ICYMI via Jennifer Rubin in The Washington Post: “Centrist Democrats are pushing smart — if politically risky — anti-inflation ideas”
“If only other politicians had the same nerve that the New Democrat Coalition does, we might make real progress on inflation...”
Last week, the New Democrat Coalition released a comprehensive Action Plan to Fight Inflation outlining the next steps Congress and the Biden Administration can take to tackle inflation and lower costs for Americans.
Jennifer Rubin, Opinion Columnist at The Washington Post, wrote about the action plan in The Washington Post, calling the Coalition’s proposed solutions “surprisingly bold” and “simply smart policy, especially when the goal is to tamp down on inflation.” She also stated that “It’s no surprise that economist and Post contributing columnist Lawrence Summers, who correctly predicted sustained high inflation, has endorsed the coalition’s package.”
By Jennifer Rubin
June 13, 2022
The most significant tool for fighting inflation remains the Federal Reserve’s control of interest rates. That does not mean the political branches are powerless, as a group of House Democrats demonstrated last week.
In a surprisingly bold move, the New Democrat Coalition — a group of 98 centrist, problem-solving House members — put out an expansive proposal for fighting inflation. As one might expect, the coalition praises President Biden for his work on the issue to date (e.g., untangling supply chains, using the Strategic Petroleum Reserve to restrain gas prices, investing in energy and infrastructure). It recommends he do more of the same and renew his focus on reducing food costs and limiting prescription drug prices.
It also throws in two major suggestions that would be politically difficult to accomplish but highly effective in raising output to meet demand. The first is substantial reforms to improve and expand legal immigration. These include passage of the America Competes Act “to establish a new start-up and entrepreneur visa program, bolster apprenticeships, exempt immigrants with PhDs in a STEM field from green card limits, invest $250M in the future STEM workforce, and promote workforce development through data collection and other investments.” The coalition also recommends visas for agricultural workers, which are in short supply, and increasing “high-skilled worker and student/academic visas (H1As and J-1s) and family visas, and reform outdated country caps.” In an ideal world, they would also support comprehensive immigration reform.
There is little substantive argument against these measures. U.S. unemployment is historically low (indeed, we face a worker shortage). These visas would fill gaps in the workforce and provide skills to enhance our technological advantage. We know that smart, legal immigration laws can boost productivity, provide necessary receipts for entitlement funding and mitigate the overly tight labor market. The U.S. Chamber of Commerce agrees.
Is it politically dangerous to support expanded immigration when MAGA zealots still push for a wall on the southern border, hype migrant “caravans" and rant about the “great replacement” theory? Well, voters taken in by xenophobic appeals aren’t likely to vote Democratic anyway. Persuadable voters see the “help wanted” signs, know employers cannot find workers, and understand that PhDs and STEM workers make all Americans richer.
It’s simply smart policy, especially when the goal is to tamp down on inflation. It’s no surprise that economist and Post contributing columnist Lawrence Summers, who correctly predicted sustained high inflation, has endorsed the coalition’s package.
The coalition’s second, even gutsier recommendation includes reducing trade barriers that increase costs to consumers and manufacturers. “Actions should include immediately establishing a comprehensive, fair, and transparent exclusion process for existing Section 301 tariffs to cut costs for Americans and ease global supply chain constraints,” it argues. It also urges the administration to reach out to trading partners to “increase economic coordination and pursue trade agreements to further secure global supply chains, open new markets for U.S. goods, and strengthen coordination to counter the abuses and influences of non-market economies and adversarial powers.” Given that both parties have fallen for protectionist thinking, such sane trade policy ideas are impressive.
One of the worst bipartisan decisions in recent years was to reject the Trans-Pacific Partnership, which would have opened markets in Asia while excluding China and allowing the United States to write the rules of the road on issues such as intellectual property. We should give such a trade deal another try. (The good news is that the administration is supposedly reviewing China tariffs, which have walloped farmers, businesses and consumers.)
Again, Republicans, who used to understand the benefits of free trade, are likely to throw a fit and accuse Democrats of being “soft on China” or “sending jobs overseas.” But plenty of Americans — especially farmers — understand how counterproductive tariff wars have been. Let Republicans defend them to farmers, who have recently suffered rising bankruptcies; to consumers, who are paying effectively a tax on imports; and to businesses, which already struggling with supply chains.
Both immigration and trade are net wealth creators for the United States. At any given time, expansion of both would be smart policy. At a time when inflation is high, they are essential to increasing production to meet demand and reducing the risks of inflation. If only other politicians had the same nerve that the New Democrat Coalition does, we might make real progress on inflation in ways that don’t send the U.S. economy spiraling into recession.
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