How the GOP Congress Could Still Accommodate Obama’s Agenda

NEW YORK (TheStreet) -- Getting elected is tough, but for the new Republican majority in Congress, working with President Obama could prove downright daunting.

After the drubbing Democrats took in the midterm elections, the president pronounced that he is open to listening if the GOP has some ideas to fund more infrastructure investment, advance early childhood education or improve Obamacare.
That may not quite be what congressional Republicans have in mind, but if I were Sen. McConnell or Speaker Boehner, I could work on those issues -- but with measures that get to the root of some of the country's growth problems.

America spends plenty on infrastructure but it spends it badly -- and that impedes new investments in housing and jobs.

State and local governments, bending to powerful construction and homebuilder lobbies, place too much emphasis on expanding highways to ever more distant suburbs. Specifically, Millennials show a much greater appetite than their parents for living in or near cities and having short commutes. New home construction has shifted toward urban redevelopment, but young folks face daunting transportation problems on overtaxed roads and transit systems.

The "prevailing wage" provision of the Davis-Bacon Act generally requires excessively high union wages on federally assisted projects. That grossly inflates construction costs and reduces the number of projects undertaken. And organized labor represents only 6.7% of the private sector labor force these days.

The gasoline tax was last raised since 1997, and the federal highway trust fund is broke. The GOP leadership should craft a bill that increases the tax in line with inflation but refocuses spending more on relieving congestion and bottlenecks on urban roads and rail, and repeals Davis-Bacon.

Obama always seems to like more taxes, and he would find the urban emphasis, serving the needs of his young constituents, intriguing -- but would likely develop apoplexy about repealing Davis- Bacon.

McConnell and Boehner could refer him to Gov. Scott Walker, who has cleaned out union obstructions to growth and has Wisconsin's economy firing on all cylinders. The governor won his reelection the same day the president took his national shellacking.

Hardly anyone likes the IRS. Junking the federal income tax for a simpler to implement value-added tax would better encourage investment and growth, but that would impose greater burdens on parents of young children who by necessity save less and spend more on items that would be subject to the new levy. To compensate, Congress should also create a childcare allowance, and permit parents to spend that money on preschool or to defray the cost of homeschooling for stay-at-home parents.

We could count on the president balking at funding for homeschooling, in deference to Democratic-leaning teachers' unions. But it's time for the GOP to stand up for America's moms -- including those who stay at home.

The Affordable Care Act states that health insurance subsidies be paid through exchanges "established by the states," but 36 states have balked at creating the marketplaces. The IRS declared taht ACA subsidies may be paid through the federal marketplace, despite the fact that law was written to encourage states to set up exchanges.

The Supreme Court is reviewing legal challenges to the IRS's interpretation of the law. Disallowing the subsidies, absent state exchanges, would all but kill the ACA. Congress should help stiffen the court's allegiance to the clear reading of statutes by restating its will.

Supporting state governors who see the ACA as an unworkable morass, Congress should quickly put an appropriations bill on the president's desk that eliminates funding for subsidies in states without exchanges.

It all sounds radical, but when the president was winning majorities in Congress, he was fond of saying that "elections have consequences."

It's time for the president to live by his own admonitions and bear the consequences of a conservative majority in Congress.

Peter Morici is an economist and business professor at the University of Maryland, national columnist.

At the time of publication, the author held no positions in any of the stocks mentioned.

Follow @pmorici1

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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