On the jobs front, Republicans would be wise to get behind the Schumer-Hatch plan for offering payroll tax relief to private sector firms that hire workers who’ve been unemployed for 60 days or longer. The fact that Orrin Hatch, the conservative senator from Utah, is a co-sponsor should serve as a seal of approval for reluctant Republicans. Conservatives have been clamoring for payroll tax relief since the start of the recession. Stanford economist Michael Boskin, a leading right-of-center wonk, has argued that cutting the payroll tax by six percentage points in lieu of passing the president’s Recovery Act would have increased employment by three to four million jobs while costing the Treasury only half as much. Last fall, he proposed shifting resources from the stimulus to partial payroll tax relief. Though that option might be off the table, Schumer-Hatch is a decent intermediate step that Republicans can and should get behind.
The other major issue where Republicans might be able to tug the Democratic majority in a better direction is financial sector reform. A number of economists from across the political spectrum have grown more sympathetic to curbing the use of deposit insurance, an approach that would help reduce systemic risk without micromanaging the size and activities of financial institutions. Many details need to be worked out, but it sounds like a smart center-right alternative to endless bailouts.
The beauty of this strategy is that it allows Republican candidates to do well by doing good.
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