Stop Arguing, Start Growing

Economist
Lawrence H. Summers

In this morning's Washington Post, economist Lawrence Summers has a great suggestion. A professor and past president at Harvard, Summers was Treasury secretary from 1999 to 2001 under President Bill Clinton, and economic adviser to President Obama from 2009 through 2010. In his op-ed piece "In shutdown debate, focus should be on growth instead of deficit," he asserts:

Data from [the Congressional Budget Office] imply that an increase of just 0.2 percent in annual growth would entirely eliminate the projected long-term budget gap. Increasing growth, in addition to solving debt problems, would also raise household incomes, increase U.S. economic strength relative to other nations, help state and local governments meet their obligations and prompt investments in research and development.

In other words, Congress and the president should stop arguing "about the precise timing of continuing resolutions and debt-limit extensions" and start working together to spur economic growth.

Summers says this can be done — indeed, must be done — in a bipartisan way:

Spurring growth is an area where neither side of the political spectrum has a monopoly on good ideas. We need more public infrastructure investment, but we also need to reduce regulatory barriers that hold back private infrastructure. We need more investment in education but also increases in accountability for those who provide it. We need more investment in the basic science behind renewable energy technologies, but in the medium term we need to take advantage of the remarkable natural gas resources that have recently become available to the United States. We need to ensure that government has the tools to work effectively in the information age but also to ensure that public policy promotes entrepreneurship.

Infrastructure investment
is sorely needed today

Breaking this down by political sides: Democrats want more public infrastructure investment; more investment in education; more investment in the science behind renewable energy technologies; and for the government to be given the tools to work effectively in the information age. Republicans want reduced governmental regulatory barriers; increases in accountability for schools and educators; acceptance of natural gas, as a bridge to "clean" energy as a way to fight global warming; and U.S. policies that favor, not hinder, private entrepreneurship and investment.

There is ample room here for Republicans and Democrats to "meet in the middle" and to take the conversation from wrangling over the budget to talking instead about America's economic growth. Says Summers:

If even half the energy that has been devoted over the past five years to “budget deals” were devoted instead to “growth strategies,” we could enjoy sounder government finances and a restoration of the power of the American example.

Post columnist
E.J. Dionne Jr.

As Post columnist E.J. Dionne Jr. says in "Obama can’t waste this moment" on the same October 14, 2013, op-ed page:

The United States should build [a strong economy], not just cut [the federal budget]. We should invest again in an infrastructure whose decayed condition ought to shame us. We should deal with high ongoing unemploy­ment, reverse the rise of inequality and give poor and working-class kids real opportunities for upward mobility.

My fellow liberal Dionne sadly doesn't mention the conservative priorities Summers lists as needing also to be included in any eventual deal.

A recent opinion column by moderate-to-conservative Post economics writer Robert J. Samuelson, "The shutdown heralds a new economic norm," however, takes a similar pro-growth tack:

Post columnist
Robert J. Samuelson

The story behind the story [of the budget battles] is that prolonged slow growth threatens to upend our political and social order. Economic growth is a wondrous potion. It encourages lending because borrowers can repay debts from rising incomes. It supports bigger government because a growing economy expands the tax base and makes modest deficits bearable. Despite recessions, it buoys public optimism because people are getting ahead. ...

Slow economic growth now imperils [the post-WWII order that saw much economic expansion]. Credit standards have tightened, and more Americans are leery of borrowing. Government spending — boosted by an aging population eligible for Social Security and Medicare — has outrun our willingness to be taxed. The mismatch is the basic cause of “structural” budget deficits and, by extension, today’s strife over the debt ceiling and the government “shutdown.”

Samuelson agrees with Dionne and Summers (and me): what we most need today is government policy — a compromise policy, as Summers says — that boosts economic growth.