Getting Back to a Grand Bargain
I’ve been arguing that the only antidote to this debilitating situation is a Grand Bargain between the two parties — one that cuts long-term entitlement spending and raises additional tax revenues to get our fiscal house in order, while making short-term investments in the sources of our strength (particularly new schools and community colleges, scientific research and roads, bandwidth, mass transit and airports) that can also cushion this recession. While President Obama has talked generally about such a Grand Bargain, he has never put a detailed offer before the American people and his own party faithful. It was a failure of leadership.
“After a painful and, for many, inexplicable delay, the administration is finally shifting from an ineffectual series of ad-hoc measures to a comprehensive program that targets key impediments to job creation,” commented Mohamed El-Erian, the chief executive of the world’s biggest bond manager, Pimco. “The emphasis is rightly on employment incentives, labor market reforms, infrastructure, and improving the functioning of the mortgage market.”