A while back, a commenter led me to a Life Magazine article from 1954 where President Eisenhower’s top economists discussed their plans for a slowing economy. Here’s how they were thinking about dealing with it:
Anti-depression planning by the Administration includes plenty of stop-gap measures just in case the experts prove wrong and the expected moderate decline turns into full-scale recession. On the shelf are $15 billion of public-works projects [that’s about $100bn today] already blueprinted and approved by Congress, which can quickly be set in motion. Plans have been made to speed up state and local public-works projects, if need be by buying up their bond issues. The “tight money” policy, which has already been liberalized, would quickly be switched to fast expansion of credit by decreasing Federal Reserve margins, resuming the price-pegging of government bonds, and stimulating installment buying. Taxes would be cut still more, the building industry would get special inducements to expand. The republicans say they will spend money faster than the New Deal if they have to.
This paragraph came to mind today when contemplating how the vast gulf between what we need to do and what our political system is willing to do. I also thought back to this post, and the finding that past deficit reduction deals got 40-80% of their savings from revenues—and that 80% was Reagan!
Anyway, we have truly become a lot worse at governing ourselves, an assertion with which the broad public clearly agrees. Yesterday’s Republicans were apparently ready to go all New Deal on the situation if they had to!
Update: Just as I posted this, a colleague tells me that S&P is planning to downgrade our debt. I think S&P is wrong to do so–our ability to service our debt remains as solid as it ever was, and that’s what our rating should reflect.
But after the spectacle we’ve just been through, I’m a bit more understanding of where S&P are coming from. I mean, you’ve now got prominent R’s–Rob Portman, Sen McConnell, Rep Ryan–calling for the debt ceiling debacle to be the new template. Like I said, we’re just a lot worse at governing.
Note, from the link on the downgrade: “A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited [for the downgrade].”
Never thought I’d say this, but…calling Ronnie Reagan!