A Powell Doctrine for the Economy and a Grand Bargain
As President-elect Barack Obama prepares to take office, he faces a nearly unparalleled economic challenge. Instead of inheriting projected budget surpluses as President George W. Bush did in 2001, Obama will inherit a projected deficit for 2009 approaching $1 trillion. On the other hand, Obama is also inheriting an economy that is badly in need of both massive stimulus and major long-term reforms in areas such as health care, climate change and education, writes Gene Sperling.
It's not an easy time to be a member of the Federal Open Market Committee. You learn in Economics 101 that you tighten interest rates in an inflationary environment and ease on weaker economic demand. When faced with the dreaded "S" word -- stagflation -- there are no sure textbook answers.
Josef Ackermann, chief executive officer of Deutsche Bank AG, summed up the debate over the global economy at a meeting I recently attended: It's either the beginning of the end or the end of the beginning.
Rising food prices have led to deadly riots in fledging democracies such as Haiti and caused World Bank President Robert Zoellick to project that 100 million more people will fall into poverty.
There is no shortage of regret over the failure of regulators and the Bush administration to heed the warning signs about the extent of the subprime housing crisis. A new regret is on the horizon: The failure to take action to prevent the descent into disrepair, economic distress and crime of revitalized urban neighborhoods across the nation.
During the battle over President George W. Bush's plan to partly privatize Social Security, many of us engaged in the debate received long, lucid memos from a former Social Security commissioner. I used to receive similar notes from this particular person years before, when I was in the Clinton White House.
