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Thursday, March 11, 2010

"We Need to Recognize the Difference"

We are all very lucky that David Broder is not in charge of fiscal policy. He thinks it's a good idea to balance the budget in a recession:

What the states could teach Washington about budgets, by David S. Broder, Commentary, Washington Post: ...The record of the Washington politicians is summarized in the report that came out of the Congressional Budget Office last week. That nonpartisan scorekeeper announced that it projects the cumulative national debt to increase in the next decade by $9.8 trillion. ...
The state side of the story is told most clearly in another report this week, this one from the private Center on Budget and Policy Priorities. ... The Great Recession knocked state tax revenue down by $87 billion in the fiscal year that ended last September -- an 11 percent decline that was the steepest on record.
In response, the first thing the states did was cut spending... -- even as Medicaid rolls swelled and other recession-related expenses climbed.
But the governors and legislators did not stop there. Two-thirds of the states, 33 of 50, also raised taxes last year, adding more than $30 billion in revenue.  ...
While the federal government was handing out tax rebates and is preparing to extend many of the Bush-era tax cuts, 13 states were raising personal income taxes; 17 were passing sales tax and various business tax increases; and 22 were increasing excise taxes on tobacco, alcohol or gasoline. ...
Once again this year, Congress has passed a "pay-as-you-go" bill, requiring lawmakers to make compensatory cuts whenever they increase appropriations... Then Congress turned right around and began waiving the requirement when circumstances pinched.
Discipline is visible in the states. It is still a stranger to Washington.

From the same editorial page, some sanity:

Smart debt, dumb debt -- there is a difference, by E.J. Dionne Jr., Commentary, Washington Post: Because we never face up to how much we need government to do, there is a pathetic quality to our discussion of big deficits.
It's a debate also characterized by a politically convenient amnesia. Just a decade ago, we were running surpluses so big that Alan Greenspan, then chairman of the Federal Reserve, worried about what would happen once our national debt was liquidated. We had this problem well in hand until we started waging wars and cutting taxes at the same time.
What would a rational approach to the budget look like? It would begin by accepting that running deficits at a time of high unemployment is a good thing. We would celebrate the fact that the world's governments were far wiser in this downturn than their counterparts were during the Great Depression.
It is a hugely underrated achievement of international cooperation that the world's 20 leading economic powers pumped trillions of dollars into the global economy to prevent collapse. Catastrophe was averted, and growth, although sluggish, has resumed.
True, unemployment in our country is still too high. But the lesson here is not that President Obama's economic stimulus failed but that it was too small to do all that was needed. Those who would repeal stimulus spending -- the bright idea of the House Republican Study Committee -- would take us backward.
Yet no one should doubt that we must put our long-term fiscal house in order. ...
There's smart debt and there's stupid debt. We need to recognize the difference.

Same for columnists.

Update: Paul Krugman has additional comments.

    Posted by on Thursday, March 11, 2010 at 12:05 AM in Budget Deficit, Economics | Permalink  Comments (27)

          


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