Tags: Barro | Reagan | Problems | Obama

Robert Barro: Reagan Fixed Problems, Obama Places Blame

Wednesday, 10 Aug 2011 08:14 AM

Economist Robert Barro says the U.S. can get its AAA rating back by enacting a meaningful medium-and-long-term plan for addressing the nation's fiscal problems.

"Ronald Reagan and Barack Obama have at least one similarity," Barro writes in The Wall Street Journal. "They both were confronted by great economic challenges when they became president."

The difference, says Barro, is that Reagan inherited economic problems and fixed them, and Obama's strategy is to blame Bush and Standard & Poor's.

Barro offered a five-point program for retrieving a triple-A rating: Make structural reforms to the main entitlement programs, lower the structure of marginal tax rates in the individual income tax, pay for the rate cuts by gradually phasing out the main tax-expenditure items, permanently eliminate corporate and estate taxes and introduce a broad-based expenditure tax, such as a value-added tax (VAT), with a rate around 10 percent.

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"The VAT's appeal to liberals can be enhanced, with some loss of economic efficiency, by exempting items such as food and housing," says Barro.

"I recognize that a VAT is anathema to many conservatives because it gives the government an added claim on revenues. My defense is that a VAT makes sense as part of a larger package that includes the other four points."

The Hill reports that former Arkansas Gov. Mike Huckabee supports the Fair Tax, a proposal that would scrap federal income and payroll taxes for a national sales tax.

“The Fair Tax doesn’t punish people for their productivity, and it does not reward them for their irresponsibility,” says Huckabee. “And that’s the essence of it.”

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Economist Robert Barro says the U.S. can get its AAA rating back by enacting a meaningful medium-and-long-term plan for addressing the nation's fiscal problems. Ronald Reagan and Barack Obama have at least one similarity, Barro writes in The Wall Street Journal. They...
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Wednesday, 10 Aug 2011 08:14 AM
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