Cole and Ohanian

Some interesting reading for today is Cole and Ohanian's piece in the WSJ. At the minimum, this is a reminder that there is more to life than aggregate demand. Here's the conclusion:

Policy can also improve today. The bipartisan Joint Select Committee on Deficit Reduction will make a recommendation by Nov. 23 to deal with future deficits. It has an outstanding opportunity to initiate broad-based tax reform that adopts the recommendations of most bipartisan tax reform commissions of the last 20 years: a simpler tax code that improves the incentives to hire and invest, broadens the tax base, lowers the corporate income tax, and also eliminates loopholes to equalize tax treatment of capital income. Sensibly addressing our long-run challenges will do more for the economy than continuing the stop-gap measures that have dominated policy-making for the last three years.

The Joint Select Committee on Deficit Reduction has an opportunity to tackle tax reform in a serious way - to make the tax code much more efficient while also closing the gap between tax revenue and outlays. Likely the Committee will be dysfunctional, but hoping does not hurt.