Committee for a Responsible Federal Budget

The Ever-Growing Announcement Effect Club

Mar 1, 2010 | Economics

EPI's Lawrence Mishel joined the Announcement Effect Club with an article co-written with David Walker (already a member) in Politico last week.  In the article, they argued that there need not be a dichotomy between short-term economic stimulus and medium- to long-term deficit reduction.  Citing large unemployment and underemployment numbers, they acknowledged that short-term expansionary fiscal policy is much needed to cure the ails of our economy.  But, as they explain:

These problems, and the resulting short-term deficits they cause, should not be confused with the primary deficit challenge facing our nation: structural deficits. These deficits are projected to exist in coming years — even when the country is at peace, even when the economy is growing, even when unemployment falls.

Of course, this statement should not be new to our readers.  Our current policy baseline shows huge and growing deficits long after the economy is projected to recover.  And even though short term deficits may be useful, these later deficits must be addressed.

And as bona fide members of the Announcement Effect Club, Walker and Mishel think they must be addressed immediately.

While we address our short-term unemployment challenges, we must also immediately establish a path to address our large, and growing, structural deficits...we must take immediate steps to agree on a path and a process for reducing the structural deficits that lie ahead

Click here for a full list of Announcement Effect Club members.