Isabel V. Sawhill is a senior fellow in Economic Studies at the Brookings Institution. She serves as director of the Budgeting for National Priorities project and co-director of the Center on Children and Families. She holds the Cabot Family Chair. She served as Vice President and Director of the Economic Studies program from 2003 to 2006. Prior to joining Brookings, Sawhill was a senior fellow at The Urban Institute. She also served as an associate director at the Office of Management and Budget from 1993 to 1995, where her responsibilities included all of the human resource programs of the federal government, accounting for one third of the federal budget.
In addition, she has authored or edited numerous books and articles including Restoring Fiscal Sanity 2005: Meeting the Long-Run Challenge and Restoring Fiscal Sanity: How to Balance the Budget, both with Alice Rivlin; One Percent for the Kids: New Policies, Brighter Futures for America's Children; Welfare Reform and Beyond: The Future of the Safety Net; Updating America's Social Contract: Economic Growth and Opportunity in the New Century; Getting Ahead: Economic and Social Mobility in America; and Challenge to Leadership: Economic and Social Issues for the Next Decade. Her research has spanned a wide array of economic and social issues, including fiscal policy, economic growth, poverty and inequality, welfare reform, the well-being of children, and changes in the family.
Sawhill helped to found, and now serves as President of the board of, The National Campaign to Prevent Teen Pregnancy, a nonprofit organization devoted to reducing teen pregnancy in the United States. She has been a Visiting Professor at Georgetown Law School, Director of the National Commission for Employment Policy, and President of the Association for Public Policy Analysis and Management. She also serves on a number of boards. She attended Wellesley College and received her Ph.D. from New York University in 1968.
I applaud the 10 Senators who are calling for a bipartisan commission on the budget. Too bad there are no Republicans in the group so far but perhaps that will change. And too bad some other Democrats, such as Pelosi, are also opposed. In both cases, they are ducking their responsibilities unless they come up with specific proposals to reduce long-term projected deficits – which is not happening and is not likely to happen any time soon. In the meantime, we are courting all kinds of trouble from slower growth, to an economic crisis, along with reduced flexibility to… Read more
Krugman is right that economics is now more about the elegance or beauty of ideas and their mathematical exposition than about shedding light on real world problems. As he notes, even the pragmatists among us (“the saltwater economists”) have not found a way to reconcile Keynesian theories with our continuing belief in the ability of individual markets to equilibrate supply and demand. Behavioral economics has helped to wean a new generation of economists from the earlier fixation on perfect rationality along with full and unbiased information, equally available to both buyer and seller in a market, but the microeconomic foundations… Read more
I doubt that the deficit will be a serious drag on the recovery. The Treasury hasn’t had much difficulty selling its debt so far and interest rates remain at reasonable levels. In addition, even if the economy starts moving in the right direction, it will likely remain depressed for several years, limiting the demand for credit from the private sector. And if the recovery is short-lived or falters, then another stimulus could be needed and should not be held hostage to concerns about short-term deficits. That said, it’s important to get a handle on the long-term fiscal situation since it… Read more
Americans need to save more so that we can finance investments in the economy instead of borrowing the money from other countries (thereby necessitating that we earmark some of our incomes to pay them back with interest later). Granted this increase in saving will slow the recovery but it does not necessarily undermine the effectiveness of the stimulus bill. Without the stimulus bill things would simply be worse. It’s true that there’s a theory that says that consumers save more when the government stimulates the economy because they believe their taxes will go up as a result of the stimulus… Read more
Given the growing inequality of incomes, especially at the very top of the distribution, asking this group to pay higher taxes seems like the right thing to do. And I have never been persuaded that people at the top of the distribution are going to work or save less just because their taxes have gone up from present levels. Back in the 1950s and 1960s, income tax rates were far higher and this doesn’t seem to have adversely affected the rate of economic growth. Similarly, the increase in top tax rates during Clinton’s first term was accompanied by vigorous economic… Read more
There is no way to ever definitively establish how many jobs will be (or have been) created or saved by the stimulus plan. The reason is because we will never know what might have happened without the stimulus. As Greg Mankiw notes in his blog, recent unemployment rates have been more in line with what the Administration predicted in their baseline economic projection in January without the stimulus, leading to the impression that the stimulus has done virtually no good at all. But in my view, this would be the wrong conclusion. The Administration has correctly focused instead on the… Read more
The most precious asset any President has is trust. So far, he has said all the right things about the need to balance short-run stimulus with long-term restraint. But this approach hasn’t been embedded in the stimulus package and Alan Auerbach’s argument calling for an elimination of any permanent measures from the package is exactly right, in my view. Since that doesn’t seem to be in the cards, all eyes are on the next shoe to drop – the President’s first budget. A group of a dozen experts, including three former heads of CBO, recently called for the President to… Read more
Those designing the stimulus package should consider adding one big sector that got left off the list: investing in the nonprofit sector. Spending just 10 percent of the stimulus, or up to $100 billion, to assist nonprofits could help to revive the economy since these organizations are being hard hit by the recession. By including this sector we can take advantage of a huge network of institutions that work hard every day to improve the welfare of communities and individuals, that will spend the money quickly, that have the capacity to spread the dollars widely, and that in the absence… Read more
I am not aware of any respectable economist who is arguing that deficit spending to get the economy out of a recession is a bad idea because it increases the deficit. The argument that Krugman attacks seems like a straw man. Like Krugman, I think a big stimulus is needed since, as he argues, we are in a liquidity trap of sorts. There is no source of stimulus right now other than the government. Where I would take exception is with his inference that we are only borrowing the money from ourselves. Since 1994 we have borrowed about three-quarters of… Read more
Ideally, we should have a tax reform package in 2009 that provides a refundable tax break for low and middle income families immediately to stimulate the economy but then raises revenues in the outyears (beyond the recession) by raising rates on the more affluent and curbing or eliminating the numerous tax expenditures that now total close to $1 trillion a year. The entire package should lose revenues in the short-run but gain enough revenues in the long-run to contribute to lowering the deficit. The problem with this ideal scenario is that there may not be time to get tax reform… Read more
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