Committee for a Responsible Federal Budget

Weekend Editorial Roundup

Jun 1, 2010 | Economics

Here are the highlights from this weekend’s editorials on fiscal and budget policy:

In light of Obama advisor Larry Summers’ recent speech on the merits of carefully calculated deficit spending to increase economic growth, The Washington Post criticized the Obama administration’s heavy selling of an “emergency” education jobs bill with a price tag of $23 billion. Proponents argue that the bill would prevent teacher layoffs across the country, benefitting not only teachers but also the students of our public school systems and, also, the government, which would ultimately pay out less in unemployment compensation. Yet others argue that the bill’s intended effects could be achieved in much less expensive ways—and, furthermore, that the $23 billion it would cost could be better allocated for, as Summers said, “maximum bang for the buck.” The Post argued that “instead of passing a bill that perpetuates the status quo, Congress should use its power of the purse to leverage reform.”

The New York Times warns of the many threats to America’s economic recovery: any one issue we currently face—mounting unemployment, enormous state budget deficits, falling housing prices—would be worrying on its own, yet “collectively, they constitute an emergency.” Yet Congress has stalled on passing a bill to extend unemployment benefits, and the Times uses this as an example of the tough decision between fiscal responsibility and the continued government spending that some perceive necessary for economic recovery. The limited version of the bill that passed the House last week was justified in the name of budget deficit reduction, yet the Times argues that “withholding support now — when the recovery is still fragile and needs are still great — runs the risk of condemning the economy to a long, hard slog of subpar growth.”

The Wall Street Journal highlights Sen. Bob Casey’s plan to bail out union-run pension plans at taxpayer expense, considered “Big Labor's consolation prize” with the ‘card check’ proposal stalled. Not only would the plan be “a raw deal for union pensioners who worked a lifetime in expectation of certain benefits,” but it also would further increase the budget deficit and only lengthen the growing list of taxpayer bailouts.

The Financial Times illustrates the spread of the financial crisis from private actors to sovereign states. How can a widespread failure of the international economy be prevented? The Times lists four crucial yet complex steps: deregulation and liberalization of the Eurozone, resolution of the “solvency problem,” the rebalancing of the world economy, and, finally, the “restoration of fiscal sustainability.”