David Frum writes that congressional Republicans need an agenda if they are to make the most of their (hopefully!) forthcoming gains and offers a Contract With America for 2010. Even if Republicans don't take up Frum's Contract, I think that such exercises can be useful. As Reihan Salam pointed out today, constructing policy agendas and building support both within and outside a partisan coalition for an agenda is an important, early and crucial step towards policy reform. I think Frum's effort is thoughtful, but I have some pretty big reservations.
On Taxes - He wants to repeal the tax increases in Obamacare. So far so good. He also wants to extend the Bush tax cuts for another five years, have an eighteen month payroll tax holiday and speeded up expensing. That isn't a bad plan and Mitch Daniels offered something similar, but I'm skeptical of what amount to rightish versions of stimulus. The challenge is coming up with a set of long-term sustainable policies that can win majority support and make the US economy more competitive. This means a tax program that offers significant and long-term direct benefits to most working families and encourages growth year in and year out (rather than a short-term demand spike.) I prefer something like the family-friendly and pro-growth plan offered by Robert Stein along with maybe some kind of cut in the corporate income tax. There are reasons to not like the plan since it raises income taxes on some high-income voters, but it keeps the top income tax rate at 35%.
On Debt - Frum wants to cut federal aid to states. I see his point. I personally prefer a Cash for Cuts approach in which federal dollars are made conditional on structural changes in state government that bring state and municipal budgets under control.
Health Care - You can read Frum's suggestions yourselves, but for me, Frum's proposal amounts to a Liberal Republican version of Obamacare. Frum is right that repeal sentiment, in itself, is likely to fade over time, but I'm not so sure that young voters will be as indestructibly tied to an Obamcare-type system as Frum thinks. Obamacare basically forces younger people to either pay too much for their health insurance or else pay a fine for the privilege of having no health care coverage whatsoever. For younger cohorts, Obamacare (for all the problems) might actually beat out a Republican message built around repeal and incomprehensible slogans about socialized medicine. But a Republican alternative that offers low-cost catastrophic coverage options for the middle-class young, state reinsurance pools for those with preexisting conditions, and a reformed and market-oriented Medicaid program for those with low-income might seem like a pretty big improvement over Obamacare.