Sunday, December 13, 2009

“So, how are the green shoots doing today?”

Nobody would be surprised to learn that this is often the first question that Maya MacGuineas hears in the morning.

As the president of the bipartisan Committee for a Responsible Federal Budget (CRFB) and the director of the fiscal policy program at the nonpartisan New America Foundation, Ms. MacGuineas is understandably obsessed with “green shoots,” a phrase Federal Reserve Chairman Ben S. Bernanke coined to describe the first signs of economic recovery.

Surprisingly, the question comes from her son, William, 5. Sometimes William asks about the budget. So far, no policy questions have come from daughter Annika, 3.

Welcome to the world of Maya MacGuineas.

“It’s exhausting,” she said, acknowledging she occasionally retires in the evening worried whether she has done enough that day for her children and her jobs.

She is widely known as an impeccably credentialed deficit hawk who nonetheless supported the federal government’s massive borrowing campaign throughout the financial and economic meltdowns during 2008 and 2009.

“We’re not out of the woods yet,” Ms. MacGuineas said the other day, adding, “the economic recovery is still incredibly risky.”

Married for seven years to Robin Brooks, a globe-trotting financier, Ms. MacGuineas, a political independent and native Washingtonian, lives in Chevy Chase, Md., “one block” from her beloved D.C.

She landed what she describes as her “dream job” at the CRFB in 2003. “I won the lottery!” she exclaimed six years later. “Few people love the budget and worry about the deficit as much as I do.”

The committee is a bipartisan, nonprofit organization committed to educating the public about issues that have significant fiscal policy impact, such as health care, taxes and entitlements. Its board includes a “who’s who” of budget experts, many of whom served as CBO directors, budget committee chairmen and White House budget directors.

Ms. MacGuineas graduated from Northwestern University, where she majored in economics and psychology. “I figured if you can understand markets and people, then you’ll know the important things,” she explained.

After college, she wanted to be either a bartender in London (psychology) or a policy researcher (economics).

She became a research assistant at the Brookings Institution. “For two years, I got paid to keep learning new ideas all the time,” she fondly recalls.

She then spent two years on Wall Street as a stock analyst at Paine Webber, where she says she “became obsessed with the budget deficit and a ‘bond vigilante’ without knowing it.” She wanted to read “Deficits for Dummies,” but she discovered it hadn’t been written. So she decided to write a book about the deficit herself, while serving as policy director at the Concord Coalition, a budget-watchdog group.

After approaching “a gazillion” publishers, she finally found a taker. But then the Republican-controlled Congress and the Clinton White House reached a deal to balance the budget, and her book deal fell through.

After picking up a master’s degree in public policy at the Kennedy School of Government at Harvard, she returned to Brookings. In 1999, she joined John McCain’s campaign for the Republican presidential nomination as a policy adviser. She traveled with the candidate to New Hampshire and Michigan as he unveiled his Social Security and economic plans.

“I always point out that he won the states where I traveled with him,” she laughingly recalled.

With nearly two decades of experience as a budget analyst, Ms. MacGuineas has more than a few answers when William asks, “What’s up with the budget, mommy?”

That’s when she dons her green eyeshade.

For the 50 years ending in fiscal 2008, federal spending averaged about 20.5 percent of gross domestic product; and federal revenues averaged 18.5 percent. But spending is on track to reach 26 percent to 30 percent over the long term, Ms. MacGuineas said.

Through a combination of tax increases and spending cuts, she said policymakers must balance the budget over the business cycle with spending and revenues averaging 22 percent of GDP.

On the spending side of the ledger, she would means-test entitlements, including Social Security and Medicare.

On the revenue side, she would introduce an energy tax, such as a gasoline tax. She would gradually reduce the value of mortgages entitled to the interest deduction from $1 million to $350,000.

Those 10-year, $1.8 trillion in middle- and upper-middle-class tax cuts that President Obama promised to extend? Not so fast. They would have to be paid for by raising taxes elsewhere or extra spending cuts.

“I’m the grinch who wants to pay for all these things,” she said.

Congress should also pay for eliminating the $200 billion-plus cuts in Medicare payments to doctors. Ditto for patching the alternative minimum tax. And she would get rid of the deduction for employer-paid health insurance.

The mild-mannered Ms. MacGuineas would also take an ax to corporate welfare.

“The fiscal noose around our necks will tighten much sooner” because we spent years borrowing irresponsibly before the meltdown, while ignoring the fiscal tsunami approaching with the retirement of the baby boomers, she warned.

While she thinks President Obama has been “pretty terrific” so far, under no conditions can policymakers allow publicly held debt to reach 82 percent of GDP by 2019, as the president proposes to do, according to CBO estimates.

Tomorrow, the Peterson-Pew Commission on Budget Reform, in collaboration with the CRFB, will be releasing its first report, “Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt.”

It’s fair to say that 5-year-old William will get more answers than he could ever imagine the next time he asks, “What’s up with the budget, mommy?”

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