How To Make A Useful Grand Bargain


The Nation Of Change has published Robert Reich’s article Obama’s Next Economy: Why He Must Take This Opportunity to Reframe the Economic Debate.

His victory and the pending “fiscal cliff” give him an opportunity to recast the economic debate. Our central challenge, he should say, is not to reduce the budget deficit. It’s to create more good jobs, grow the economy, and widen the circle of prosperity.
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Any “grand bargain” on deficit reduction should contain a starting trigger — and that trigger should be when the economy can safely be assumed to be back on track. I’d make that trigger 6 percent unemployment and 3 percent economic growth for two consecutive quarters, and make sure that trigger was in the legislation.

The first part of the quote describes how the debate must be reframed.

The second part of the quote is a way to agree to deficit reduction, but makes it clear when is the time to do it and when is not the time to do it.  If this wording makes it comfortable for the opposition to realize that the President is not saying that the deficit should not ever be cut, then we should put in those words.  These words are only an explicit statement of what President Obama’s policy has always been.  The words are also an answer to the claim by the opposition that if we do not cut the deficit now, there are no plans to ever cut the deficit.

Mitt Romney, even before his unexpected  switch to being a pseudo-moderate Democrat in the campaign, agreed that cutting the deficit too soon would be bad for the economy.

I might add that another part of the Grand Bargain is the statement that changes to Social Security and Medicare will not be planned in detail until after we see how the increase in taxes on the wealthy and the recovery of the economy effects the long term outlook for these insurance programs.

When you pay for an insurance policy, you are entitled to the benefits you paid for.  Nobody calls the monthly payments of a private annuity  an entitlement.  Why should they call the monthly payments of a public insurance policy, the Social Security Annuity, an entitlement?

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