US Congress Gets Conflicting Advice on Economy, Debt

September 21, 2011

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

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."