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National Review:


The latest numbers on the economy are alarming. The unemployment rate ticked up to 9.1 percent. Housing prices have dropped to a new low. Consumer confidence is down. The manufacturing index has taken a hit. GDP projections are being revised downward. Most people are dreading higher gas prices.

Some analysts make a case for optimism. The labor market, they say, is suffering from the crisis in Japan, and the numbers look worse because the labor force is growing. Hours worked in the private sector are up, and so are wages.

We’re not persuaded. Even at its best, this recovery has been weak. We have had a persistently high level of long-term unemployment: a social catastrophe with no end in sight. The higher taxes and increased regulation that Democrats in Washington are promising will, on the margin, further weaken the economy. But the spending cuts that Republicans are finally getting serious about, while welcome, will not by themselves return us to prosperity, either.
The country needs short-term measures to accelerate the recovery and long-term measures to increase our trend rate of economic growth. Yet even that will not be enough. During the last decade we have had periods of economic growth without wage growth. Middle-class prosperity — a big part of the American dream that Republicans rightly say they want to restore — requires more than growth, as important as it is.

We cannot claim to have a ready-made agenda to achieve these goals. Our hope is to stimulate conservative thought about how to reach them. But it seems clear that the tax code as currently structured is an obstacle to them.

The bipartisan tax deal enacted this winter temporarily cuts the payroll tax for employees. To assist job growth during the recovery, there should also be a temporary reduction in the employer side of the tax. Companies would then have a way of reducing labor costs per worker without cutting wages.snip
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