Posted by Bob Lord
[Distributed via OtherWords.org]
The Way Forward: Tax and Spend
This strategy would reduce joblessness and inequality while stimulating the economy.
Have you heard? Our economic policy debate is getting some spring cleaning.
President Barack Obama has signaled that he’s had it with all that talk about America being broke and the belt-tightening austerity measures that went along with it. His proposed budget for the 2015 fiscal year will reflect this reality.
You know what he should try? A tax-and–spend strategy.
Yes, conservatives have tried for years to turn that simple solution into an epithet. But it’s the best way forward.
Taxing more and spending more would stimulate a $17 trillion U.S. economy that’s not producing at full capacity and dogged by high unemployment. It wouldn’t expand the budget deficit. And it would reverse the concentration of income and wealth that’s hollowing out our middle class and denying most Americans a fair shot.
Changing tax rates and spending levels are two of the three standard tools policymakers have at their disposal to goose the economy. The other is monetary policy.
The Federal Reserve’s expansionary monetary policy that began in 2008 is unprecedented. It may have helped get our financial system back on its feet and unleashed a multi-year bull market. But our economy is still staggering.
That means it’s time to give targeted tax increases and higher government spending a shot.