PUT RELIEF ON AUTOPILOT

Justin Wolfers, Professor of Public Policy and Economics, University of Michigan

Given the degree of financial pain

that households are suffering, Wolfers, like many economists, would urge the next president to get more money into the hands of Americans fast. But he’d also advise the president to remove—or at try to least reduce—the politics that have gummed up the federal government’s ability to respond quickly to the financial crisis thus far by taking some decisions out of human hands.

“The last few weeks of stimulus talks being on again, then off again, as electoral fortunes—and the president’s steroid doses—fluctuated are a primary example of the system not working,” he says. “The fiscal need didn’t change, just the politics. So why not simply agree in advance that if the economy gets this bad, we’ll execute some specific amount of fiscal stimulus?”

A good way to accomplish this, Wolfers says, is through “what economists call automatic stabilizers, which are programs that automatically spend more and tax less when the economy tanks.” One current example: the Supplemental Nutrition Assistance Program, commonly known as food stamps. During tough economic times, the number of people who meet the program’s income and savings requirements go up and the program costs more. When times are good, the reverse happens.