Transcript
12:30 Fred Barbash-Moderator:
Hello everyone. Welcome to this week's edition of the Scouting Report. I'm Fred Barbash, Senior Editor at Politico, and I will be moderating this week's chat. Joining us this week is Brookings Senior Fellow Martin Baily, an expert on U.S. economic policy. He is ready to answer your questions about restoring confidence in financial institutions. Welcome Martin.
12:30 Fred Barbash-Moderator:
How essential is it that the new Administration balances the budget in the next four years?
12:31 Martin Baily:
Nice to be here.
It is not essential that the federal budget be balanced four years from now, but it is vital that good budget targets are set and maintained. The Administration can provide a powerful signal by including declining long-run targets for future structural budget deficits as a percent of GDP as part of any short-run stimulus. OMB should be required to submit a realistic budget plan to Congress each year that is consistent with the long run targets. Any changes to the budget made during Congressional debate should be made only on a PAYGO basis. Emergency appropriations (hurricanes and such) must trigger a readjustment of either spending or taxes in future years, to hold the budget targets on track.
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