On Sunday, Josh Barro published a superb essay for the Daily News on how “the housing crash and ensuing stagnation turned a lot of usual economic rules upside down,” i.e., by justifying deficit spending and monetary expansion, and how policymakers should shift gears as the economy recovers and the rules are once again turned right-side up. Those of you who follow Josh’s work closely won’t be surprised to learn that he supports the expiration of all of the 2001 and 2003 tax cuts; as he’s written elsewhere, however, he also supports a tax overhaul that would curb most tax expenditures while improving the treatment of capital income.

Josh adds the following on Medicare:

Washington’s dirty secret is that everybody there wants to cut Medicare. No wonder: It’s where the money is. But because Medicare cuts are politically toxic, the parties spend more time attacking each other’s Medicare plans than discussing their own.
Republicans want to introduce more private competition and hold traditional Medicare to no more cost increases than in the private sector. Democrats want top-down controls on traditional Medicare spending. Some members in each party want to narrow the scope of the Medicare benefit, for example by raising the retirement age and further means testing the program.
The one nice thing about the Medicare fight is that all of these are good ideas, and there is no reason they can’t be combined as a cost-saving compromise. An aggressive program to save money in Medicare — starting today, not in 10 years — would have the added benefit of lessening the need to collect more tax revenue and deeply cut discretionary spending programs.

Though I imagine Josh and I would disagree somewhat on the revenue side — I’d say I’m somewhere between Josh and the Romney camp — and I’m somewhat less sanguine about the robustness of the recovery, he offers an excellent starting point for thinking about what should come next.