…because I’m an economist and a mom–that’s why!

A Budget Director Who Knows Surpluses

July 14th, 2010 . by economistmom

If only it took just this to get us back to fiscal sustainability: put back in place the budget director who last saw the federal government running budget surpluses–Jack Lew, President Clinton’s last OMB director.  Well, it can’t work as magically as that, unfortunately, despite the President’s whimsical remarks that may suggest so. But Jack Lew does know more than the mere experience of budget surpluses; he understands the policies that produced those surpluses.  And I presume he remembers that although there was certainly a little bit of luck involved in the “irrational exuberance” of the stock market in the late 1990s which provided such convenient, repeated “revenue surprises” (via capital gains and dividend tax revenues), there was a bit of hard and good policy work in the Clinton mix, too, with effective budget rules that controlled spending (statutory PAYGO without costly exemptions, caps on discretionary spending), and even tax increases that raised revenue (yes, raised revenue!) and national saving and, hence, economic growth.

So now Jack Lew will get a chance to advise President Obama on what he should do about the Bush tax cuts which he presumably did not approve of at the end of the Clinton Administration, at a time when we were projected to run $5.6 trillion in surpluses over the next ten years (FY2002-11).  If those tax cuts were considered fiscally irresponsible back then, how will they be seen in this new context of $6 trillion to $10 trillion in projected deficits over the now next ten years (FY2011-20)?  Will turning them into the Obama tax cuts under the direction of a Clinton-surpluses budget director somehow make them better?  The coming debate over what to do with these tax cuts is sure to be very interesting–but also quite agonizing for anyone with Jack Lew’s combination of historical budget experience and current budget role.

3 Responses to “A Budget Director Who Knows Surpluses”

  1. comment number 1 by: AMTbuff

    There is one way to square the circle of far-too-expensive promises to baby boomers: arrival of a massive plague that kills the old selectively and quickly. This is an observation, not a suggestion, in case anyone is black humor-impaired.

    As long as the boomers continue to exist and draw benefits, no amount of expertise can make much difference fiscally. Promises need to be broken, period. There’s no magic available.

  2. comment number 2 by: Arne

    It is not necessary to kill the old, just reduce the end-of-life medical expenses at whatever age.

  3. comment number 3 by: AMTbuff

    Continuing with the black humor, why don’t we simply apply our current immigration policy to the old?

    First you pay a thousand dollars for this screening process. Then we drop you off at the border in the desert with minimal food and water. You hike a few days in blistering heat, perhaps getting robbed or raped by your guide.

    If you make it to civilization, you are home free and you can stay as long as you like with no questions asked. Otherwise, we kick you out of the country and you are on your own. This screening method works great for immigrants, so why not for the old?

    OK, back on a serious note: Why have there been no ADA lawsuits claiming that current immigration policy discriminates de facto against the old and the infirm, which it plainly does?