SUNDAY, NOVEMBER 14, 2010
KLMNO
EZ RE Sunday OPINION DANAMILBANK
can embrace N
A deficit deal Obama
ot yet two weeks after the voters delivered a clarion cry for change in Washington, we’re already back to
business asusual. DemocratsintheHousearesettokeepthe
same three leaders — Nancy Pelosi, Steny Hoyer and JimClyburn—who led themto theirhistoricwipeout.This is thepreschool- soccer theory of accountability: Nobody keepsscoreandeverybodygetsatrophy.The fallen House speaker seems to speak for a number ofher colleagueswhenshe says she has “noregrets”about thepast twoyears. On theRepublican side, SenateMinority
LeaderMitchMcConnellmadeclearthathe would continue his all-out belligerence eventhoughthecampaignisover.Speaking totheHeritageFoundation,he renewedhis assertion that his priority is “to deny Presi- dent Obama a second term.” He vowed to hold “repeated”—and pointless—votes in theSenate torepealhealth-care reform. Then, onWednesday, the co-chairmen of
Obama’s debt commission, unable to forge consensus among the deadlocked commis- sioners,cameoutwiththeirownversionofa planto conquer the deficit, reduce the debt, overhaul the tax code and put entitlement programs on solid ground. It was quickly pronounced dead on arrival by no-regrets Pelosi,whocalledit “simplyunacceptable.” Is this how the next two years will look?
Probably. But the outline released by the commission co-chairmen, Democrat Er- skine Bowles and Republican Alan Simp- son,alsopresentsanopportunityforObama —if he’swilling to triangulate.He’ll have to take theperilouspathof turning againsthis liberalbase,but it justmightwork. The Bowles-Simpson plan has some-
thing to offend everybody, as it should. It would slash spending—including for the military. It would raise tax revenue by rewriting the tax code and eliminating popular deductions. It would seek to cut Medicarecosts,reduceSocialSecurityben- efits andgut agriculture subsidies. On the left, the sturm und drang was
predictable: The National Organization for Women called it an “assault on Social Security,” the AFL-CIO said it tells “work- ingAmericans to drop dead,” andRep. Jan Schakowsky (D-Ill.), a member of the commission, calledit a “non-starter.” It’s unsurprising that liberals feel this
way, because the plan is a centrist ap- proachdevelopedunder thesupervisionof BillClinton’s former domestic policy chief. It calls for a hard-to-swallow $2 or $3 in spending cuts (depending onwhether you count interest payments) for every dollar of increasedtaxes. There were similar reactions fromsome
of the usual suspects on the right, such as Grover Norquist’s Americans for Tax Re- form, which proclaimed that “support for thecommissionchairplanwouldbeaviola- tionof theTaxpayerProtectionPledge.” Interestingly, though, the reaction from
Republican lawmakers has been signifi- cantly more favorable than McConnell’s no-way, no-how view of compromise. Re- publican Reps. Paul Ryan (Wis.), JebHen- sarling (Tex.) and Dave Camp (Mich.), all members of the commission, called it “a provocative proposal.” Another commis- sioner, Sen. Tom Coburn (R-Okla.), said that “ifwedo the cuts, I’ll go for it.” If a budgethawk suchasCoburncanget
on board, any Republican can. Beyond that, the U.S. Chamber of Commerce, which led the opposition to Democrats in 2010, conceded Thursday that “any solu- tionwill requirecommitmentandsacrifice onboththe spending andrevenue fronts.” Inthosestatementsarethecontoursofa
deal Obama could strike with Republican lawmakers such as Ryan, the incoming Housebudget chairman.Forapresident in urgent need of regaining his standing, the possible results must be tempting: a bal- anced budget, a shrinking federal debt, a long-overdue rewrite of the tax code, im- provingMedicare and Social Security sol- vency in the long run, and easing health- care costs. The political benefits could be equally enormous: taking over the main issue of the Tea Party and building a good relationshipwithbusiness. The questions are whether Obama is
willing to stand up to Pelosi and whether he canweather the consequences of trian- gulating against the liberals. So far, so good. “Before anybody starts shooting down proposals, I thinkwe need to listen,” he said fromSeoul in an implicit rebuke of Pelosi. He also said that he’s “prepared to make some tough decisions” and that “we’regoingtohavetotakeactions thatare difficult andwe’re going to have to tell the truthto theAmericanpeople.” That’s exactly the rightmessage. Here’s
hoping the no-regrets Democrats and the no-compromiseRepublicanshear it.
danamilbank@washpost.com TOPICA What’s next for the global economy?
MARKZANDI Chief economist atMoody’s
Economy.com
The global economy’s prospects hinge on one key
factor: policymakers’ ability to avoid protectionism. If they are able to avoid erecting barriers to trade, investment and immigration, then prospectswill be bright. If not, the fragile global recoverywill come undone. So far, so good.Global policymakers’ arguably
most important achievement during theGreat Recession has been avoiding the kinds of trade and currencywars that contributed to theGreat Depression.This is evenmore laudable given the intensifying political pressures fueled by near double-digit global unemployment. The script, however, is still beingwritten, as is
clear fromthe acrimony at theG-20 summit in SouthKorea.TheUnited States has come under harsh criticismfor the FederalReserve’s resumption of quantitative easing, a byproduct ofwhichwill be a weaker dollar.Officials overseas are concerned that U.S. policy aims to significantly debase the dollar, whichwill result in runaway inflation and aweaker economy. Theseworries aremisplaced, but that is beside
the point. It is vital for global policymakers to keep meeting and talking through their disagreements; theymust not let let themspill over into counterproductive action. I expect themto succeed and for the global economy to gain traction.
DOUGLASHOLTZ-EAKIN Former director of the CongressionalBudgetOffice; senior economic adviser to JohnMcCain’s presidential campaign
The global economy is a choppy sea.After the
failure of the stimulus, theObama administration has turned to a newexport strategy to generate growth.Unfortunately, export-led growth is already the policy of choice forChina, Japan,Germany, Brazil and a host of other key economies. It is inconsistent for every country to simultaneously count on net exports to generate growth. The result is rising international tension.The
United States faces tremendous pressure from Germany,Brazil and others regarding the Fed’s recent decisions to resume quantitative easing (“QEII”).The Fed (and PresidentObama,who curiously decided to violate the “Fed is independent” rule andweigh in on the topic) sees this as domestic monetary policy, but to theworld it is a competitive devaluation of the dollar.The administration’s approach has been to set quantitative targets for external balances— essentially “quotas” for shares of the global economic pie. Itwould neverwork and has been rejected. The key for theUnited States is stronger domestic
pro-growth policies and spending controls that reduce the need to borrowabroad.Absent this, the futurewill be evenmore contentious and littered withmore lawsuits brought before theWorldTrade
ESWARPRASAD ProfessoratCornellUniversity; senior fellowat theBrookings Institution; co-author of the forthcomingbook “Emerging Markets:ResilienceandGrowthAmidGlobal Turmoil”
The global economic recovery is proceeding on
twin tracks.Advanced economies face a tepid and uncertain recoverywhile emergingmarkets experience red-hot growth and try to copewith the risks of assetmarket bubbles and rising inflation. G-20 leaders need to forcefully address the complications created by this bifurcation of growth prospects and required policies.Otherwise,we are in for a trainwreck. Advanced economies are resorting to increasingly
desperatemeasures to secure their recoveries. Rising levels of public debt and aggressivemonetary easing, especially in this country, are generating enormous longer-termrisks both domestically and globally. Emerging-market economieshave rebounded
sharply fromgrowthslowdowns andnowface an altogetherdifferent set of short-termrisks.These economiesneedtighter rather thanmore stimulative policies.This is complicatedby the fact that emerging markets are facing a tidalwave of capital inflows, thanks inpart to cheapmoney inadvanced economies.These inflows areunlikely to ease anytime soon, giventheir strong growthprospects. The recovery in advanced economies still needs
support frommacro policies, but the leaders of those economies should develop crediblemedium- termplans forwithdrawingmonetary stimulus and cutting public debt.Emergingmarkets should allow some currency appreciation and use incoming capital to broaden their financialmarkets rather than resort to futilemeasures such as capital controls. The optimismof the summer is givingway to the
realization that a balanced global economic recovery is going to be a long, hard slog.TheG-20 objective of robust, balanced and sustainable growth remains elusive for now.
C. FREDBERGSTEN Director of the Peterson Institute for International Economics; assistant secretary of the Treasury for international affairs from1977 to 1981
The outlook for the global economy is
surprisingly strong despite the failure of theG-20 at Seoul to domuch to support it.World growth should average 4.5 percent this year and in 2011. This rosy aggregate, however,masks very sharp
differences around theworld.The emerging and developing countries are expanding at better than 6 percent annually.The high-income developed countrieswill come in under 3 percent.
OMBUDSMAN ANDREWALEXANDER For The Post online, standards to set L
essthanaweekbeforeElectionDay, theInternet lit up over a salacious story on
Gawker.com in which aman recounted a boozy sleepover years
earlierwithChristineO’Donnell, theRepublicanU.S. Senate candidate from Delaware. He wrote anony- mously and his story contained no comment from O’Donnell orher campaign. An “aggregation blogger” on The Post’s Universal
Desk, which processes both print and online news content, sought guidance fromsenior news director Sara Goo. The story was spreading like wildfire, but ThePosthadnothing onitsWebsite. Shouldit link to theGawker story? “Don’t touchit,”Goo instructed. But hours later, The Post’s online Opinions page
devoted a blog post to it. Ina funny critique, editorial page writer Alexandra Petri mimicked the Gawker story andlinkedto it. The contrastingdecisions illustrate the challengeof
interpreting traditional print standards in the digital age. Whether they deal with news or opinion, Post journalists oftenfindthemselves inunchartedwaters. In a medium with an inherent need for speed, how strictly should the old rules of authentication and fairnessbeapplied? “It’s like walking on eggshells,” Goo said. “It’s
magnified because we’re in a highly competitive environmentwhere secondsmatter.” The impulse to pull the trigger can cause embar-
rassment. In June, with legendary UCLA basketball coach John Wooden near death, an online staffer overheardnewsroomchatterthat ledhimtoconclude erroneously thatWooden had died.Without verifica- tion, thenewswas soonreported ontheWeb site and rocketed around the Internet, leaving The Post red-
faced. Early next year, The Post will begin mandatory
standards and ethics training for everyone in the newsroom. It can’t come soonenough. ThePost’sStylebookincludes lengthysectionsoffer-
ing guidance on everything fromfairness to the use of anonymous sources. When I’ve discussed them with newsroom veterans, most have confessed it’s been years since they read them. New employees receive littlemorethanashort lectureabout theirimportance. Of greater concern, however, is the broad confusion overhowthey shouldbeappliedonline. There’s much to sort out. The accelerated shift to
digital news delivery has exposed fundamental differ- ences between Post journalists rooted in print and those oriented to new media. The divide has grown withaninfluxofnewemployees,manywithlittleorno experience inactualnewsgathering.Amongnewhires in the newsroom this year, those working online in producingandeditingrolesfaroutnumberthosehired for traditionalnewsgathering. “We have a new mix of skills in the newsroom,”
noted Peter Perl, the assistant managing editor for personnelwho heads a group designing the training sessions. “The Web has presented questions about howthe old standards apply” online, he said, and the training will offer guidance on “what’s usable and underwhat circumstances.” Those are key questions as news consumption
habits rapidly change. In a book released last week, veteran journalists and media experts Bill Kovach andTomRosenstiel cite researchshowing that “six in ten of those [reading] online get news assembled for them by aggregators” who provide links to multiple
sources. In“Blur:HowtoKnowWhat’sTrueintheAge of InformationOverload,” they argue that for quality journalismto thrive, news organizations such as The Post must “help authenticate for us what facts are true andreliable.” Verification is key, Rosenstiel toldme. But he also
argued that news organizations should be more transparent in explaining their print and online policies to readers. “If you’re aggregating other people’smaterial,” he
said, “itmay be as simple as providing a box explain- inghowyouaggregate.Youdon’tcontrol thematerial, but you can explain howyou decidewhatmaterial to use.” And,he said, it’s valuable toinvite readers toweigh
inonhowtodefine evolving online standards. The Post does not share its internal policies. It
should make them public. The lengthy “Standards andEthics” sectionof itsStylebook,alongwithnewer guidelines on the use of social media, are inspiring. Yes, readers would often cite them when they think The Post has fallen short. But what’s the point of setting high standards if you’re afraid to be held to them? Morethanayearago, intheaftermathofThePost’s
ill-conceived plan to sell sponsorships to “salon” dinners,ExecutiveEditorMarcusBrauchlipledgedto make the newspaper’s journalistic standards public. Withmandatory newsroomtraining about to begin, now’s a goodtime.
AndrewAlexander can be reached at202-334-7582or at
ombudsman@washpost.com. For daily updates, read the omblog at
voices.washingtonpost.com/ombudsman-blog/.
Organization, greater trade tariffs and/or subsidies, andmore taxes on foreign investment fromour trade partners.
EastAsia is growing three to four times as fast as
Europe and Japan.TheUnited States is in the middle.The developing countries as awhole are expanding twice as rapidly as the rich ones.The emerging nations fortunately account for half of the global total; they can thus carry theworldwith them, and their share is rising steadily every year. Theymade up half of theG-20 thatmet in Seoul, reflecting the enormous shift in global economic power that has occurred over the past three decades and is likely to become evenmore pronounced in the years ahead. Themajor riskto this reasonably optimistic
outlookisprematurepolicy tightening inthehigh- income countries.TheFederalReservehas alleviated muchof that concernintheUnitedStateswithits quantitative easing ofmonetarypolicy,butGermany is tightening itsbudgetsdespite the total absence of pressure fromthe financialmarkets.The otherbig riskis that theG-20’s failure to resolve the large and growing current account imbalances andexchange ratemisalignments, especiallybetweenChina and the rest of theworld, couldtrigger trade andcurrency restrictions thatwill stifle growtheverywhere.
KARENJOHNSON Director of the FederalReserve’sDivision of International Finance from1998 to 2007
Global economic growthhasbeensub-par and
unevenandis likely to remainsonext year.Although the “emerging” economies are recording solidGDP growth,most advancedindustrial countries are still growing too slowly to reduceunemployment rates. TheUnitedStates, for example,has a troubled housing sector andadepressedcommercial real estatemarket. Its financial systemis reluctant to provide credit tomany.Those factors, anendto positive shifts infirms’ inventoryholdings andanend to the stimuluspackage,haveproducedgrowthtoo weakto improve the labormarket or lifthousehold confidence. Given the fragility of the recovery, officials in
many nations arewary ofmeasures thatmight weaken their country’s immediate prospects.This edginess has been apparent in quarrels over currency values and fears of trade imbalances that raise risks of heightened protectionismor a crisis triggered by accumulated currency holdings.The global gross capital flowswe are seeing in response to interest rate differentialsmay be the seeds of a future crisis. Underlying all this is the reality thatmany
countries (including ours) have neglected long-term problems, such as deficit spending,whose remedies are partially at oddswith the expansionary policies needed to address the short-termcyclical slowdown in the global economy.Theway forward is to design fiscal and regulatory policies that unfold over time but inwhich the commitment to future action is firm.We need to usemonetary policy to guide the macroeconomic outcome all along theway.
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