An agenda for the next OMB director
Andrew Samwick writes:
I am less concerned about who will succeed outgoing OMB Director Peter Orszag than what the new budget director will do. We face an unusually high unemployment rate of 9.7 percent and ridiculously low interest rates, even out to 30 years. Cheap credit and idle resources present a great opportunity to borrow and spend, particularly for things we know we need.
I have long been a fan of countercyclical government investment. In January 2008, I proposed a better way to deal with downturns and a budget that plans for the future as a means of substantially increasing our infrastructure investment at the most opportune times in the business cycle. At the time, I was trying to push back against calls for "timely, targeted, and temporary" measures that would widen the deficit without building anything of lasting value. While that phrase has fallen out of fashion, the sorts of policies being discussed -- like the patchwork of relief programs that died in the Senate last week -- are the same old stuff. It is a sign of how poorly our system of governance works that we cannot even plan for something that we have been enduring for two and a half years.
From one of those proposals:
The federal government has a critical role in maintaining and developing public infrastructure, whether in transportation, telecommunications or energy transmission projects. A sensible capital budget would include a prioritized list of projects that need attention. Some would be slated for this year, some for 2009 and so on, over the useful lives of the projects. When economic growth falters, the government would be in a position to move some of the projects from later years into the present year.
This approach to counter-cyclical fiscal policy has several advantages. Perhaps most obvious is that it forces the government to establish priorities for capital projects. It reduces overall expenditures by doing more of the work in times of economic slack, when costs are lower. It also abides by pay-go rules, since projects moved up to 2008 need not be done in 2009. With a little forethought, short-term economic concerns and long-term budget goals need not be in conflict.
I still think this is a good idea.
June 22, 2010; 4:21 PM ET
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