What Should Congress Do to Avoid a Recession?

Rob Bluey / January 16, 2008

Members of Congress turn their attention to the economy this morning with a Joint Economic Committee hearing about what lawmakers should do to avoid a recession. They’ll hear testimony from former U.S. Treasury Secretary Lawrence Summers, Economic Policy Institute President Lawrence Mishel and Heritage’s Bill Beach, director of our Center for Data Analysis.

Beach will use the high-profile setting to stress that any stimulus package considered by Congress must take into account a long-term outlook rather than a quick fix.

Congress obviously should do nothing to harm the economy, it should let the Federal Reserve lead the effort to stabilize economic activity, and it should keep its focus on crafting long-term, pro-growth economic policy. Congress should take this moment of slow growth to do what it does best: set broad economic policy.

Beach believes Congress can play its biggest role in the areas of tax, regulatory and spending policies. Putting forward a pro-growth economic plan would ease fears among investors, calm business owners and restore confidence in workers who are worried about their wages.

While these policies take a long-term view of the economy, Beach said they could bring short-run benefits as well, encouraging economic decision makers to reduce the risk they place on starting new businesses or expanding existing enterprises.

The full text of Beach’s testimony is below. (UPDATE: Video of Beach’s opening remarks is available on YouTube.) (more…)