Excerpts From Columnists Bound for White House Jobs

Two members of The Times’ Board of Economists have been selected to serve in the Clinton White House.

Laura D’Andrea Tyson--a professor of economics at UC Berkeley and research director of the Berkeley Roundtable on the International Economy--was named chairwoman of the White House Council of Economic Advisers. Alice M. Rivlin--senior fellow at the Brookings Institution in Washington--will be deputy director of the Office of Management and Budget.

Over the years, their columns for The Times have touched on topics with which they now will be grappling inside President-elect Clinton’s circle of policy advisers. Here are some excerpts:

Laura D’Andrea Tyson

On who’s to blame for U.S. economic woes: Contrary to the self-serving claims of some U.S. politicians and business leaders, Japan’s trading practices did not cause our recession. We managed that on our own. Our financial house of cards has come tumbling down under the weight of excessive debt and bad loans. The Federal Reserve, still fighting the last war against inflation, has waited too long to ease the credit-crunch strangling domestic spending. Meanwhile, fiscal policy has been paralyzed by a decade of tax-and-spend deficits created by the irresponsible supply-side economics of two successive Republican administrations. (1-5-92)

On a proposed balanced-budget amendment: The fact that 70% of the American population supports it is a powerful argument for requiring elementary economics for all high-school students. Then, when they read Bush’s--or indeed Ross Perot’s--lips on the balanced budget question, they would not be persuaded. (6-21-92)

On trimming the deficit: The deficit cannot be cured by cutting waste, if one defines waste as bloated government bureaucracy and unwanted or unnecessary spending programs. The big-ticket items in government spending are defense, interest on the debt, the savings and loan bailout, Social Security and Medicare. Most other government programs are trifling by comparison. And even if we cut defense spending by $100 billion over the next five years--and even if the economy fully recovers--the underlying deficit will hover discouragingly around $200 billion for the foreseeable future. (6-21-92)

On trade with Japan: No trade policy, taken by itself, can eradicate real differences in quality. Japan’s trade surplus with the United States continued to grow in the last four years, particularly in industries in which Japanese producers have made real competitive gains, such as electrical machinery and computers. (7-28-91)

On Social Security and health care: I happen to believe that Social Security for wealthy Americans should be taxed as regular income--even though my father and his pals at the golf club will never forgive me if this becomes national policy. I also believe that we need a national health care program that strictly controls costs. Perot can’t bring himself to espouse higher taxes on Social Security for the wealthy, although he claims to believe that many of them would be willing to sacrifice their Social Security voluntarily. I’d be delighted if they did so, but I’m not counting on it. Most wealthy people did not get that way by turning down free money. (6-21-92)

Alice M. Rivlin

On the size of the budget deficit: The deficit is likely to come down as the economy recovers from recession and the savings and loan bailout ends, but the problem is far from solved. Even on optimistic assumptions--moderate growth in the economy, continuation of caps on domestic appropriations, further declines in defense and a moratorium on new programs--the deficit at mid-decade will still be about $250 billion and will be rising again. It will go up because the cost of Medicare and Medicaid, expected to increase $140 billion between 1992 and 1997, will go up faster than federal revenue. (9-27-92)

On cutting the deficit: If the country is going to rely on procedural rules, rather than common sense, to constrain budget policy, the rules must meet the demanding “Goldilocks test”--not too tight, not too loose, but just right. They must be designed to hold down the permanent ongoing deficit while allowing temporary fluctuations. (6-7-92)

On public investment: There is broad consensus that a higher rate of public investment is needed to upgrade education and skills and modernize the nation’s infrastructure. The health system needs restructuring to ensure access for everyone and control the rate of growth of costs.

Achieving these objectives at the same time the federal deficit is reduced will take a substantial tax increase at some level of government. For the federal government to take on all of these jobs and reduce the deficit at the same time will require a massive tax increase at the federal level. Alternatively, the federal government could get out of some areas of spending all together (education, training, housing, infrastructure, community development, for example) and turn these over to the states. Then the tax increases would have to come at the state and local levels. (4-12-92)

On “peace dividends”: The end of the Cold War raises hopes that the considerable resources that the United States has devoted to deterring and countering the threat of Soviet aggression can be put to more productive uses.

Almost everyone in Washington has a plan for the “peace dividend.” Some would use it to cut taxes, others to increase domestic spending, still others to reduce the federal budget deficit. The pot of gold has many claimants.

In fact, however, reducing the rate of growth of the nation’s health costs could produce a dividend far larger than the peace dividend. (4-12-92)

On federalism: State government finances are a national crisis. The federal government should help, but not by sending money. The states need some common taxes, collected centrally and shared on a formula basis. Common shared taxes would strengthen state revenue systems and simplify life for taxpayers, especially business taxpayers. (9-1-91)