- - Monday, March 11, 2019


President Trump’s economy has been good so far, but to sustain the momentum and raise his re-election prospects he should champion policies that many Republican or Democratic members of Congress don’t like, are inclined to obstruct but could be persuaded to accept.

With the government shutdown and trade tensions with China receding, economic growth should be decent going forward — about 2.8 percent but not enough to raise working and middle class incomes very much.

China’s flagging economy won’t be resurrected by any trade deal hatched by Presidents Trump and Xi Jinping. The Communist leader has imposed more state controls that breed corruption and wasted investment, and left provincial governments and private businesses laboring under a mountain of debt.

Europe remains obsessed with preserving dysfunctional macroeconomic policies required to sustain a euro that promotes German exports but is overvalued for less dynamic southern European economies.

Italy is slipping into recession and growth elsewhere remains perilously close to zero. Brussels’ obsession with punishing Britain for Brexit and Theresa May’s unimaginative leadership leaves the island nation struggling.

No surprise, U.S. imports are growing more rapidly than exports, and the trade deficit jumped 10 percent last year. That taxes U.S. growth and an armistice in Mr. Trump’s trade wars with the Middle Kingdom and Europe will not appreciably alter the reality that revving up the U.S. economy will hinge on boosting domestic demand and resolving shortages of skilled workers.

Democratic senators running for president see all this and are promoting socialist solutions. Each has embraced the Green New Deal, which requires de facto government takeovers of the automotive, banking, health care, education and energy sectors, and a Maoist iron rice bowl — a guaranteed basic income for all.

That’s tone deaf — Americans are not that radical.

Democrats won the House with moderate candidates promising to work for practical solutions to improve health care, roads and mass transit, and reform immigration. The latter touches a cultural nerve in ways the aging Washington political class and Northeast liberals simply don’t grasp.

The White House should challenge Congress with pre-drafted bills, for example, one that explicitly links U.S. drug prices to those charged in Germany. The largest European economy has a health care system similar to ours but keeps down costs by regulating drug and health service prices.

U.S. prescription drugs are rising at nearly double the rate of inflation — even after all the discounts to pharmacy-benefit-manager manufacturers like to blame.

Similarly, the administration should table a bill ending Big Pharma’s penchant for suing generic manufactures and forcing agreements that delay generics and limit competition. And perhaps consider criminal prosecution of a few CEOs for outright price fixing.

Mr. Trump’s $1.5 trillion infrastructure plan got little traction because it is full of questionable right wing ideas — for example, private toll roads too often fail. And it didn’t specify how the $200 billion federal contribution would be funded.

After 25 years at 18.4 cents per gallon, it’s time to raise the gas tax 25 cents and offer the proceeds to the states on a per capita basis to do as they please if they match with new money and spend what they receive within 12 months. Each dollar of tax collected, if spent immediately, would boost GDP by the same amount and create good-paying middle class jobs.

It’s time for the president to de-emphasize the border wall. He doesn’t have the votes in Congress and the courts will decide if his national emergency is legitimate.

Instead, offer a grand deal on legal immigration — permanent status for DACAs if the Democrats will agree to reform family reunification rules and replace the visa lottery with a system that emphasizes badly needed STEMS skills.

Mr. Trump needs to move to the center on those issues with simple understandable proposals in ready drafted bills. Then challenge Democratic leaders Nancy Pelosi and Mitch McConnell to put those to an up-or-down vote and hammer them relentlessly when they delay.

These are hard swallows for many in Congress but all would help lift wages right away and make Mr. Trump the pragmatist in the face of a do-nothing Congress that only bickers, investigates and complains.

All should be pitched as initiatives to make conditions for working Americans better — the folks who will ultimately determine the occupant of the Oval Office in 2021.

• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.

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