Morici: U.S. Democrats must accomplish something

Peter Morici

U.S. Democrats won a narrow House majority appealing to minorities, college-educated women and suburbanites who want solutions to problems in their daily lives, not a revolution.

The Great Blue Wave of radical progressivism, which promised gains of 40-plus seats, never materialized. Democrats who snatched Republican seats were largely moderates who ran on clean governments and incremental improvements to healthcare and other nettlesome issues – not promising to relentlessly oppose or impeach President Trump.

Healthcare costs are spinning out of sight, because the Affordable Care Act enables drug companies, hospitals, large insurers and large group practices of medical specialists to monopolize and impose outlandish prices in national and regional markets.

Democrats must give up the fantasy of socialized medicine based on confiscatory taxes on upper-income Americans. European societies accomplish “free healthcare” by heavily taxing the folks that use it – working and middle-class folks – and regulating prices.

Republicans must wake up to the hard reality that competition in these markets is rigged. Congressional oversight should cast a discerning focus on monopoly exploitation to coax a reluctant Justice Department to start prosecuting abusers. Both parties need to fashion legislation that requires drug companies, hospitals, insurers and medical professionals to benchmark prices against those fetched in prosperous northern European countries with insurance-based payments systems.

An increasingly urban society requires better commuter-mass transit and intercity connections. Financing infrastructure runs smack into the exorbitant costs imposed by cumbersome regulatory and permitting procedures by federal, state and local agencies. Engaging Mr. Trump on regulatory reform and encouraging a special dialog with governors about prohibitive construction costs would help.

Still, trillions more dollars are needed but the federal deficit is already too big and someone has to pay – namely transportation users through higher gas taxes and transit fees. Many members of Congress reflexively balk at such solutions, but Democratic leaders Nancy Pelosi and Chuck Schumer may be able to triangulate the issue with Mr. Trump.

On immigration, the movement toward a commonsense compromise to realign U.S. policy to place great emphasis on admitting immigrants with skills in short supply, a greater capacity to quickly assimilate and attributes less threatening to struggling rural communities has some bipartisan support, but little enthusiasm from the Democratic leadership and their more strident acolytes.

The U.S. Supreme Court may soon permit Mr. Trump to end President Obama’s illegal DACA program and that would force reluctant Democrats to the table on broader reforms. If they balk, those young people face deportation and neither party should count on twisting that spectacle to its advantage–incumbents of all stripes may end up with bulls-eyes on their backs.

On trade and the broader economy, Democratic congressional leaders like to exploit Mr. Trump’s missteps – for example, putting tariffs on bicycle parts but not bicycles that force U.S. manufacturers to offshore even more and his indiscriminant targeting of our allies with tariffs.

However, many Democrats in Congress recognize China’s criminal behavior is a menace to American prosperity and security. A steady, private dialog that links their support for congressional approval of the new North American free trade deal to Mr. Trump trading in his spray gun for a more focused trade rifle would help broaden their party’s appeal to working-class voters.

President Trump’s economy is doing quite well – growing at a 50 percent better pace than either Messrs. Bush or Obama could manage – and it is starting to finally lift the wages and overall circumstances of lower income Americans.

Able-bodied adults on the sidelines are rejoining the workforce, but to maintain an elevated pace of growth without running into crippling shortages of engineers, technicians and other skilled workers requires Democrats to support immigration reform and make the recent tax cuts permanent.

That will require the Democrats to shelve their tropism for higher marginal taxes on upper-income Americans and for the president to give up on yet more budget busting tax cuts. Alternatively, both sides could go after the “carried interest” tax break for Wall Street’s financial engineers – those levy lower capital gains tax rates on income that should rightly be classified as wage income for their professional efforts.

All this may disappoint the combative political instincts of Mrs. Pelosi and President Trump. But winning long-term majorities – holding power by governing effectively – requires moving to where the American people really stand – in the pragmatic center.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. © 2018, The Washington Times, LLC.

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