Yes, we can now reveal that ex-Treasury Secretary Bob Rubin has joined the Ancient and Hermetic Order of the Shrill, in a measured, polite, and sober way:
WSJ.com - 'We Must Change Policy Direction'
: Some would argue that our reasonably healthy GDP growth in the last few years -- driven largely by the Federal Reserve Board's accommodative monetary policy and the disposition of consumers to spend based on high housing prices and lower interest rates -- indicates that we can stick with the economic policy status quo. I believe this would be a serious mistake. Median real wages and median family incomes have been roughly stagnant for the past five years.... Private sector job growth has been the lowest of any recovery since the '30s. Most importantly, the longer-term underpinnings of our economy are unsound.... Re-establishing seriousness of purpose regarding economic policy... will require our political system to do what it is not doing today: making choices that are very difficult politically... putting aside ideology in favor of facts and analysis....
[O]ur future economic well-being is threatened by large current and projected fiscal deficits, huge increases in entitlement costs... personal savings rates of approximately zero, public school system inadequacies, and high health care costs. But our political system is... failing to make the difficult decisions required. Political leaders... have taken on critically important economic issues, as President Clinton did on deficit reduction, trade liberalization and global economic crises... as Ronald Reagan and Tip O'Neill did on Social Security in 1983....
(1) We should re-establish sound fiscal conditions for the intermediate term (the 10-year federal budget window) and put in place a real plan to get entitlements on a sound footing for the long term. (2) We need a strong public investment program -- paid for... -- to promote productivity growth, to help those dislocated by technology and trade, and to equip all citizens to share in our economic well-being and growth. (3) We must pursue an international economic policy that continues global integration, especially multilaterally, and proactively addresses our other international economic interests, including combating global poverty. (4) We should work toward a regulatory regime that meets our needs and sensibly weigh risks and rewards. Our strategy should reaffirm market-based economics as the most effective organizing principle for economic activity, while recognizing the critical role of government in providing the many requisites for economic success that markets, by their very nature, will not provide.
Broad participation in economic well-being and growth is critical, both as a fundamental value and to realize our economic potential.... [I]n 1979 it took 44 people with average earnings in the bottom half of the population to equal each person in the top 0.1 of 1%, while in 2001, the last year in that study, that number was 160.... The proponents of supply-side theory who assert that tax cuts will wholly -- or even significantly -- pay for themselves (through increased growth and federal tax revenues), appear to be no more accurate now than they were in the '90s.... Virtually all mainstream economists take the view that sustained long-term deficits will crowd out private investment, increase interest rates, reduce productivity and reduce growth. And the far greater danger is that these various imbalances could at some point lead to fear of fiscal disarray and concern about our currency, causing sharply higher interest rates in our bond markets and the risk of a sharp exchange-rate decline. Also, very importantly, the evidence of the early '90s strongly suggests that sustained deficits can undermine business and consumer confidence. The adverse impact on interest and currency rates has not yet occurred, partly because business has had relatively low levels of demand for capital -- but most importantly because of vast capital inflows from abroad (until recently, predominantly from central banks supporting the dollar to subsidize their exports). This is not indefinitely sustainable....
I believe that the most realistic way forward is for the president to bring together the leaders of both parties and both houses to make these decisions with joint political responsibility. Everything should be on the table, including cost discipline, progress toward entitlement reform, and judgment as to the revenues needed to close current deficits and provide the functions the American people expect of government. These include public investment in education, basic research, infrastructure and other requisites for a successful economy as well as national security and the entitlement costs of an aging population. Finding the balance that best promotes economic growth in this context could well call for revenue increases as well as spending discipline, as evidenced by the '90s, when a mixture of spending cuts and targeted tax increases was followed by years of strong growth, powerful job creation and rising incomes. Moreover, any revenue-increasing measures should reduce, not exacerbate, our growing income gap....
None of this is easy, but our economy could well be at a critical juncture for the longer term. To realize our bright future and to minimize the risk of serious difficulty, we urgently need our own sense of mission to meet the challenges facing our economy.