Who is Responsible for the Sour Economy?

In yesterday’s New York Times the columnist Ross Douthat with “The Great Disconnect” makes a good case that the Washington to Boston corridor, i.e. the national elite, is disconnected from America’s most pressing problems.  Instead of concerning themselves with jobs and the economy, healthcare costs and entitlement reform, fighting poverty and reforming the tax code, which are the real priorities of the American people, the issues getting the most attention by our national leaders are rather gun control, immigration reform and climate change mitigation which represent much lower public priorities.
Of course there is a political logjam between the two parties.  The Republicans want to use free market incentives to improve the economy such as tax reform and the elimination of onerous regulations.  The Democrats want more government stimulus which is controversial because it will increase the deficit.  As far as Mr. Douthat is concerned both parties are pretty much equally to blame for the stalemate because of their unwillingness to compromise in order to make progress on our biggest problems.
In a situation like this there is really only one person who has the clout to make a difference.  It is the President.  Presumably he is motivated to improve the economy more quickly because lack of progress will be a blot on his record and a drag on the chances of his party in the next presidential election.
The problem is that his liberal ideology, which got him elected and then re-elected, is at odds with the one single measure which would most improve the economy.  I am referring to pro-growth, broad-based tax reform where rate reduction and simplification would be offset revenue-wise by eliminating deductions and closing loopholes.  If such tax reform includes the elimination of the tax deduction for employer provided health insurance (again, offset with lower tax rates!), the cost of healthcare would drop dramatically as consumers started paying attention to their own costs.  Then Medicare and Medicaid could be brought into the same framework and presto, we have entitlement reform as well.
Republicans are strong advocates of tax reform.  It’s too bad that Democratic leaders can’t see how everyone, including themselves, would benefit from doing this!

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