Making Fiscal Responsibility Popular

By: Diane Lim Rogers (“EconomistMom”), Ph.D.

Diane Lim Rogers recently joined the Concord Coalition as their first Chief Economist. She was Chief Economist for the U.S. House Budget Committee from January 2007 through April 2008. Using her dual credentials as a Ph.D. economist and mom of four, Diane now “blogs” on EconomistMom.com.

It’s been just over a month since Mother’s Day when I launched EconomistMom.com, a place “where analytical rigor meets a mother’s intuition.” I hope readers of this AGA blog will come visit my blog today, if you haven’t already, and especially to please pass the link around to your friends who are not government accountants or economists. As I explain on my “about” page, EconomistMom.com is a place where honest math and sound economics is communicated in a way that makes common sense and is relevant to our daily lives. The issues we discuss span a wide and unusual range as suggested by the blog’s title–from “do deficits matter?” (yes) to “can I get my family life in perfect order?” (no). Among the broader policy issues, there is a particular focus on the economics of fiscal responsibility, as my hope is that the blog will be part of a newly effective, “grassroots” movement involving ordinary American parents and grandparents, encouraging our policymakers to “do the right (fiscal) thing” for the sake of our children and grandchildren.

My blog’s emphasis on fiscal responsibility is no accident. Yes, it does help justify my “blogging” as part of my “work” for the Concord Coalition, whose mission after all is “dedicated to educating the public about the causes and consequences of federal budget deficits, the long-term challenges facing America's unsustainable entitlement programs, and how to build a sound economy for future generations” (taken right from the “about” page of the Concord website). But it’s much more than that. Fiscal responsibility has really been my “passion” as a fiscal policy economist since my position as the senior economist for tax and budget policy at the Council of Economic Advisers, during the last year of the Clinton Administration, when I wrote about the “legacy” of the Administration’s fiscally-disciplined policies in President Clinton’s last economic report. And the issue of fiscal responsibility wouldn’t have become nearly such a “passion” were it not for the merging of my perspective as an economist and my concerns as a mother. I firmly believe that the theory and evidence show that fiscal responsibility is essential in order to promote a strong economy. I also firmly believe that our current fiscal irresponsibility is a shirking of duty to our children and grandchildren—that it’s just plain unfair to those future generations with no “political voice,” whose future is in the hands of their parents and grandparents.

I wouldn’t have started the blog, however, had I believed that that “shirking of duty” was a well-informed, intentional choice made by those (evil) current parents and grandparents. I have little desire to “shame” people into doing the right (fiscal) thing. I have much more desire to follow my hunch that most parents and grandparents are good, caring people who just don’t fully understand the adverse economic consequences of the government’s fiscal irresponsibility, and that if they better grasped how much this directly affects their own kids’ and grandkids’ future well-being , that they’d start to reward (I mean with votes rather than money) politicians who do the right (fiscal) thing, and that only then would the politicians have the (even selfish) incentive to do the right (fiscal) thing.

This is in line with Concord’s “grassroots” approach—EconomistMom.com is a sort of “virtual Fiscal Wake-Up Tour” after all—which in my common-sense opinion has promise to be almost infinitely more effective than strategies that gather old (no offense), wise (fiscally-hawkish) men in grand ballrooms inside the Beltway to say that politicians ought to listen to them because they’re smart. (And no offense to those policy groups who pursue such strategies, because I still see merit to an “attack on all fronts.” I just think the grassroots approach will prove to be the much more cost-effective strategy—maximizing political bang per buck.)
So my blog tries to explain why deficits matter, and why they should matter to any ordinary American family, using a combination of economic wisdom and common sense. I like to stress that families don’t budget the way the government is currently budgeting, often as if there are no constraints, and with failure to weigh costs against benefits. Families understand that their budgeting decisions matter, especially for the well-being of their children.

Wouldn’t it be great if we could get the government to budget as if it mattered, by turning fiscal responsibility into a popular thing?

MONDAY: Evie Barry, AGA Director of Performance Reporting, on ""Best Practices and Lessons Learned from CEAR FY 07 Reviews"

Comments

[Diane Lim Rogers (EconomistMom)]

Thad: Wow-- I will check out that book, although you will figure out from my blog (and this post in particular: http://economistmom.com/2008/05/the-irony-in-my-busy-life/) that I don't have much time to read. Most of what I write about is just stored in the long-term memory of my "hardware". Thanks for commenting here and for visiting my blog, and I hope you will keep coming and post comments when you are so moved!

[Thad J]

Diane,
I applaud your recognition that we need to be concerned economically and as parents. In response to my AGA blog on June 2nd on Baby Boomers and their lack of accountability (fiscal child abuse), a colleague directed me to Christopher Buckley's novel, Boomsday, which I have now started to read. What is scary is that the novel is a satire, but much of it seems like what is actually happening. I will check out your blog. thx.

[Diane Lim Rogers (EconomistMom)]

Michael: I totally agree with you. Part of the reason the federal government seems to make fiscal policy decisions as if there are no constraints is because in large part the federal government faces no *immediate* budget constraints. The problem is that in the long run, they can't avoid the constraints, no matter what they and the American public might falsely believe (e.g., that the federal government can "just print money" or just "write it off"). I'm not saying that I favor a balanced budget requirement at the federal level, but it might help if the federal government *behaved as if* there was such a requirement--at least most of the time--in other words, for the federal government to behave as if they faced budget constraints similar to state and local governments. (This is sort of the same reason why I actually like the "lock box" idea for Social Security, even though I understand that such a concept lacks economic meaning.)

[Michael Perkins]

Hi Diane. In my opinion, not all government borrowing is bad. I like to use the analogy of a credit card vs. a mortgage. Municipalities, quasi-government agencies and States sometimes borrow money, and the federal government borrows money too. To me, the difference is that the former are required to borrow only for a specified purpose (often with approval of the voters), they're required to budget for "debt service", which includes paying down the principal, the purpose of borrowing is most often to purchase a capital asset that will be long-lived, and that the interest rates obtained are typically fixed. I think that this is most analogous to a mortgage for a home. On the other hand, the federal government seems to borrow whatever amount expenses exceed revenues, doesn't have to appeal to a higher authority to increase its borrowing, doesn't have to budget for paying off the principal, doesn't usually spend the borrowed funds on purchasing long-term capital assets, and at least in part borrows using short-term bills that renew at market interest rates periodically.

Perhaps this analogy can be helpful to explain why the Federal deficit and debt are worrisome, but the state borrowing $50M to fund a new school or transit improvement is not.