No matter what happens on November 7, America is going to end up with a de facto divided government. Even should the GOP keep control of the House and Senate, it would likely be by the narrowest of margins. Most analysts think voters should expect nothing but gridlock for the next two years. So for the heck of it, I asked a couple of pretty smart guysone on the left, one on the rightwhat their dream economic agendas would be for the Democrats and Republicans, within broad political reason.
Yesterday, Yale poli sci Prof. and The Great Risk Shift author Jacob Hacker gave me his two cents on the Democrats. Today is Tyler Cowen's turn to tell what he would love to see from the GOP. Cowen is an economics professor at George Mason University and director of the Mercatus Center, which studies how societies become and stay prosperous. He is also coauthor of the popular blog Marginal Revolution. Cowen calls his agenda "economic ideas voters need to hear."
1) Institute means-testing for Medicare. "The graying of America threatens to bankrupt our national finances, mostly through forthcoming Medicare expenditures. Medicare should be a welfare program for the needy, not a source of comprehensive coverage for wealthy old people."
2) Eliminate all farm subsidies, quotas, and price supports. Eliminate all tariffs. Eliminate all budget earmarks. Eliminate all corporate welfare. "No, these are not the 'big fish' in the budget, but we need to take a stand against the totally outrageous."
3) Take in more high-skilled immigrants, and make them legal. "This is a win-win situation, and we are turning our back on it."
4) Phase out all forms of capital income taxation, including the corporate income tax, and replace them with a carbon tax, including a gasoline tax. "Savings and investment boost economic growth, but when it comes to energy, global warming threatens as a major problem and our dependence on Middle Eastern oil damages our foreign policy."
5) Institute full-scale experiments with school vouchers. "Competition is a needed tonic for many of America's worst schools; in any case, many simply cannot get worse. Make sure that the money is attached to the student, not to the school."
So how does Cowen handicap any of his ideas ever making it into law?
"The odds? No. 1 will happen sooner or later, but at the last possible moment. It won't be popular, and it will be introduced in sneak fashion, rather than transparently. No. 2 won't happen. No. 3 will happen only when the climate of opinion shifts on low-skilled immigrants. Don't hold your breath. [As for No. 4], I predict we will get a carbon tax under the next Democratic president but not sooner; capital income taxation won't fall more than it already has. On No. 5, we will try some more poorly thought out voucher experiments, not the real thing."