In the current global crisis, economists and policymakers have reembraced Big Government as a means of preventing the recurrence of a debt-deflation depression. According to Senior Scholar L. Randall Wray, the danger is that policy may not downsize finance and replace money manager capitalism. Moreover, we need a permanently larger fiscal presence, with more public services. His advice to President Obama is to discard (and reverse where possible) all of former U.S. Treasury Secretary Henry M. Paulson’s actions. Wray believes that we can afford any necessary spending and bailouts, and that these actions will not burden our grandchildren.

Policies to deal with the immediate crisis include liquidity; a “too big to save” doctrine; tax relief that strengthens household balance sheets; fiscal stimulus, including state and local government assistance; mortgage relief, including the renationalization of Fannie Mae and Freddie Mac; and higher budgets for the pursuit of fraud (i.e., jail the crooks). The author also outlines policies to encourage sustainable economic growth in the medium to long term. He notes that Obama was on the right track when he set a goal of creating millions of new jobs, but these jobs should be provided, without limit, to anyone willing and ready to work.

“Intergenerational accounting” purports to calculate the debt burden our generation will leave for future generations. The Federal Accounting Standards Advisory Board (FASAB) proposes to subject the entire federal budget to such accounting and is soliciting comments on the recommendations of its two “exposure drafts.”

The authors find that intergenerational accounting is a deeply flawed and unsound concept that should play no role in federal government budgeting. Arguments based on this concept do not support a case for cutting Social Security and Medicare. For example, the reporting proposed by the FASAB exposure drafts does not appear to recognize the fundamental differences between public and private budgets. Some of the most basic principles of accounting are neglected, terms are ill-defined, projections are misused, policy prescriptions are unjustified, and revenues are matched to spending for parts of the federal budget in ways that have no economic validity.

In this report, the authors examine long-term trends in economic well-being between 1959 and 2004 within various population subgroups based on such household characteristics as race/ethnicity, age, education, and marital status. They also break down the absolute gap in well-being (measured in dollars) between subgroups by component. This is helpful in highlighting the extent to which the sources of changes in disparities are the result of policy or broader economic trends.

The LIMEW provides a picture of disparities among population subgroups that differs from the official measures. Therefore, it is important to recognize these differences when accounting for intergroup economic disparities and formulating appropriate policies to improve the relative well-being of disadvantaged groups.