Commentary - The President's Budget Proposals Need To Include The Word Permanent
Monday, February 06, 2006Tonight`s commentator has some suggestions for brightening the nation`s financial picture, but you might not like what he suggests. Here`s Mark Zandi, chief economist of Moody`s economy.com.
MARK ZANDI, CHIEF ECONOMIST, MOODY`S ECONOMY.COM: The president`s state of the union was notably cautious, at least when it came to economic policy. As the president has done many times before, he argued that his tax cuts should be made permanent, health saving accounts expanded and more spent on energy-related R&D. There were no new ideas in the speech, not even a mention of last year`s proposal to privatize Social Security or to reform the tax code.
Perhaps the president feels, given his ongoing political problems, he is in no position to do so. This is a mistake. Despite the economy`s currently strong performance, it faces enormous challenges, and policymakers can`t take a year off to address them. At the top of the agenda should be record high energy prices. Investing in alternative fuels will at best have a long-term payoff. Energy demand must be curbed immediately. How about a higher, variable gasoline tax? Rapidly rising health care costs has everyone nervous. What about limiting the tax breaks on the large premiums many businesses pay their senior management?
And then there is the nation`s darkening fiscal outlook. Should we be making the tax cuts permanent when given the size of the current deficit, it is clear we can`t pay for the ones we already got? You may not like the proposals I`m making. Fair enough. The point is that someone, presumably the president, has to make some big proposals now to begin working on these big problems before they become insurmountable. This is Mark Zandi.
