If he was a few minutes late to his economics talk at American University, Jared Bernstein had a good excuse: He was at the White House, and it’s not easy to break away from Vice President Joe Biden.
The chief economist and economic policy advisor to Biden stopped by AU to share his views on the economic stimulus plan and six lessons he says he’s learned as a member of the White House economic team.
The first lesson: Keynes was right, a reference to the seminal British economist who advocated government regulation of the business cycle. Markets can fail disastrously, but “the largest, most aggressive, most diverse stimulus package in history” is on target, Bernstein said, to create or save 3.5 million jobs.
The second lesson: Balance matters. It’s important to balance “common sense oversight” with market freedoms, he said, charging that “it was deregulatory zeal that ended up supporting unsustainable practices” over the past decade.
Lesson three: It’s also crucial to remember the difference between the short term and long term, he said as he defended deficit spending in the interest of stimulus in the short run, noting that “we need to plot a path back to sustainability as soon as possible.”
Bernstein’s fourth lesson involved unsustainable trends, and whether they can be recognized or altered. “If you want a classical example of unsustainable, it would be the excess burden of health care,” he said. “We’re the only advanced economy that fails to cover our citizens, and most [other developed countries] do so at a half to two-thirds of the GDP that we do.”
The fifth lesson he’s learned, he said, is about implementation. It’s one thing to plan a program, such as the vaunted support of “shovel-ready projects” in the stimulus package, he said, but “making it work in a real economy with real people, real Congress, real states, real mayors? That can be tricky.”
It’s been a challenge, he said, “to avoid giving loans to people for ‘shovel-ready’ projects they would have done anyway” or that wouldn’t be ready for another five years.
The sixth lesson he’s learned at the White House, he said, was that “a recovery that doesn’t reach the middle class isn’t much of a recovery.” At the end of 2000–2007, he said, there were more people in poverty and the middle class was worse off than before. To avoid that, he said, is a key measure of success.
After his talk to a packed auditorium of students and faculty members, Bernstein took questions—and then dashed back to the White House.
The talk was part of an ongoing series of events on current economic issues organized by the Department of Economics, College of Arts and Sciences; and cosponsored by the Kogod School of Business; and School of Public Affairs.