I wonder whether there would be more coherence in discussing fiscal Policy if some Members of Congress or the occupant of the White House were economists. Then, too, one can ask whether that being the case would place a higher standard on the press to explain what is going on with the economics.
With respect to the example given by the McLaughlin's in the clip below, what was their income in the decade before the Bush Tax Cuts were put into place? Was it that same $82,000? If their income has declined precipitously since Bill Clinton was President, then perhaps one can understand why going back to the pre-Bush tax rates would be so onerous. If, alternatively, their income has been flat, why would going back to the Clinton tax rates cause such a hardship? Do they now have private spending needs that they didn't have twelve years ago? Or is something else amiss here?
There is the further issue that in talking about fiscal policy sensibly, one has to consider the entire picture - expenditure and revenue, near term and long term. Economists, whether of the left or the right, would insist on that much. Alas, we hardly seem to get this in the public discussion.
The article makes it seem as this latest policy recommendation is merely posturing for the fall election. Suppose that's true. Why should the posturing matter at all to voters. Given the gridlock we've seen with this Congress, there shouldn't be any hope that the lame duck session will do something sensible about the "fiscal cliff" mentioned in the clip below. The thought would then be that with a different Congress perhaps something sensible might be done. If that's the thinking, economists in high office would insist it be discussed now.
There is a strong case to be made for new near term federal spending, simply to offset the reduction in state spending since the stimulus package has worn off. Where is that in the policy recommendation?