New TNR Piece on Obama Team's Economic Debate
Thoughtful piece by Noam Schieber now running on TNR. It contains the following passage:
The biggest problem facing the Clintonites back in 1993 was arguably political: The bond market assumed the first Democratic president in twelve years would unleash a wave of pent-up spending. Long-term interest rates stayed stubbornly high as a result. Hence the theory, embraced by Clinton adviser Robert Rubin (and another Clinton economic aide named Larry Summers), that a credible plan for deficit reduction could chip away at long-term rates and boost the economy. The Clintonites were gambling, in effect, that deficit reduction could itself be a form of stimulus because of the unique historical moment--that they might not have to choose between the two. Sure enough, interest rates abruptly fell, and the '90s boom commenced.
Alas, there’s no such win-win solution this time around--among other things, there’s little room for historically low rates to fall much further--meaning the only way to further stimulate the economy is to spend. “Now is not the time politically or economically to emphasize fiscal austerity,” says Simon Rosenberg, president of NDN, a Washington think tank. “That day will come.”
The President is significantly wading into now the most important issue in Washington - how to get employment and wages/incomes moving in the right direction again. His speech and subsequent events are a welcome sign that the Administration will be making the core economic issues a much bigger priority this year.
For the Democrats the goal has to be now to unify behind a single strategy early next year, and prevent the year long drawn out negotiations over health care reform be replicated around the economy and budget next year. The Democrats should pass their new economic strategy in the winter, early spring and spend the rest of the year touting the investments being made on the ground.
I also believe, strongly, that the President needs to repackage the global economic gatherings into a much more serious set of events, one which show that he is working with foreign leaders on a global strategy to bring about a better economic day. For as this President knows, our economy is much interdependent now than we were in the past, and our new economic strategy will have to be a global not just national one.
So kudos the President for engaging more forcefully on these matters, and congratulations to the House for the encouragement they gave the Administration to do so.
- Simon Rosenberg's blog
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