News / USA

US Congress Gets Conflicting Advice on Economy, Debt

A demonstrator holds placards to protest U.S. debt in front of the US Capitol in Washington, July 18, 2011 (file photo).
A demonstrator holds placards to protest U.S. debt in front of the US Capitol in Washington, July 18, 2011 (file photo).

Multimedia

Audio
Michael Bowman

For U.S. lawmakers, no issue is more pressing or contentious than how to revive an ailing American economy while confronting a $14.7 trillion national debt. Complicating this monumental task is a sharp divergence of views and recommendations from economists and budget officials on the causes and best solutions for the nation's financial woes.

Recent weeks have seen a parade of America's most-renowned economists and other experts testifying at dozens of hearings on Capitol Hill examining U.S. fiscal and financial matters from every possible angle.

If lawmakers were hoping for consensus from the nation's intelligentsia on how best to navigate perilous economic waters threatening to sink America's financial ship, they have surely been disappointed. Just as members of Congress passionately disagree on what ails the nation and what will cure it, so too do academics and officials who have dedicated their careers to studying such matters.

Consider the question of what, if anything, the U.S. government should do to promote economic growth and job creation. Economists of all stripes agree that an expanding economy will put Americans back to work and reduce budget deficits. But how to achieve that goal is a matter of intense debate.

Alice Rivlin, who served as a budget official during the Clinton administration and co-chaired President Barack Obama's deficit commission, urged lawmakers to embrace an active government role to get the economy moving.

"Unless employment accelerates sufficiently, we are doomed to stagnation and eroding standards of living," said Rivlin.  "The faster we get people back to work, the easier it will be to move toward a sustainable federal budget. If the recovery stalls and unemployment rises again, prospects for stabilizing the debt will deteriorate rapidly. It will be worth some temporary increase in the near-term deficit to avoid getting into another downward spiral of falling jobs, sales, investment, and confidence."

Her words were music to the ears of Democratic lawmakers, like Maryland Congressman Elijah Cummings, who, like the president, wants Congress to approve a short-term federal jobs program.

"The debt is a nominal factor in our current economic outlook," said Cummings.  "Rather, slowed hiring, low consumer confidence and demand, reduced public investment, and the continuing [real estate] foreclosure crisis are driving our economic conditions and our rising debt, rather than the other way around."

Not so, according to another economist who testified on Capitol Hill this week. J.D. Foster, a budget official under former President George W. Bush, argued the U.S. economy would soar on its own if only a burdensome federal government would let it.

"The economy abounds in opportunities for growth," said Foster.  "But turning potential into reality requires confidence: confidence in the future, confidence in the specific effects of government policy. America suffers a confidence shortage, and Washington is overwhelmingly the cause."

Picking up on that theme was Carnegie Mellon University economist Allan Meltzer, who took aim at the Obama administration's call for higher taxes on the wealthy and some corporations.

"Uncertainty about future tax rates has deterred investment and slowed recovery," said Meltzer.

According to economists like Meltzer, a federal jobs program is ill-advised, as it adds to short-term deficits, raises the debt burden, and increases the likelihood of future tax increases to avoid a fiscal meltdown. Thus, the path to unlocking investment and economic expansion is maintaining current tax rates and cutting federal spending.

That view is trumpeted by Republicans, like Senator Jeff Sessions of Alabama.

"The debt level today already costs us growth and jobs," noted Sessions.  "America's private sector is just waiting to grow and expand, but unwise government policy continues to stand in the way."

However, Alice Rivlin told lawmakers the real cause of America's economic doldrums is not a lack of confidence, but a nation that has stopped spending.

"Lack of demand is the basic problem," added Rivlin.  "If you do not think you can sell your product, you are not going to make more of it."

Public policy groups, like the Committee for a Responsible Federal Budget, say, whatever policies or programs Washington adopts, lawmakers need to keep an eye on the main prize: stabilizing and ultimately reducing a national debt that has grown to the size of America's entire yearly economic output.

On that score, no one in Congress disagrees. But getting there when 14 million Americans are out of work and economic growth has slowed to a crawl is no easy task for lawmakers, or the experts who advise them.

You May Like

Tunnel Bombs Highlight Savagery of Aleppo Fight

Rebels have used tunneling tactic near government buildings, command posts or supply routes to set off explosives; they detonated their largest bomb this week under Syria's intelligence headquarters More

Sierra Leone Launches New Initiative to Stop Ebola Spread

Government hopes Infection and Prevention Control Units, IPC, will help protect patients and healthcare workers More

UN Official: Fight Against Terrorism Must Not Violate Human Rights

UN High Commissioner for Human Rights says efforts by states to combat terrorism are resulting in large scale rights violations against the very citizens they claim to defend More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960s Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7 to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More