Today’s Room for Debate on rebuilding the middle class contains a fair bit of wisdom from across the political spectrum:

(1) Dean Baker takes on patents, which I’m happy to see has become a recurring theme for him, and efforts to shield affluent workers via licensing requirements and other regulations:

The correction to this policy is to also subject highly educated workers to international competition. This will lower wages of doctors, lawyers and other high-end earners. It will also lead to more affordable health care, college and other services provided by highly paid workers. Restoring the dollar to competitive levels can rebalance trade and create more than 4 million new jobs in manufacturing.

These are policies that right-leaning libertarians like Nick Schulz and Arnold Kling have backed enthusiastically, and Ross and I touched on these themes in our book. I’d love to see this approach embraced by a wider swathe of the center-left.

(2) Andrew Biggs makes a sensible point about the policy errors that have contributed to and exacerbated our economic woes:

High corporate taxes cost jobs and wages. Housing policies tell banks to issue low-down-payment mortgages that lead to defaults. Entitlement programs encourage middle-class Americans to save less for retirement. Federal tax law boosts health spending that saps wages anddrives inequality. Public employee pay is excessive and bad school teachers are impossible to fire. Welfare encourages rising illegitimacy, creating new generations of poverty. It’s not the rich who suffer from misguided social engineering.

(3) James Capretta emphasizes the importance of entitlement reform;

(4) Roberton Williams wants to turn various tax expenditures right-side up:

Turning tax deductions into tax credits would make the revenue code “right-side up” and better target limited resources toward the middle class. Today, itemized deductions account for about a sixth of the roughly $1.2 trillion of federal income tax revenue lost each year to tax expenditures (economists’ term for tax breaks). But the more money you make, the more valuable those deductions are. For instance, take two families who have $10,000 in deductions. A middle-class family in the 15 percent bracket saves $1,500 in taxes while someone in the 35 percent top bracket saves $3,500. Almost three-fifths of the tax savings go to households with income over $163,000, even though they are just one-fifth of all itemizers.
Eliminating all itemized deductions would cut the deficit by more than $225 billion each year but would impose large costs on the middle class, particularly homeowners who benefit from the mortgage interest deduction. But by turning those deductions into a 15 percent tax credit, Congress could still raise revenue by about $50 billion annually while protecting most middle-class taxpayers. Such a plan would not harm those in the 15 percent tax bracket — couples with taxable income under $69,000 — and would limit the tax increase on others in the bottom 90 percent of the income distribution. About three-fifths of the tax increase would be paid by the richest tenth of households.

This should be a part of any reform of the income tax. (My own preference is to replace the income tax with something like a Bradford X tax, which could do something similar.)

(5) Laura Tyson emphasizes public investment, though not in a terribly specific way.