Saturday, April 28, 2012

Fareed At Last!

I have to admit, I love reading this guy’s stuff (you should pick up one of his books).  Here is a link to his op-ed in Post this week that hits a few notes that resonate with me.

First, he questions the political decision and the practical policy implication of Obama’s full court press on the Buffett Rule.  Zakaria does a full take down: 

“Recently the president and his advisers have focused on taxing the rich and tackling inequality. The “Buffett rule” tax on millionaires has become Obama’s bumper sticker. The proposal is reasonable — but does not deserve the attention Obama is showering on it. It raises a trivial sum, $47 billion over the next 10 years, during which period the federal government will spend $45 trillion. It adds one more layer to a tax code that is already the most complex and corrupt in the industrialized world. If the president wants to be bold, he could propose comprehensive tax reform and eliminate the hundreds of deductions, exemptions, credits and loopholes, many of which Congress sells in exchange for campaign contributions.“

I would have gone further and called the Buffett Rule a great way to turn meaningful debate over tax policy into a cartoon punch line.  Zakaria was more polite than me, but he’s a paid professional.  The idea of tax fairness is a political winner; the idea that Warren Buffett needs to pay more is not.
Next, he makes the compelling case that the American approach (Obama’s) to the global economic crisis has been far superior to what the GOP has proposed, and he backs it up with the evidence from Europe.  Europe followed the GOP proposed austerity approach with damaging results:

“We are four years into the financial crisis. In the United States, the government acted speedily and massively to stimulate the economy, using monetary and fiscal measures. In Europe, governments quickly turned toward austerity programs, cutting spending across the board to reduce budget deficits.

“The results are in: The U.S. economy is expected to grow 2 to 3 percent this year. The euro zone is expected to contract 0.3 percent this year; Spain and Britain have officially entered a double-dip recession, the first time major economies have done so in 40 years. The International Monetary Fund’s latest forecast through 2017 predicts that the United States’ economy will outpace every major European one. IMF projections show that even Germany’s average growth rate will be only 40 percent of America’s. 

European concerns about deficits and debt are valid. But it was a mistake to use these medium- and long-term problems as a reason to make massive spending cuts in the middle of the worst economic slowdown in 80 years. Government policy at its best is countercyclical: You cut in boom times and spend during troughs. Europe is doing the opposite, and the effect is to worsen budget deficits. In most European countries, spending cuts have led to slower growth, lower tax revenue and thus bigger deficits. Spain and Britain are running deficits well in excess of earlier projections.”

This one line bears repeating, and the President should not back away from it:

“Government policy at its best is countercyclical: You cut in boom times and spend during troughs.”

Investments in infrastructure, education, and health care are smart uses of dollars.  That message makes sense.  Promoting populist, focus group tested slogans like the Buffett Rule does not make sense.  The dancing around the edges instead of attacking the colossus that it the U.S. tax code does not make sense.  This is the kind of simplistic messaging that makes us all cynics and does not inspire hope that anything will change.

Zakaria closes with his take on what the Buffett Rule should really be all about:

Warren Buffett has said that, in the midst of the economic slowdown, his strategy was to invest in America. That’s the Buffett rule Obama should follow.”

I agree.

No comments:

Post a Comment