Governing the $5 Trillion Economy: A Twentieth Century Fund Essay

There is an enormous concern today about the Federal budget, and almost all of it begins and ends with the deficit as the problem. But as eminent economist Herbert Stein argues in Governing the $5 Trillion Economy, the solutions most often proposed are escapist. Freezes, across-the-board cuts, or constitutional amendents all fail to take into account the real needs of the nation and, worse yet, focus too narrowly on the Federal budget. Stein contends that it is not enough for the government to manage only the Federal budget. The government, in cooperation with private planners, must begin to manage the whole output of the nation, which currently runs at almost five trillion dollars. It is only when planners can make choices between allocating resources either from the public sector (the Federal budget) or the private sector (industry or individuals), Stein says, that those decisions that benefit the nation as a whole will be made. For instance, health care planners should be able to choose between appropriating Federal money for Medicare and mandating company-paid employee health care plans. This would allow the government to reduce expenditures while still meeting its goal of better health for all citizens. Governing the $5 Trillion Economy is not a partisan argument for a specific set of economic policies, but an insightful prescription for improving the policy process no matter what the aims of the government. Written by one of America's leading authorities on national economic policy, this trenchant volume will be required reading for planners in government and the private sector as well as anyone interested in the future of the American economy.