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The five-page brief focuses on arguments about what drives productivity, wage growth, innovation and equity in the economy. All are issues that predate the coronavirus recession and recovery, and which Democrats, in particular, have pledged for years to address.
It begins by attacking the “old orthodoxy” of tax-cutting policies by presidents and Congress, including the 2017 tax cut law passed by Republicans under President Donald J. Trump. A driving rationale behind those cuts was an effort to encourage more investment by private firms, boosting what economists call the nation’s capital stock. The brief faults those policies for not producing the rapid gains in economic growth that the champions of those policies promised, and it says that raising taxes on high earners “will help ensure that the gains from economic growth are more broadly shared.”
It also recounts what it calls the federal government’s underinvestment in policies that help educate children and adults, facilitate the development of new technologies and industries and support parents so that they are able to work and earn more. It singles out the wave of fast-developed Covid-19 vaccines from Pfizer and Moderna, which grew out of publicly funded research, as an example of public investments yielding private-sector innovation.
“Those started with ideas that were funded by the public sector decades ago,” Dr. Rouse said. “And then the private sector built on top of that, so it’s really, the private sector needs to work with the public sector. We are all very grateful that the public sector was willing to take that risk, and it didn’t pay off right away.”
“In many ways, the federal government should be patient,” she said. “We are a kind of entity, we should be patient. So I’m not saying we have to wait a million years for something to pay off, but we don’t need to have the kind of immediate payoff that a private company might need to see.”
That argument is, in many ways, a departure from how administrations typically pitch economic policies during a crisis. There is no focus in the brief on immediate job creation or a quick bump in economic growth.
Weeks after Mr. Biden detailed both halves of his plan, the administration still has offered no projections about the impact of his policies on jobs or growth. Instead, Dr. Rouse and others in the administration have taken to citing forecasts by the Moody’s Analytics economist Mark Zandi, which are among the more favorable outside analyses of Mr. Biden’s agenda.
Source: The NY Times
Keyword: As Economy Wobbles, Biden Stays Focused on Longer Term