Economy

Tax reform is like the weather – everyone talks about it, but no one ever does anything about it. But unlike inclement weather, the problems of the tax system don’t go away; they continue to fester and compound. Today there are a number of unpleasant trends in the federal tax system that are crying out for attention:

by Jay Pelosky

This article originally appeared in The Huffington Post. View the original piece here.

Washington is all about the fiscal cliff these days. In Doha, Qatar, world leaders are negotiating over climate change. Federal debt and carbon emissions are indeed two big problems on the nation's front burner. But they are just the beginning.

As the fog of the election season lifts, America has a lot to worry about -- everything from competing economically with China to housing rapidly retiring baby boomers.

Today’s prolonged economic slump is fundamentally different from an ordinary recession. In the aftermath of a severe financial collapse, an economy is at risk of succumbing to a prolonged deflationary undertow. With asset prices reduced, the financial system damaged, unemployment high, consumer demand depressed, and businesses reluctant to invest, the economy gets stuck well below its full employment potential.

For much of the last three decades, policy debates in the United States have been dominated by a quixotic concern about deficits, debt, and demographics. This concern has distracted policy from fundamental economic issues that have much more direct bearing on economic well-being, most notably the growth (and bursting) of the housing bubble in the last decade. While large deficits can have a negative impact on economic growth, this impact has been hugely misrepresented in public debates.

With Americans still trapped in the fifth year of our Great Recession, and median personal income having been essentially stagnant for forty years, perhaps we should finally admit that decades of economic policies have largely failed.

As we gear up for the presidential debates tonight, it’s worth reflecting on the presidential debates from exactly one hundred years ago.

Is America still a land of promise?

The biblical metaphor was used in 1785 by George Washington, who described the new United States as a "second land of promise." More than a century later, the progressive journalist Herbert Croly wrote: "From the beginning the Land of Democracy has been figured as the Land of Promise."