Summers on Post-Deal Budget Policy

Local and State governments will need help in the coming months to keep them from adding too much to unemployment.

 

…the single largest and easiest method of deficit reduction is the non-extension of the Bush high-income tax cuts. The president should make clear that he will not accept their extension on any terms. That, along with modest entitlement reform, will be sufficient to hit current deficit reduction targets. Second, it is essential the payroll tax cut be extended and further measures, such as infrastructure maintenance and unemployment insurance extension, be taken to spur demand. If so, there is still time to confirm Churchill’s maxim that the US always does the right thing after exhausting all the alternatives.

via Relief at an agreement will give way to alarm – FT.com.