A copy of the U.S. budget is shown on Capitol Hill in Washington.
Image Source: 
REUTERS/Jason Reed

Peter R. Orszag (Lazard), Robert E. Rubin (Council on Foreign Relations) and Joseph E. Stiglitz (Columbia University)

Uncertainties about future interest rates and their impact on government borrowing call for a new fiscal framework avoiding arbitrary debt and deficit targets. Three veteran government policymakers—Peter R. Orszag, Robert E. Rubin, and Joseph E. Stiglitz—warn that current low interest rates may not last forever. They argue that unpredictable factors like global shocks and climate change require greater use of budgetary “automatic stabilizers” that self-activate in response to economic distress. Policymakers could then use discretion to make any adjustments instead of adhering to arbitrary targets.

The Peterson Institute for International Economics building is closed to staff and visitors until further notice. PIIE personnel are working remotely, with access to telephone messages.

Photo Credit: 
REUTERS/Jason Reed