Second: How much and how fast should budget deficits be cut? From 2009 to 2012, the federal debt increased by $5 trillion; on the present path, it will continue growing as a share of the economy. Many economists warn that this could someday trigger a financial crisis, as fewer lenders buy U.S. debt. But many of the same economists fear that abrupt deficit declines — from tax increases and spending cuts — would cause a new recession. That's what the "fiscal cliff" involved.
Third: Can the global economy avoid self-destructive economic nationalism? Economist Adam Posen of the Peterson Institute warns of currency wars, as countries let exchange rates depreciate to gain competitive advantage in export markets. This has already happened; if it gets worse, protectionism could obstruct trade flows.
These are thorny issues; Lew's possible responses are unclear. One constructive step would be to start cleansing Washington's poisonous political climate. This corrodes confidence and weakens the economy by undermining the willingness to spend and invest by households and businesses.
The question about Lew is whether he encourages cooperation and bolsters confidence — or becomes an instrument of conflict. Obama's anti-business attitudes are politically convenient but economically destructive. As Behravesh puts it: "Who do they [administration officials] think creates jobs? It's puzzling to me that, when they want jobs, they bad-mouth the private sector. It doesn't compute."
Robert J. Samuelson is a columnist for the Washington Post.
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