A New, Simple, Smart Plan for the Fiscal Cliff

 On The Economy, July 23, 2012

"What’s so fundamentally appealing about this simple plan is that it basically says, “those Bush tax cuts—you know, the ones that started over ten years ago and that we’ve been fighting about ever since…well, they didn’t work. So let’s finally let them go and start over.”

If, post-sunset, we want to talk tax reform, as Gale suggests above, that’s fine too. As EPI budget analyst Ethan Pollack pointed out to me the other day (and as CBPP has stressed in tax reform trap discussions) the only time for democrats to safely engage in tax reform discussions is when ample revenue flows are already locked into place, as they would be under Gale’s plan. Otherwise, lower-the-rates-broaden-the-base risks being reduced to just lower-the-rates.

Finally, it’s really quite shocking how nobody in the policy world is considering ways to deal with an economy that’s now probably growing even slower than we thought. A research note from Goldman Sachs last week noted that they think the current economy “is growing at little more than a 1% pace.” That means unemployment doesn’t just sit there, stuck at an already elevated level north of 8%. It could start going up again."