By Donald C. Fry
U.S. Treasury Secretary Tim Geithner is adding his voice to growing calls among public officials and advocates for “balanced” approaches to policymaking as our nation and our state claw their way out of a debilitating recession.
“The shock of the crisis in 2008 and 2009 was truly overwhelming,” Geither said May 17 to a capacity audience of Greater Baltimore Committee executives and CEOs gathered at the Baltimore Marriott Waterfront Hotel. “The level of panic you saw across much of the financial system and across the American business community was incredibly strong.”
The fact that traumatized business owners and managers were not sure when or how the United States would come out of the recession has had long-lasting effects on economic growth because of lingering business tentativeness and caution.
Nurturing economic recovery amid the “aftershocks and scars” of the financial crisis, coupled with overcoming challenges to U.S. competitiveness – including education weakness, income stagnation, healthcare costs, deteriorating infrastructure, and poverty rates – will require “a carefully-designed, balanced package of long-term reforms to restore fiscal sustainability,” Geithner said.
Even in a tentative economic recovery, “a credible strategy for economic growth requires a willingness to do things, not just cut things,” Geithner said. “If you try to restore fiscal balance without a penny of additional revenue, then you have to cut deeply – too deeply – into critical functions of government.”
Others talking about “balance” these days include Maryland Governor Martin O’Malley, who calls his administration’s fiscal strategy of coupling budget cuts with tax increases a “balanced approach.”
Thomas L. Friedman offered a compelling perspective on the topic of balance and public policy in a March 13 New York Times opinion piece.
Friedman passes onto readers a compelling, insightful definition of capitalism from David Rothkopf, the CEO and editor-in-chief of Foreign Policy magazine, who has written a new book, “Power, Inc.” about the epic rivalry between big business and government.
“America’s success for over 200 years was largely due to its healthy, balanced public-private partnership, where government provided the institutions, rules, safety nets, education, research and infrastructure to empower the private sector to innovate, invest and take the risks that promote growth and jobs,” Friedman wrote, paraphrasing Rothkopf.
“When the private sector overwhelms the public, you get the 2008 subprime crisis. When the public overwhelms the private, you get choking regulations.”
This observation should be imbedded in the minds of all in business and government alike.
The trick in both Washington and Annapolis is to discern specifically where the most effective “balance” lies in making public policy.
To the GBC audience, Geithner contended that “the basic arithmetic of fiscal and economic policy is not political.” He’s right; it shouldn’t be. But these days, it quickly becomes highly political in legislative bodies in Washington, Annapolis and almost anywhere else where elected officials gather to enact things.
To be sure, in finding balance, the stakes are high for politicians. But they are even higher for the private-sector employers and employees who ultimately drive our economic growth and the revenue it generates for our government.
Geithner’s audience yesterday – the Greater Baltimore Committee – offers public policymakers its own road map for balance in the form of eight core pillars for a good business climate contained in the GBC report, “Gaining the Competitive Edge.“
The core pillars are:
• Government that partners with business
• A highly-educated workforce that meets business needs
• Streamlined and stable regulatory policies
• A fair and competitive tax structure
• Competitive costs of doing business
• Superior and reliably-funded transportation infrastructure
• Strategic investment in business growth
• A coordinated, well-funded business marketing strategy for the state
To those in business, these core fundamentals of policy “balance” seem obvious. But they do not always remain top of mind for elected leaders in the midst of chaotic, disjointed legislative sessions where politics still remains the primary element that shapes policy decisions.
Geither said it pretty directly yesterday: finding policy balance in Washington “will require better choices from our political system. And it will require recognition of basic economic realities,” he told GBC members. “No economy can be stronger over time than the ability of its political leaders to come together to make tough decisions.”
Finding proper fiscal policy balance may be easier said than done in today’s national and state policy environments, but it’s even more important in these times for government to find a way to get it right.