After a month of high drama the Senate at high noon today voted to pass a bill to raise the debt ceiling. How to evaluate this outcome? If I must give a one-word verdict, it would be “good.” If I can expand to two words, it would be “not good.” If I can elaborate to 20 words: “The legislation confirms the sorry state of our public deliberations, but it is probably the best that could be hoped for,” given where the negotiations were as the big hand on the clock approached twelve.read more
President Obama proposes allowing the Bush tax cuts to expire next year — as they are scheduled to do if nothing is changed — for those earning more than $250,000, but changing the law so as to extend the tax cuts for those earning less than that amount. Republican politicians are opposing the proposal. I don’t understand what they are thinking. Their position doesn’t make sense to me, regardless whether they are thinking about short-term stimulus, long-term fiscal conservatism, good economics, or even pure politics.read more
Every two years, Harvard Kennedy School hosts the newly elected Members of Congress for a three-day “briefing” on a wide variety of topics. We had an excellent turnout this week: 40 of the 50 new congresspeople, from both parties. I participated in a panel titled “Understanding the Economic Crisis,” along with Greg Mankiw, Elizabeth Warren and Robert Lawrence (on video).
Trying to explain the origins of the financial crisis and recession in ten minutes, even to the extent any of us understands it, was a tall order. But I tried to cram it all into a single slide. Here it is:read more