Late last month, a quintet of big-name Hoover Institution economists warned in a Washington Post op-ed that a coming “string of perpetually rising trillion-dollar-plus deficits” could soon lead to a full-blown debt crisis — and that to address this looming debt problem and avoid a fiscal collapse, Congress must act to curb entitlement spending and enact additional “pro-growth tax and regulatory policies.”
On Monday, a group of distinguished economists from the other side of the political divide responded with an op-ed of their own: Yes, the growing debt is a serious problem, but don’t pin the blame entirely on entitlements. “There is some room for additional spending reductions in these programs, but not to an extent large enough to solve the long-run debt problem,” they write.
The economists, all former chairs of the White House Council of Economic Advisers, including former Federal Reserve Chair Janet Yellen, argue that “large tax cuts and unfunded wars have been huge contributors to our current deficit problem” — and that the GOP tax plan that passed last year was far from a “good first step,” as the Hoover economists described it:
“As we focus on the long-run fiscal situation, our goal should be to put the debt on a declining path as a share of the economy. That will require running smaller deficits in strong economic periods — such as the present — to offset the larger deficits that are needed in recessions to restore demand and avoid deeper crises. Last year’s Tax Cuts and Jobs Act turned that economic logic on its head.”
The left-leaning economists’ recommendation: Combine increased revenue with spending cuts, along the lines of the plans proposed several years ago by the Simpson-Bowles and Domenici-Rivlin commissions.