Try This
America's economy continues its recovery from the 2007/08 near-collapse of the financial system and the attendant recession, but at a rate persistently below the 3.5-4.5% required to stimulate sustained and substantial employment growth. Further, the notion of America emerging as an engine of world economic growth, as China, India and Brazil slow, Europe stays moribund, and Japan is still rousing itself from its decades of lost growth, seems similarly ethereal. Consumer and especially business confidence are anything but buoyant. And of course the public sector in America seems barely capable of just keeping itself open, to say nothing of running efficiently (think the roll-out of the Affordable Care Act as just one example). This past month, the Federal Reserve became so concerned with this pervasive sluggishness, and political dysfunction, that it stepped back from its plan to begin withdrawing its unprecedented monetary stimulus - indeed, it may now be several quarters before the Fed deems it propitious to taper.
So, within this environment, is it possible to think that there may still be a way to provide the needed spark? In a word, yes. To a significant extent, it is the lack of political leadership and policy direction in Washington that is inhibiting what is always the prime source of employment growth - American corporations, both large and small. These are poised, almost like never before, to invest, because years of aggressive cost-cutting have produced record profits and robust balance sheets. (It is no accident that equity prices are at all-time highs.) But private business investment never occurs solely as a result of financial strength - it is as importantly a function of confidence that, among other things, tax and regulatory rules are clear and stable. And therein lies the rub (think, as just the latest example, the epic, shamefully unfair and unnecessary pursuit of JPMorgan Chase by the Justice Department).
Here's a solution. President Obama should contact Republican House Budget Committee Chairman Paul Ryan and propose a series of five, weekly luncheon meetings with himself, Mr. Ryan and his Democratic Senate counterpart, Chairwoman Patty Murray - just these three. (Such meetings would run concurrently with those of the Congressional Budget Conference, that begin tomorrow and are charged with devising a bi-partisan budget by December 13.) Further, Mr. Obama should set one goal only for the luncheon meetings - a legislative outline for corporate tax reform. Much of the detail has already been properly thought out and presented in the Simpson-Bowles report, so it would be simply a matter of writing the corresponding framework for new tax law.
At 35%, the United States has the highest nominal corporate tax in any of the world's developed economies, with the inevitable result that American corporations have reported and retained significant profits in more favorable overseas' tax jurisdictions, such as Ireland. Lower the rate, close the outdated loopholes, and watch as profits are repatriated to America, private business investment - and hence employment - surge, and corporate tax revenue received at both the federal and state levels rebounds. No other single policy initiative, short of a fiscal "Grand Bargain", could come close in its impact on the vibrancy of the American economy.
None of this is innovative, or conceptually difficult. But with a President who thinks of himself as a Democrat, rather than the nation's leader, it won't happen.