5 Ways Congress Can Bolster Growth by David Leonhardt

Instead of just bemoaning the Republicans' Wall of "No" midterm election strategy, Leonhardt has some positive, proactive suggestions. (The following block quotes are snipped out of context.)

1. Race to Solvency

"Why should state workers or city workers or county workers have benefits that are far better than private sector workers?" Edward Rendell, the Democratic governor of Pennsylvania, told me earlier this year. "We should have parity, not better"

Meh, as they say. Well when they're better, they help raise the standards for private sector workers, at least in a tighter labor market. I'd be in favor of parity if it involved raising standards for private sector workers.

2. Lift Trade

American exports rose 11.5 percent from early 2009 to early this year, accounting for more than half of total economic growth. But this momentum will be hard to maintain if China’s currency remains as undervalued as it is.

This can help somewhat and has the advantage of being an issue which is difficult for the Republicans to demagogue.

3. Provide Clarity

Corporate executives complain that uncertainty about regulation has made them wary of expanding. Some of their complaints are classic political posturing -- an attempt to avoid oversight by claiming it will hurt the larger economy. In reality, consumer demand and Europe’s woes are much more important sources of uncertainty.

See #2 above.

4. Leverage Taxpayer Money

Last year’s big stimulus bill included $2.3 billion for promising clean energy projects. To qualify for the money, companies had put up 70 percent of a project’s cost, in exchange for a tax credit equal to 30 percent. The idea -- just as with cash for clunkers -- was to use a relatively small amount of government spending to spur much more private spending.
...
The federal government could leverage its spending in other ways, too. It could give households an incentive to improve the energy efficiency of their homes -- cash for caulkers -- and could look for similar investment incentives for companies outside the energy sector.

Couldn't hurt.

5. The Fed's Mission

Ben Bernanke, the Fed chairman, seems genuinely torn about how weak the economy is. He has said that inflation is not a problem and that unemployment will probably remain high for years. Even so, he has been unwilling to push down long-term interest rates, which would encourage more consumer and business spending.

Mark Thoma, a monetary economist who writes a well-read blog, points out that Mr. Bernanke is in a political bind. He has been criticized by regional Fed presidents who always seem to worry that inflation is about to accelerate and who want the Fed to raise rates. But Mr. Bernanke faces no such internal pressure about the other part of the Fed’s mission: maximizing employment.

That could begin to change next week. The Senate will hold confirmation hearings for three new Fed governors, all of whom have the potential to make it a more balanced institution. It couldn’t hurt if a few senators used those hearings to review some basic facts: inflation has been zero lately, inflation expectations are tame, 15 million Americans remain unemployed and job growth has slowed in recent months.

Now we're talking.