“The optimal policy response can only be formed if we know why the economy remains weak,” Sufi wrote in a Bloomberg op-ed this summer. “And in making the diagnosis, it is crucial to check ideology at the door and instead be guided by the data. And the data tell a compelling story: The main factor responsible for both the severity of the recession and the subsequent weakness of the economic recovery is the deplorable condition of the U.S. household balance sheet.”
Housing policy, it just so happens, has vexed this administration as much as, or more than, any economic issue.
Carmen Reinhart. Senior fellow at the Peterson Institute for International Economics, but you know her as the coauthor, with Harvard’s Kenneth Rogoff, of the most widely respected book in Washington about the financial crisis: This Time is Different: Eight Centuries of Financial Folly.
Reinhart is a deficit hawk, which would increase her appeal to Republicans and anger some Democrats. She also happens to be generating some seriously creative ideas lately on how the United States can power through the sort of protracted slog that she and Rogoff contend typically follows a major financial meltdown. For example, Reinhart told Bloomberg’s Al Hunt this month that one of the best ways to accelerate recovery would be forgiving debt for low-income households.
She also lines up with Obama on taxes, telling Bloomberg: “Average tax rates have to be higher, and Democrats have to accept that raising marginal rates may not be the way. But I think the tax issue has to be put on the table.”
Rob Shapiro. Chairman of the economic consulting firm Sonecon, and a former adviser to President Clinton and Vice President Al Gore, among others. He brings D.C. insider cred but also a fairly loud voice urging Obama to think big on economic policy.
Perhaps most intriguingly for Obama, Shapiro sees job-creation policy and politics intertwined, writing: “The president can lay a foundation for stronger job and income gains in a second term — if he’s reelected — by campaigning for a new economic program.”
In a recent blog post, Shapiro urged the president to “offer up a new program of ‘Big Ideas’ that directly takes on jobs, stagnating incomes, housing values, and the nation’s debt.” He advocates a deeper cut in the payroll tax, a new government lending agency for small business, bridge loans for struggling homeowners, and funding for community colleges to offer free IT training to anyone who wants it.
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