RX for an ailing economy: Dueling views on the best fix

There’s no question the economy is in serious trouble. But what should Washington be doing about it?

amNewYork spoke to two policy analysts on both sides of the political spectrum, whose divergent takes underscore the elusiveness of the goal: a healthy economy.

Tad DeHaven

The Cato Institute

Solution: Big government is part of the problem; filter power down to the local level

DeHaven says Washington needs to do “pretty much the opposite of everything it’s been doing the last 10 years or so” by getting its hand out of the market.

“A decentralization is what’s called for, devolving power to the state in local level,” DeHaven said. “If the federal government left things up to local government, you would have more civic engagement and more responsibility on the part of state and elected officials,” he argued.

If it were up to local governments to decide policies, people choose what they want, DeHaven reasoned. If you want universal health care, move to Vermont. For no government mandate, Texas is the place to go.

“The great thing about having 50 states… is that the states can look at each other and see what works and doesn’t work,” he said.

Andrew Fieldhouse

Economic Policy Institute

Solution: Stimulus spending and tax hikes offer a tonic to the economy that will boost job creation

Fieldhouse said the debt ceiling deal approved this week not only hurts the economy, but will also increase unemployment.

Cutting back on the government’s spending now “would be the last thing you would want to do,” Fieldhouse said, instead arguing for increasing taxes, giving money to local governments and more stimulus spending to build infrastructure and create jobs for the unemployed.

“You’re not only buying goods for what they’re building, but you give them a paycheck which trickles down into the economy,” Fieldhouse said. “It’s a very cheap time for the government to borrow,” he continued, adding that the government needed to step in because the private sector wasn’t going to.

“There’s a glut of cash on the corporate balance sheet and they’re not spending,” he said.