The Democrats to varying degrees want to raise a lot of taxes, taking money out of the private sector. That would be anti-growth. Sen. Bernie Sanders (I-Vt.) and maybe Hillary Clinton (who knows?!) do not want to open up Asian markets with the Trans-Pacific Partnership. Too bad, since that would increase growth and wages. They want to spend a whole lot of money — in Sanders’s case $18 trillion. Eventually that will require a really, really big tax increase.
That much of the nation’s infrastructure is crumbling is a common observation. And infrastructure supports growth. Low interest rates are a particularly propitious time to build infrastructure. . . .The process of infrastructure investment needs a complete overhaul. To mention just a few, it is no surprise that costs spiral when projects must pay “prevailing wages” and obey set-asides for specific contractors, or when environmental review takes years. It is no surprise that projects are not repaired when federal funds pay for new construction but not repair. Federal funding diverts resources to rail, a charming but very inefficient mode of transport, over freeways, airports, buses, bus lanes or bus rapid transit, or other needed modes. Real time tolling, private toll roads, and congestion pricing are easy ideas, used successfully in other countries, but almost never here.So, yes, we need a growth-supporting infrastructure program. But our political leadership needs to show us it can construct infrastructure in a more competent, less politicized, way, focused on delivering the needed infrastructure at least cost to the taxpayer.
We are fairly certain that Clinton and her union supporters are not going to go along with reform of “prevailing wage” regulations.
Donald Trump’s agenda is in some ways much worse, in part because he cynically offers false hope and stirs resentment toward foreigners. He wants a tax plan that is going to add $10 trillion to the debt. He won’t touch Social Security and wants to increase defense spending. Imagine the eventual tax increase needed to pay for all that. Worse, he is eager for a trade war, which is very anti-growth. It is commonly thought that the Great Depression in part was attributable to Smoot-Hawley tariffs. (Can a Trump adviser explain that to him?) We are not done with the economic lunacy. He also wants to spend billions to uproot 11 million people — who work, consume, pay taxes (sales tax at least) and otherwise contribute to the economy — and kick them out. Taken together, that is not a doable, coherent pro-growth agenda.
Start by letting in people who obviously contribute to the American economy and society. Ambitious young people come to the US to get degrees in medicine, engineering, and business. They want to stay, work, buy things from our businesses and pay taxes. They want to start businesses and hire people. We kick them out. The H1B visa lottery should simply be abandoned. Any high-skill immigrant should be able to stay. Any high-wealth immigrant should be able to stay. Immigrants often start small businesses that serve poor areas. Anyone who starts a business should be able to stay. People who came at a young age, have been through American schools, served in the US military, and know no other country should be able to stay.The immigration discussion is full of more nonsense than any other policy question facing the country. No, immigrants are in fact much less likely to commit crimes than Americans. No, terrorists come on tourist visas. They do not swim the Rio Grande and stop to pick vegetables for a few years before blowing things up. And we already spend more than twice—$13 billion dollars—on the border patrol than we do—$6 billion—on the entire FBI. They are “illegal” some say. Well, that’s easy to fix. Change the law, and they will no longer be illegal! Constructing a great Ice Wall on the border with Mexico is a canard. Immigrants come on airplanes and overstay tourist visas. . . . Immigration and growth feed each other. Immigrants help economic growth. But conversely, the lack of economic growth is feeding a misguided but understandable resentment towards immigrants.
In other words, no one currently running for president is offering a workable, consistent, pro-growth agenda. We surely could use a candidate willing to offer a package that would include 1) corporate tax reform (fewer economically inefficient subsidies and a competitive top rate to attract capital), 2) payroll relief (kick-start consumer spending, disproportionately help lower- and middle-class workers); 3) free trade and economically advantageous immigration reform; 4) efficient infrastructure spending; and 5) smart regulatory reform (“Regulation is not more or less, regulation is effective or ineffective, smarter or dumber, full of unintended consequences or well-designed, captured by industry or effective, based on rules or based on regulator whim, accountable or arbitrary, evaluated by rigorous cost benefit standards or by political winds, distorting economic activity or supporting it, and so forth.”) If a candidate is really brave, we would see a reasonable plan to tackle entitlements, if for no other reason than to make room for additional tax cuts and smart spending on human capital (training, K-12 school choice, vocational schooling, etc.).
If someone offered that sort of balanced plan, it might at least generate some intelligent discussion. We could use that before GDP growth stops altogether.