The President’s Do-Over
By ROSS DOUTHAT
NYT
A week after President Obama took the oath of office, Alice Rivlin, budget chief to President Bill Clinton, testified before a Congress that was about to consider sweeping stimulus legislation. In her remarks, Rivlin voiced her support for a swift and substantial federal intervention to prop up the sagging economy. But she offered lawmakers three warnings as well.
The first warning was about the design of the stimulus. The ideal anti-recession package, Rivlin told Congress, would include aid to state governments, extended unemployment benefits, money for genuinely “shovel ready” projects and a payroll tax holiday. But she urged Congress to resist the temptation to combine these kinds of short-term recession-fighting measures with a larger and more costly investment in energy, education and infrastructure. Trying to rush a long-term spending package through in an atmosphere of crisis, she cautioned, would only guarantee that its contents would be poorly designed, and much of its spending wasted.
The second warning was about setting expectations. Given the nature of the financial crisis and the nasty overhang of debt it left behind, any recovery would probably be slow even with a stimulus bill. Policy makers “should be skeptical of all forecasts,” she told Congress, “and especially conscious of the risk that things may continue to go worse than expected.”
The third warning was about how to handle the problem of deficits, which already shadowed the stimulus debate. “We do not have the luxury of waiting until the economy recovers before taking actions to bring down projected future deficits,” Rivlin said. Instead, she urged Congress to take action “this year” on entitlement spending, and to prioritize Medicare reforms over a more comprehensive health care overhaul.
(More here.)
NYT
A week after President Obama took the oath of office, Alice Rivlin, budget chief to President Bill Clinton, testified before a Congress that was about to consider sweeping stimulus legislation. In her remarks, Rivlin voiced her support for a swift and substantial federal intervention to prop up the sagging economy. But she offered lawmakers three warnings as well.
The first warning was about the design of the stimulus. The ideal anti-recession package, Rivlin told Congress, would include aid to state governments, extended unemployment benefits, money for genuinely “shovel ready” projects and a payroll tax holiday. But she urged Congress to resist the temptation to combine these kinds of short-term recession-fighting measures with a larger and more costly investment in energy, education and infrastructure. Trying to rush a long-term spending package through in an atmosphere of crisis, she cautioned, would only guarantee that its contents would be poorly designed, and much of its spending wasted.
The second warning was about setting expectations. Given the nature of the financial crisis and the nasty overhang of debt it left behind, any recovery would probably be slow even with a stimulus bill. Policy makers “should be skeptical of all forecasts,” she told Congress, “and especially conscious of the risk that things may continue to go worse than expected.”
The third warning was about how to handle the problem of deficits, which already shadowed the stimulus debate. “We do not have the luxury of waiting until the economy recovers before taking actions to bring down projected future deficits,” Rivlin said. Instead, she urged Congress to take action “this year” on entitlement spending, and to prioritize Medicare reforms over a more comprehensive health care overhaul.
(More here.)
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