The Futility of Talking Growth

Matt Cooper wants the Democratic presidential candidates to "talk growth".

Democrats need to talk about growth if they want to keep their mojo going... Democrats who have won have had pro growth agendas. If you look back at the 1992 campaign, Bill Clinton had a set of plans to get the economy moving. A lot of them went nowhere--the middle class tax cut, the Robert Reichian idea of having companies of a certain size be mandated to set aside funds for worker retraining. Those got scuttled when he took office and his modest "stimulus package" went down to defeat. Eventually the modest recovery that began at the end of the first Bush administration was goosed along by Rubinomics--bringing down the deficit substantially with a tax hike and restraining spending plus a market-assuring emphasis on open trade. That all worked then and it may not be what's needed now. I don't know what is. But growth is not a given. At some point all the Democrats--more so than the Republicans who have a Pavlovian reflex about tax cuts, tort reform, and spending discipline--need to lay out what they want.

The weird thing is that Cooper quite handily manages to destroy his own thesis here. Clinton might have been president during a period of strong growth, but that had nothing to do with the "pro growth agenda" he put forward in 1992. Instead, America had two years of Lloyd Bentsen (remember him?) before Rubin(omics) finally arrived in 1995.

Conversely, Republicans might have a "Pavlovian reflex about spending discipline," but they've proved much less adept at disciplining their spending than the Democrats were. I guess those reflexes are overrated.

In other words, what presidential candidates say, in presidential elections, gives voters absolutely no idea what's actually going to happen when those candidates get elected. Clinton wanted those tax cuts, Bush wanted those spending cuts, and none of those things transpired.

What's more, today's fragmented and globalized US economy is much less susceptible to government interference than at any point in the past. It wasn't Bush's fiscal policy which was responsible for the present slowdown; it was house prices.

The fact is that no one really has a clue what a "pro growth agenda" would really entail. I'm sure that any politician, if he or she knew for certain what would induce growth, would do that. But none of them do. And when there's no consensus among economists on optimal pro-growth policies, one can hardly expect voters to work out what a sensible pro-growth policy should look like.

I do think that anti-growth policies (protectionism) are a bad idea. But frankly I neither want nor need my president to be trying to goose the economy in some kind of state-mandated manner. The 2008 election is going to be about politics, not economics: about who the US wants to put forward as its choice for leader of the free world. Right now, that's much more important than squabbles over the optimal level of the capital-gains tax.