A debt deal for America

The president and Congress should agree to enact a one-time, limited-duration tax holiday to permit American companies to repatriate foreign-held capital at a tax rate of 12 percent, and use the revenue to finance a large infrastructure rebuild of American roads, bridges, ports and schools.

This package would include a clean continuing resolution to reopen and fund the government and a clean extension of the debt ceiling, which would both expire Dec. 31, 2014. Larger talks could begin immediately without the blackmail and extortion of repeated threats to shut down the U.S. government or trigger a U.S. default and global financial crash — tactics that are repugnant to the American way and intensely disapproved of by a large majority of the nation.

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Two years ago I proposed on this page a “repatriation for jobs” deal. In recent days, a similar concept has been floated by Sen. Lindsey Graham (R-S.C.). This package would be more than a “face-saving” deal for either party. It would give President Obama, Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) real value in a fair bargain that could lift the economy toward the “Morning in America” that men and women of good faith in both parties covet.

This package would inject capital into the economy through the repatriation, create jobs in the economy through the rebuild and immediately lift the confidence of business, consumers, entrepreneurs and investors.

The humiliation that official Washington should feel when families of American troops killed in action are degraded by their government is only one example of the widespread pain, heartache, agony and uncertainty felt by millions of Americans during the fiasco we endure — yet again — today.

Some in Congress are delusional deniers who refuse to accept the financial and economic cataclysm of a U.S. default that would cause a financial crash. Others propose a short-term delay to merely buy a little time to repeat the current farce in a few weeks or months.

The nation would be disastrously served by simply transporting Washington’s farrago of fiascos to a rerun on Christmas Eve, or during an election year. On television, bad shows are canceled. In Washington they are endlessly rerun.

America is on the brink of a powerful recovery that for too long has been impeded, obstructed and prevented by incompetence in Washington that destroys confidence and deters job creation.

Sen. Mark Warner (D-Va.) is right: the sequester is “stupidity on steroids.” Raising payroll taxes on workers when the real jobless rate remains near 14 percent was an act of economic negligence. The lack of action by politicians in Washington to lower the jobless rate is a national scandal.

I agree with critics of the repatriation tax holiday, but compared to the political gridlock, financial chaos and widespread hardship caused by the status quo, a deal combining a repatriation tax cut with a job-creating infrastructure rebuild would give a significant boost to the economy.

First, even if much of the repatriated money is not used by business as promised, a huge return of capital to America would do more to create jobs and increase growth than leaving this money sitting permanently idle.

Second — and this is critical — the infrastructure rebuild would create large numbers of good, well-paying jobs that would generate an immediate impact lift to the economy.

Third, by ending repeated cycles of Russian roulette threatening shutdowns and default would lift perpetual uncertainty and generate a new surge of confidence from big business, small business, consumers, workers and entrepreneurial “job creators” who would be incentivized to hire and invest.

The result: a “virtuous circle” lifting the economy with a multiplier effect beyond the one-time injection of capital from repatriation and the one-time surge of jobs from the rebuild.

Labor wins. Business wins. Consumers win. Investors win. Democrats win. Republicans win. America wins. 

Sure beats the alternative, right?

Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then chief deputy majority whip of the House. He holds an LL.M. degree in international financial law from the London School of Economics. He can be read on The Hill’s Pundits Blog and reached at brentbbi@webtv.net.