How a GOP Congress could accommodate Obama’s agenda
For the new Republican majority in Congress, working with President Obama could prove downright daunting. After the drubbing Democrats took in the midterm elections, the president oddly pronounced if the GOP has some ideas to fund more infrastructure investment, advance early childhood education or improve ObamaCare, he is open to listening.
That might not be what congressional Republicans have in mind, but Sen. McConnell or Speaker Boehner could work on those issues — but with measures that get to the root of some of the country’s growth problems.
America spends plenty on infrastructure but it spends it badly. State and local governments, bending to powerful construction and homebuilder lobbies, place too much emphasis on expanding highways to distant suburbs. Millennials show a much greater appetite than their parents for living in or near cities and short commutes. New home construction has shifted toward urban redevelopment, but young folks face daunting transportation problems on overtaxed roads and transit systems.
The “prevailing wage” provision of the Davis-Bacon Act generally requires excessively high union wages on federally assisted projects. That grossly inflates construction costs and reduces the number of projects undertaken.
The gasoline tax was last raised in 1997 and the federal highway trust fund is broke. GOP leadership should craft a bill that increases the tax in line with inflation but refocuses spending on relieving congestion and bottlenecks on urban roads and rail, and repeals Davis-Bacon .
Obama always likes more taxes and he would find the urban emphasis, serving the needs of his young constituents, intriguing — but develop apoplexy about repealing Davis-Bacon. McConnell and Boehner could refer him to Gov. Scott Walker, who cleaned out union obstructions to growth and has Wisconsin’s economy firing on all cylinders. And the governor won re-election the same day the president took his national shellacking.
Junking the federal income tax for a simpler value-added tax would better encourage investment and growth, but that would impose greater burdens on parents of young children, who save less and spend more on items that would be subject to the new levy. To compensate, Congress should also create a child-care allowance and permit parents to spend that money on preschool or to defer the cost of “home schooling” for stay-at-home parents.
We could count on the president balking at funding for home schooling, but it’s time for the GOP to stand up for America’s moms — including those who stay at home.
The Affordable Care Act states that health insurance subsidies be paid through an exchange “established by the state.” The IRS decided ACA subsidies may be paid through the federal marketplace. The Supreme Court is reviewing legal challenges to this interpretation of the law. Disallowing the subsidies would all but kill the ACA. Supporting state governors who have determined the ACA is an unworkable morass, Congress should quickly put an appropriation bill on the president’s desk that eliminates funding for subsidies in states without exchanges.
It all sounds radical, but when the president was winning majorities in Congress, he was fond of saying “elections have consequences.”
It’s time for the president to live by his admonition and bear the consequences of a conservative majority in the Congress.
Peter Morici is an economist and professor at the University of Maryland Robert H. Smith School of Business.