Gregg Easterbrook

The global economy doggedly refuses to re-start. Employment is flat, demand is flat, prices are flat, housing sales are flat, growth is nearly flat.

Stagflation and inflation, the old fears, have given way to the flatline economy. Sometimes flatlined patients can be revived. Clear! But what should the therapy be?

Republicans are responding to the flatline economy by demanding what they are programmed to demand — tax cuts for the upper class. Democrats are responding to it by demanding what they are programmed to demand — more government spending.

Both approaches have already been tried, and both don’t work. Only a gridlocked partisan political system would keep demanding more nostrums.

Federal income taxes were cut significantly in 2001 and again in 2003. The recession of 2008 began under a regime of tax cuts. The tax cuts probably did not cause the recession, but they obviously did not stop it either. Federal taxes were cut again in 2010, this time both income and payroll taxes were reduced. No response from the flatline economy.

All the leading Republican presidential contenders except Jon Huntsman are denouncing government, with high vituperation. Yet all have spent some to most of their adult lives as office-holders, enjoying the perquisites of government and pocketing some of the public spending they say they oppose.

This a bit like a used-car salesman claiming to be a consumer crusader or a high-class madam denouncing Internet porn. Why does anyone believe politicians who shake their fists against government while comfortably ensconced as government insiders?

Consider:

* Rick Perry, the putative Republican frontrunner. After college he joined the Air Force – an admirable form of service, and also a secure government job. Afterward, he spent seven years in cotton farming, where federal price supports insulate growers against free-market competition. Since then, Perry has been a government employee: first in the Texas state legislature, then as Texas Agriculture Commissioner, then lieutenant governor, then governor of Texas. Now Perry is campaigning for a federal job with a $400,000 salary and very substantial subsidized lifetime benefits.

“President Obama announced plans Monday to fund his $447 billion jobs bill largely by raising taxes on wealthier families.”

– Washington Post lead article on 9/13/2011

Bravo! It’s about time a national leader had the courage to use the T word. There is no solution to the federal debt fiasco that does not involve raising taxes on the well-off. Washington’s decade-long allergy to the word tax – or its reliance on silly euphemisms like “surcharge” or “revenue enhancement” – must end. Barack Obama did the country a service by putting this on the table.

Here’s the part the left will not like. Assume the president’s jobs bill is enacted, and is funded not by yet more borrowing but by raising taxes on the well-off. That will pretty much tap out “tax the rich” as a political strategy and rally cry. Unless the economy really takes off, further progress against the debt will need to come from entitlement cuts and raising taxes on the middle class.

On Labor Day, President Barack Obama vowed to put “our construction workers back to work rebuilding America ,” a theme he is expected to repeat in his address to Congress tonight.

There’s plenty of rebuilding to be done. But a combination of top-heavy bureaucracy, union rules, cost-plus profits and graft have made recent federally funded construction projects insanely expensive and slow. The result is more national debt without much contribution to economic growth. Consider:

*Boston’s Big Dig, mostly funded by the federal taxpayer though benefits went exclusively to Massachusetts, was supposed to take 10 years at a cost of $6.2 billion in today’s dollars. Instead it took 21 years and cost $22 billion.

If an election is coming, that means each side needs a bogeyman. The Republicans have chosen first, and theirs is the Environmental Protection Agency. Michele Bachman calls the EPA “the job-killing organization of America,” promising to “padlock” its doors. Tea Party leader Eric Cantor says environmental rules are “job-destroying”. Texas Gov. Rick Perry says he “prays daily” for the EPA to be restricted.

Soon Democrats will choose their bogeyman – The Rich are the current frontrunner.

Elections often are dominated by bogeymen – Republicans claim Democrats don’t care about national defense, Democrats claim Republicans want to eliminate Social Security, that sort of nonsense. Environmental bogeymen are appealing to some factions because the issue involves regulatory arcana that hardly anyone understands, and because environmental subjects are poorly reported in the mainstream media.