Ryan Streeter
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Tyler Cowen has 6 thoughts on the S&P downgrade. He's always worth reading.
1. The Republican Party made a big, big mistake passing up a chance for a “grand bargain” with Obama. It’s time to be a realist about revenue increases, rather than signaling ideological purity.
2. Democrats need to choose on entitlements.
3. The “we should have had a much bigger stimulus” argument is unlikely to go down in intellectual history as the correct view.
4. If at this point, in response to this news, a commentator attacks the ratings agencies for their previous mistakes and stupid, corrupt behavior, it’s a sign the commentator is trying to muddy the broader issues at stake.
5. I don’t think that an alarmist reaction about the market would be appropriate.
6. Let’s hope it serves as the needed wake-up call. If it doesn’t, well, back to…
On the first two points, the best idea to date is the one Krauthammer advanced in his last column in which he proposed the following steps:
Start with tax reform, and lower rates across the board to something like what the Deficit Commission recommended.
Maintain revenue neutrality by getting rid of the junk in the tax code.
Then have (1) Democrats concede on entitlements, and (2) Republicans allow for tax increases from the lowered rates, which would still be historically low.
So far, no one has put forward a better suggestion.
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