Economists Recommend Immediate Action To Stimulate Economy

By Adrianna McGinley

A trio of economists suggested to the Senate Budget Committee Thursday that immediate, stimulative action is necessary to have effective results in reviving the nation’s debilitating economy. 

In his opening remarks, Ranking Member Sen. Jeff Sessions (R-Ala.) criticized President Obama for not presenting Congress with a concrete budget and blasted experts’ claims that spending more will have immediate positive effects on the economy.

“The budget process I don’t think is broken, it’s been abandoned…Why should we continue to trust the, affectionately, I call them, masters of the universe, maybe you three are part of that group, who tell us we can spend and borrow our way to prosperity,” Sessions said. “Why don’t we borrow twice as much? They’ve been wrong, it looks like, from the beginning.”

Dr. Kevin Hassett, Director of Economic Policy Studies at the American Enterprise Institute; Dr. Chad Stone, Chief Economist at the Center on Budget and Policy Priorities; and Dr. Mark Zandi, Chief Economist and Co-Founder of Moody’s Analytics agreed on the need for corporate tax reform and for extending the federal tax holiday, citing it would reduce the fiscal drag in 2012 by half. The trio also agreed that, while it is important to jump start the economy today, legislators must keep long-term goals in mind.

“We need to really play it big now, we need to have fiscal consolidation and fundamental tax reforms that can immediately stimulate the economy but not with policies that give us a hangover two years from now,”  Hassett said.

“If policies makers do nothing, if you do nothing, in 2012 federal fiscal policy will subtract 1.7 percentage points from growth,” Zandi added. “If you throw in state and local government cuts, it gets to 2 percentage points, I don’t think this economy can digest that.”

Sen. Begich (D-Alaska) acknowledged that the solution is in the hands of Congress and they cannot allow political games to get in the way of recovery.

“The responsibility we have as Congress is to actually do something, actually make some decisions that are not going to be easy,” Begich said. “A good example, this highway bill, this FAA bill, which are thousands and thousands of jobs that are sitting on the line because we differ over one or two items, we’re going to throw the whole thing out because we think that’s best for the political fight.”