Alice Rivlin, Brookings Institute's senior fellow and director of its greater Washington research program in economic studies, opened this year's Arthur Levitt Public Affairs Center speaker series on Oct. 11 in the Chapel. Rivlin presented the lecture, "Why The Federal Budget Matters to Your Economic Future," in conjunction with the Levitt series titled "U.S. Budget: Power, Politics & Priorities."
Rivlin began her lecture discussing the current presidential campaign and the role of the economy in the upcoming election. Unfortunately, but not surprisingly, she said, neither presidential candidate is focusing on the federal budget and the deficit. Currently the federal government is paying $422 billion dollars more than it is collecting in taxes. She compared this spending to a "national credit card," explaining that the next generation will have to pay the bill.
As time progresses, she explained, national spending and the deficit will become increasingly important, as the population ages and medical costs continue to rise. "Unless we raise taxes - other programs will be squeezed out," she said. This issue poses a huge dilemma for elected officials over the next few years.
Rivlin examined both presidential candidates and their view on the economic state. She claimed that her goal was not persuade her audience to vote for one candidate or the other, but rather persuade her audience that the issues concerning the federal budget and the deficit are in fact important.
Bush is currently emphasizing the recent progress over the last year-and-a-half. Kerry, on the other hand, is focusing on the negative aspects of the current economic situations, including the high unemployment rate. "Nobody is actually lying," Rivlin stated after describing the differences in each candidates' platforms; they are just choosing to focus on different sides of the same situation.
Rivlin described that the most recent economic recession was not that deep by historical standards. While Bush's tax cuts helped to alleviate the recession, had they been better designed they would have helped more. While the tax cuts helped, "at what cost did they work?"
No matter who wins the election, he will be faced with three "daunting economic problems," she said. The first will be the unsustainable deficit in the budget; the second will be the aging population. The third problem will be the large number of low-wage workers.
After describing each problem in depth, as well as the Clinton administration's attempt to deal with the federal deficit in the late '90s, Rivlin claimed that any solution "will require ideological flexibility." Democrats and Republicans will need to work together to come up with viable solutions.
In addition to her Brookings Institute positions, Rivlin is also a visiting professor at Georgetown University's Public Policy Institute. A former vice chair of the board of governors of the Federal Reserve System from 1996 - 1999 and director of the White House Office of Management and Budget from 1994 - 1996, she is the author of several books including Restoring Fiscal Sanity: How to Balance the Budget (co-editor with Isabel V. Sawhill - 2004), Beyond the Dot.coms: The Economic Promise of the Internet (with Robert E. Litan - 2001), The Economic Payoff from the Internet Revolution ( co-editor with Robert E. Litan - 2001), Reviving the American Dream: The Economy, the States, and the Federal Government (1992) and Caring for the Disabled Elderly (with Joshua M. Wiener 1988).
-by Emily Lemanczyk
