Welcome to EconomistMom.com and my premiere post! Please visit my “About…” and “Special Thanks” pages (linked at the top bar) to see how this blog was born. I hope you will bookmark this site and visit and comment often!
This morning (Mother’s Day) the Seattle Post-Intelligencer published my “guest column” announcing this blog. Special thanks to Seattle P-I Editor Mark Trahant for making this possible, and for his general commitment to the issue of fiscal responsibility. Here it is:
‘Economistmom’ wakes up to fiscal reality
Last updated May 9, 2008 5:01 p.m. PT
DIANE LIM ROGERS
The day after our au pair had been committed to a psychiatric facility, I walked into my staff director’s office and told him I had to leave Capitol Hill. The two months of living with a person falling into mental illness had served as an exhausting yet startling wake-up call that forced my family to re-evaluate both our child care needs and our budget. For 14 years, we had been on autopilot — each year renewing our contract with the au pair agency, finding our next au pair and paying for full-time care. With the oldest of our four kids now 16, circumstances and common sense told us it just wasn’t worth it anymore.
It was a wake-up call for my professional life as well. I had to leave the Hill, but I wanted to continue working on the policy issues I’d focused on throughout my career — the economics of government budgetary policy and more specifically, the wisdom of fiscal discipline. In that respect, my chief economist position at the House Budget Committee had been an ideal fit. But I had been disappointed in how difficult it proved to sell the members of Congress on “doing the right (fiscal) thing.” Although fiscal responsibility appeals to common sense, many policymakers feel it lacks political sense.
A couple years ago, I worked at The Brookings Institution and participated in The Concord Coalition’s Fiscal Wake-Up Tour, traveling across the country to advocate for fiscal responsibility, with then Comptroller General David Walker, Concord’s Bob Bixby and other scholars from Brookings and The Heritage Foundation. The tour has been going on for nearly three years now. Cynics can point to continued budget deficits, but the tour is making a difference exactly where it was intended — from the ground up — and the public is now more supportive of politicians who do the right (fiscal) thing than the politicians themselves yet realize.
So, faced with my own personal and professional wake-up calls, I accepted an invitation from The Concord Coalition to join its staff as chief economist and reunite with the Fiscal Wake-Up Tour. Related to my official duties on my new job, today I launch a blog using my dual credentials as a Ph.D. economist and a mom. EconomistMom.comis a place where analytical rigor meets a mother’s intuition.
EconomistMom.com will discuss a wide variety of issues from this dual perspective, with fiscal responsibility figuring prominently. Here’s a sample of some fiscal policy lessons that emerge from the EconomistMom.com perspective:
- There is no such thing as a free tax cut (or spending program). A theory known as the “Laffer Curve” says that if marginal tax rates are high enough, a cut in tax rates could actually produce higher revenues. The problem is that we’re nowhere near the level of tax rates that put us on this portion of the theoretical curve. For federal budget policymakers to count on tax cuts paying for themselves because there’s some very tiny probability it could happen is like my counting on my son’s dream of becoming an NBA basketball player coming true — and deciding there’s no need to save for his college education or for my retirement!
- Deficit-financed tax cuts or spending today promise many-fold tax increases on our children. Deficit financing is a cost-maximizing budget strategy — because of the curse of compound interest. The choice is simple: Pay for it now, or our kids pay even more for it later. For example, the balance on a $1,000 loan swells to more than $3,000 when repayment is put off for 20 years, even under a relatively low interest rate of 6 percent. If as parents we aren’t willing to go on a personal spending spree, run up our credit card balances and leave the bills for our kids to pay, why should we put up with (or even clamor for) deficit-financed tax cuts and programs?
- Lack of fiscal discipline is costly beyond the costs of debt service, because it undermines the need to set priorities. With budget rules easily bypassed, the federal government’s fiscal policy decisions are often made as if there are no constraints. This is akin to my family being turned loose in a shopping mall and told we can keep whatever we can grab in five minutes. How much would we think about the usefulness or desirability of what we were putting in our cart? More tragic, how would we feel if we were later handed the bill? Acting “economically” (and responsibly) means understanding and working within our constraints to make thoughtful decisions, so that we end up choosing the things that provide us the greatest net benefits, rather than the things we saw first at the store.
- To adequately consider those fiscal priorities, policymakers need to take the government budget off “autopilot.” Just like my family had to take our spending off autopilot and reevaluate our needs and our means as our circumstances changed, so will the government in order to handle the challenges associated with the aging of the baby boomers.
If the federal government is going to turn around the fiscal train before it wrecks, it will need to start to budget more like responsible parents do — heeding the basic math, using common sense and being good stewards. EconomistMom.com will promote this way of thinking, and it’s my Mother’s Day wish that such “waking up” will be contagious.
Diane Lim Rogers (”EconomistMom”) is a mother of four and the first chief economist of The Concord Coalition, a nonpartisan, grassroots organization advocating generationally responsible fiscal policy. From January 2007 to April 2008 she served as chief economist for the House Budget Committee.
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