Former CEA Chairs Call for Deficit Reduction

Ten former chairs of the Council of Economic Advisors have written a letter calling for deficit reduction:

As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.

There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention….

It is signed by Martin N. Baily, Martin S. Feldstein, R. Glenn Hubbard, Edward P. Lazear, N. Gregory Mankiw, Christina D. Romer, Harvey S. Rosen, Charles L. Schultze, Laura D. Tyson, and Murray L. Weidenbaum.

Comments

Why bother? There is a strong demand for US bonds...look at how low interest rates are!

We should borrow more to help get AD goosed up.

Hmm, I smell weasels. How can the *long-run* deficit call for *prompt* attention? Given the current state of the economy, the best thing to do in the short term to help the deficit in the long term is to *boost output*. Deficit targeting qua deficit targeting is a distraction at best, and a recipe for a 1937-style contraction at worst, until the economy is at or at least near full employment (particularly since any move in that direction would raise tax receipts and lower some expenditures even without a policy change as such).

Yeah this party is just getting started!

Dow 20,000 HERE WE COME!

4epmUk Hey, that's the greatest! So with ll this brain power AWHFY?

This is a dog bites man story. Everybody except the President and Nancy Pelosi is in favor of deficit reduction. The real question is how: federal spending reduction or taxpayer income reduction?

Or maybe I should say: freeloader income reduction or producer income reduction?

"Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit"

Yay, everyone agrees on the problem! What would be remarkable is if they agreed on the solution.

Now that I read it i see they did propose a solution. That is remarkable. But they aren't politicians.

Everyone agrees on the solution too... Tax more, spend less. It is simply that the solution is not politically viable.

Thank goodness this is only a Long-Term Problem.

That means we don't have to worry about it!

Bring me more beer, the circus is about to start!

Anyways in the long run we're all dead. I say jump ship when the time comes. But where?! Singapore?!

Gee, if I were CEA chair, I might have said something while I was CEA chair. You know, while the administration I was working for was proposing two wars in the middle east, a doubling of the defense budget, an unfunded medicare expansion, and large tax cuts.

That's why you have no future in politics.

Srkxxn Kudos! What a neat way of thinking about it.

You buried the lead.
The first line of the letter says that the battles over this year's budget divert effort from the real issue, which is long-run deficit reduction:
"Repeated battles over the 2011 budget are taking attention from a more dire problem—the long-run budget deficit."
This distinction between short run and long run policy is often glossed over, but is very important. With unemployment still very high, the danger in the short run is that fiscal policy will be too tight, while the danger in the long run, is the opposite: unsustainable deficits. There are lots of things we can do to reign in long-run deficits separately from short run fiscal policy. Unfortunately, that distinction remains lost on too many people.

The rich white guys (Bowles-Simpson) who made a mess of the federal government and turned Wall Street into a racketeering enterprise suddenly discover Social Security is in trouble?

I trust them to fix the problem, I really really trust them.

First they came for the rich white guys,
and I didn't speak out because I hate rich white guys...

It does not matter what former chairs of the Council of Economic Advisors do, What most of them did (or did not do) when they were not former but current is the reason we have a problem.

its ok!

At what point is the natural credit sovereign credit limit of the United States going to be exhausted? Perhaps thats another discussion. One must assume there is a finite amount of money that can be borrowed, where is the line?

How many of those signatories presided when their boss introduced a deficit reducing budget? Its pretty easy to cluck-cluck from behind ivory turrets, but how forcefully did they offer those opinions when the mob around their boss shouted them down?

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