbling infrastructure.

Some in Congress have consistently opposed the president's infrastructure proposals, citing the huge national debt. But that is an incoherent objection. If repairs to the Capitol dome or a tattered stretch of Interstate highway are postponed, they will just become more costly. Many job seekers have the skills for this work. If the country waits, it will have to bid them away from other tasks. The required materials are cheaper now than they will ever be. And interest rates are at record lows. Of course, the debt is an important long-run problem, but deferring infrastructure repairs would only worsen it. Relative to current policy, then, such projects would address multiple pressing problems without distress.

The country could free additional resources by curbing the waste. The ripest opportunities are in tax policy, an area distorted by decades of lobbying.

A tax on any activity generates revenue and discourages people from pursuing that activity. Perversely, much of our current revenue comes from taxing useful activities. The payroll tax, for example, discourages job creation, and the income tax discourages saving and investment. By shifting taxes toward activities that have harmful side effects, the country could raise substantial revenue while expanding the economic pie.

Consider highway congestion. Because drivers can generally enter a congested highway without charge, they often do so -- thus adding to the crowding. But many drivers would willingly pay a fee for using that road if it resulted in fewer delays. …

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