Economic growth reduces deficits. A bright idea

I had to stop and make sure I had really picked up the New York Times at my neighborhood Starbucks. Squinting in the brilliant sunlight of a beautiful fall afternoon, I read this bright idea on page one of the Times:

The most important [reason the country ran up a surplus in the late 90s] was the fact that the economy grew more rapidly than expected. The faster growth pushed up incomes and caused more tax revenue to flow into the Treasury.

Two bi-partisan commissions have released their recommendations on deficit reduction this week. Both, Leonhardt says:

. . .do a pretty good job, but not quite good enough, of focusing on economic growth. The most pro-growth part of both proposals — the Domenici-Rivlin plan and the one from Erskine Bowles and Alan Simpson — is their emphasis on tax reform. Today’s tax code is a thicket of deductions, credits and loopholes that force people to change their behavior and waste time trying to avoid too large of a tax bill. A tax code with fewer deductions and lower rates — which, to be clear, is not the same thing as a tax cut — would instead let businesses and households focus on being as productive as possible. The potential to make good money would drive more decisions, and the ability to qualify for a tax break would drive fewer.

I’m not an economist, but the emphasis on invigorating the private sector and reforming the tax code makes all kinds of sense and is a welcome alternative to the efforts over the last two years to spur the economy through government spending.


About Jim Jewell

I am a writer and consultant on faith and public life, active for many years in management and communications in the evangelical community. I now work as the director of the nonprofit practice at The Valcort Group ( Everything on this blog, however, is my personal opinion and is not read or approved before it is posted. Opinions, conclusions and other information expressed here do not necessarily reflect the views of Valcort.
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