The Brookings Institution’s Bill Gale and Ben Harris give the Obama Administration an overall grade of “B” for their policy performance thus far on “tax reform and fiscal policy.” But that’s a bit of an arbitrary “averaging” of what they think were good policy choices:
We give the President an A on focusing on the key economic priority [fighting off a more severe recession, and] a B+ for design of the stimulus package…
against an arguably larger part of the Administration’s overall fiscal policy agenda that Bill and Ben feel deserves a grade of “Incomplete”:
One casualty of the year-long focus on the economic recovery has been the ability to develop plans for systematic tax reform and fiscal sustainability. While it is impossible to cut the short-term deficit while stimulating the economy, progress on medium- and long-term fiscal policy has been mostly absent—and sometimes negative—in the first year. The administration has proposed to extend almost all of the Bush tax cuts and to massively reduce the AMT, in each case without offering any proposal to pay for the changes.
The 10-year fiscal outlook is unsustainable. Likewise, there has been no real progress on the taxation of capital income or the use of tax expenditures. The president’s policies have justifiably made taxes more progressive, but they have also made taxes more complex; the most egregious example being the temporary elimination of the estate tax. Systematic tax reform and fiscal sustainability should address all of these issues in the coming year.
I think the Brookings grading system is overly generous here. In most schools, an “incomplete” on a large chunk of the syllabus means an “incomplete” for the course overall. The Administration’s getting an extension on this big assignment though (what to do about the Bush tax cuts)–and is likely to get even another extension if my hunch that Congress will go for a temporary extension of the Bush tax cuts before the end of this year comes true. It’ll be interesting to see what grade Brookings gives the President a year from now.