Paulson on Prosperity

Kevin Drum reacts to the latest speech from Treasury Secretary Henry Paulson:

We’ve had economic growth and strong productivity gains for the last 30 years or so, but we still don’t have the promised increases in take-home pay. So here’s an idea: In the same way that waiting another six months for progress in Iraq is now called a “Friedman,” perhaps another decade waiting for increases in take-home pay should be called a “Paulson.”

Kevin was reacting to this:

Paulson said the slow growth in take-home pay was simply an economic reality “and it is neither fair nor useful to blame any political party.” “Rather than playing the blame game, we must focus on helping workers move up the economic ladder,” Paulson said. The best approach is to give people access to first-rate education so they can acquire the skills needed to advance.

Except Kevin did not include the last sentence. I think most liberals would agree with the need for better funding for first-rate education for all American children, but wouldn’t that require either a tax increase or more Federal borrowing? Speaking of the massive Federal deficit, let’s turn to the beginning of the linked story:

“I have always tried to live by the philosophy that when there is a big problem that needs fixing, you should run towards it, rather than away from it,” Paulson told the Columbia University business school, his first speech since taking office on July 10.

Yes, the General Fund deficit is a massive problem, which will require reversing the Bush tax cuts if we are also to fund education. But what does Paulson want to discuss – Social Security. A while back, I outsourced the responsibility for addressing the Social Security debate to Mark Thoma who notes that John Boehner wants to get serious about something – but what? Perhaps the GOP is getting serious about their goal of imposing backdoor employment tax increases.

Update: The other fiscally responsible Republican Angrybear beat me to the punch:

Of course the major fiscal problems facing the U.S. are the structural general fund budget deficit and Medicare, not Social Security. So Paulson might be running towards the wrong problem.

Well said – CalculatedRisk!