Perhaps gridlock in Washington is good for the economy after all. In the absence of new stimulus or tax bills, the economy is able to grind along, albeit not at breakneck speed. Doug Holtz-Eakin of the American Action Forum puts it this way: “This is good economic news – consistent with other data indicators for June. It suggests solid 2nd quarter GDP growth, but it will still be difficult to get to even 2.5 percent for 2014 as a whole.” He adds, “The remaining hurdle is to have the economy as a whole shift to rapid growth and thereby close the yawning gap between what is happening and the potential for the economy.”
What would help at this stage? Certainly, an energy bill, long the aim of conservatives, would not only generate jobs in the energy sector but also lower costs for many manufacturers. Likewise, incentives for investors — either corporate tax reform or simply a repatriation bill allowing firms to bring cash reserves home without a tax penalty — would encourage growth, and thereby job creation. There is also more to be done for the long-term unemployed and the underemployed.
House Speaker John Boehner (R-Ohio) in a statement today reminded voters and the Senate: “The House has passed dozens of jobs bills that would mean more paychecks and more opportunities for middle-class families. But in order for us to make real progress, the president must do more than criticize. From trade to workplace flexibility, there’s no shortage of common ground where he can push his party’s leaders in the Senate to work with us. Until he provides that leadership, he is simply part of the problem. For our part, we will continue to listen to and address the concerns of Americans still asking ‘where are the jobs?’ ” It is noteworthy that gradual progress in the jobs numbers comes without extension of jobless benefits. On that front, there may be room for bipartisan cooperation. Reform conservatives suggest, for example, using relocation bonuses to promote mobility. “Conservatives should also rethink the way unemployment benefits are provided and allow workers interested in moving in search of employment to receive relocation assistance in place of continued unemployment benefits.” This spring the House passed a measure to redefine “full-time work” in Obamacare from 30 to 40 hours, thereby making it easier to hire additional, albeit part-time workers.
The economy never saw a Reagan-like recovery, but a do-no-further-harm mentality has kept momentum going forward. Unfortunately, to kick it into high gear, we probably will need a new Senate and president committed to pro-growth policies.