Published for The Wall Street Journal, September 8th, 2010:

How about a payroll tax holiday, funded by a federal spending, hiring and pay freeze?

Ronald Reagan enjoyed telling of the elderly Blitz victim rescued from her demolished London flat in World War II. A fireman found a bottle of brandy under the ruins of her staircase and offered her a nip for her pain. “Leave it right there,” the matron ordered. “That’s for emergencies.”

A look around the American economy suggests that it’s time to break out the brandy. By any measure, growth is anemic—alarmingly so for this time in what is supposed to be a recovery period. The administration’s wild foray into trickle-down government spending has clearly failed. Funneling borrowed billions to government workers hasn’t stimulated anything where it counts, in the private sector.

Moreover, the administration’s big-government policies—most notably health-care reform—are holding back job creation. Drowning in new or pending regulations and taxes, businesses, banks and investors are understandably sitting on dollars that could be putting Americans to work.

Especially ominous are the implications of slow growth for the nation’s burgeoning debt. The government’s projections, which already point to national bankruptcy, rely on growth assumptions we aren’t even close to achieving. They say the economy must grow at an average rate of 3.4% for 10 years—better than any previous decade in a half century. And that is just to achieve disaster, with debt rising to as much as 90% of GDP. To stave off catastrophe, nothing short of a truly vibrant, extended boom will do.

Full article here