More and more, I think, China will be the defining issue of the 2012 presidential campaign. This Weekly Standard piece by Irwin Stelzer is a must-read on the topic:
This Larry Kudlow commentary is a nice companion piece to my previous post:
In one fell swoop, Obamanomics is out the window. Reaganomics 2.0 is now in the driver’s seat. … In the new session of Congress — which will feature a true Tea Party GOP conservative majority — new spending-limit policies can fill in the blanks left by the tax deal. But if President Obama has the acumen to see that a pro-growth economic policy is tied to low tax rates, the GOP should take great care not to cede that message and lose the economic-growth high ground. … A great battle will be joined over the spending, taxing, and regulatory mandates of Obamacare, which is probably the biggest job-killer of all. Conservative reformers in the new Congress will force this fight, along with tax, spending, entitlement, and monetary reform. Behind all this, however, the new Tea Party GOP must maintain a message of economic growth and prosperity.
Well, that was quick. America’s supposed generational shift toward an embrace of high-tax, high-service Big Government didn’t even make it a full two years. The new public policy consensus — built around favorite liberal issues of the environment and income inequality — promoted by Washington elites has been a flop with the public.
Yuval Levin sums things up correctly and thusly:
This opening of the eyes of the Republican appropriators (brought about by a groundswell of outrage from conservatives) is the most important part of the omnibus story, and maybe of the lame-duck Congress in general. Combined with the minor revolution John Boehner is attempting to enable in the House Appropriations Committee (by appointing some new members who might be best thought of as a kind of crop of anti-appropriators) it has the potential to change the culture of Congress (which has long consisted of three parties: Republicans, Democrats, and appropriators) in a very important and constructive way—if it lasts.
Over at NRO, Duncan Currie gives it his best shot:
Despite being more efficient than an ordinary sales tax, a VAT carries significant administrative costs, and piling it on top of the present U.S. tax structure would be a mistake. But using the VAT to eliminate a sizable amount of distortionary U.S. income taxes would yield a far more growth-friendly system than the one we have today. Over the long run, America must reorient its economy away from consumption and toward investment while boosting its dangerously low savings rate. A VAT is certainly not the only way to promote those objectives, but it should at least be part of the conversation.
This is the kind of thing that really burns me. Here is Simon Johnson, former chief economist at the IMF, over the at the NYTimes econ blog: