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The top priorities as Congress returns this week are the economy and the federal budget. Here are several interesting news stories exploring each:
In an editorial, the Los Angeles Times asked several economists how to improve the economy. There’s little agreement, but the two we find most interesting discuss uncertainty – something we’ve talked about a lot this year. Mark Zandi of Moody’s Analytics and USC’s Ayse Imrohoroglu rightly say uncertainty about Washington policies is keeping the economy from improving. According to Zandi, “The federal government’s record budget deficits have us rightly spooked.” Imrohoroglu says: “The best way to stimulate the economy is to decrease the uncertainty that government policies have created for businesses.”
The New York Times has a new graphic that allows readers to choose how to reduce the deficit. The Times makes it difficult to balance the budget by spending cuts alone, but there are a lot of options they left out. For example: rescinding unspent stimulus money, eliminating “corporate welfare,” or reforming Freddie Mac and Fannie Mae.
The Washington Post’s Robert Samuelson explores Japan’s history and the lessons it holds for the U.S. economy. Samuelson concludes Japan’s example shows the limited capacity for fiscal stimulus to improve the economy. He concludes it’s the private sector that needs to drive growth: “Neither the White House nor Congress seems to understand that growing regulatory burdens and policy uncertainties undermine business confidence and the willingness to expand. Unless that changes, our mediocre recovery may mimic Japan’s.”