UMD Business, Public Policy Experts Comment on Fiscal Cliff

Media Alert Nov. 1, 2012 
UMD Business, Public Policy Experts Comment on Fiscal Cliff

With the year-ending “fiscal cliff” approaching, faculty experts from the University of Maryland's School of Public Policy and Robert H. Smith School of Business are available to comment on implications of this impending economic slowdown due to expiring tax cuts plus dramatic spending cuts established by Budget Control Act of 2011.

The Congressional Budget Office has projected a sharp recession during the first half of 2013 from no legislative action and the full effect of tax increases and budget cuts. Oppositely, by broadly extending the tax cuts and deferring the spending cuts, the CBO forecasted a recession would be avoided, but the public debt-to-GDP would steadily increase.

The Smith School has an in-house broadcast facility for live or taped interviews with business and public policy experts via fiber-optic line for television or multimedia content.

The Hon. Jacques Gansler: Leadership and Political Courage Needed to Overcome Security Challenges

“Similar to the period following the launch of Sputnik or the fall of the Berlin Wall, the security world is changing dramatically, and a holistic perspective is required. The controlling acquisition policies, practices and laws and the armed services’ budgets and requirements priorities have not been transformed sufficiently to match the needs of this 21st century world. In fact, there is still an emphasis on ‘resetting’ vs. modernization; and on ‘preserving’ the industrial base, vs. transforming it. Achieving the required affordability changes will take political courage and sustained, strong leadership by both the executive and legislative branches, working together. This leadership must be demonstrated at multiple levels. The American public, and particularly, our fighting men and women, deserve it – and the nation’s future security depends upon it.”

From 1997 to 2001, Gansler served as Under Secretary of Defense for Acquisition, Technology and Logistics, the third-ranking civilian at the Pentagon. Before joining the Clinton Administration, Gansler held a variety of positions in government and the private sector, including Deputy Assistant Secretary of Defense (Material Acquisition), Assistant Director of Defense Research and Engineering (Electronics), Vice President of ITT, and engineering and management positions with the Singer and Raytheon corporations. He is the Roger C. Lipitz Chair in Public Policy and Private Enterprise and Director of the Center for Public and Private Enterprise at the School of Public Policy. 
Contact: 301-405-4794, jgansler@umd.edu 
Bio: http://publicpolicy.umd.edu/jacques-gansler 

Philip Joyce: The Fiscal Cliff is, First and Foremost, a Failure of our Politics

“It is important to keep in mind that the fiscal cliff is, first and foremost, a failure of our politics. The Congress and the President have not made fiscally responsible choices in the face of overwhelming evidence that these choices will be necessary to avert future economic collapse. While it seems likely that some way will be found to keep us from falling off the fiscal cliff in January, it will not change the fact that the underlying problem must be solved. Such a solution will not involve a choice between raising taxes and cutting spending, or between cutting defense spending and reforming entitlements. The magnitude of the problem suggests that ALL options must be on the table and that eventually almost no area of the budget — either on the revenue side or the spending side — can remain untouched.”

Joyce's teaching and research interests at the University of Maryland’s School of Public Policy include public budgeting, the Congressional budget process, performance measurement and intergovernmental relations. He is the author of The Congressional Budget Office: Honest Numbers, Power, and Policy Making. In addition to his academic work, Joyce, professor of management, finance and leadership, worked for 12 years in the public sector, including four years with the Illinois Bureau of the Budget and five years with the United States Congressional Budget Office. In 1992, he received the CBO Director's Award for Distinguished Service. 
Contact: 301-405-4766, pgjoyce@umd.edu 
Bio: http://publicpolicy.umd.edu/philip-joyce

David Kass: Anticipate Legislation Aimed to Avoid Recession

“The fiscal cliff is likely to be resolved either in the lame duck session of Congress after the election, or postponed up to six months. Any spending cuts or tax increases agreed upon by Congress would have to be relatively small in the short run to avoid driving the U.S. economy back into a recession. Following the Financial Crisis of 2008, the current large budget deficit is necessary to provide the fiscal stimulus to prevent an economic downturn. This fiscal stimulus, along with the monetary stimulus provided by the Federal Reserve, should remain in place until the unemployment rate declines to 7 percent or lower and inflation remains contained at 3 percent or less. There is virtually no chance that the substantial mandatory spending cuts and tax increases from sequestration will be allowed to take place because of their catastrophic impact on the economy.”

Kass, Tyser Teaching Fellow in finance, has held senior positions with the Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis. His teaching includes MBA-level financial restructuring and strategy and investment management, and hehas launched a Smith School “Warren Buffett” blog. He has appeared on Bloomberg TV, CNBC, PBS Nightly Business Report and others.
Contact: 301-405-9683, dkass@rhsmith.umd.edu 
Bio: http://www.rhsmith.umd.edu/finance/faculty/kass.aspx 

Don Kettl: The implications are huge and the stakes couldn’t be higher

“The fiscal cliff is either a once-in-a-generation opportunity to rethink what government does and how it does it —or one of a long series of opportunities to kick the big questions further down the road. Either way, we will be having a fundamental, maybe fierce, debate about the role and size of government. Part of the discussion will surely be about taxes and spending and debt, but there’s the bigger question about just what we expect government to do. It’s one thing to talk about cutting back duplicative programs. It’s quite another to erode or slash government’s capacity to do things, from providing safe air traffic control to uncovering the causes of the recent outbreak of meningitis. We’re looking at the possibility of searching questions about governmental programs and its effect on our lives. And we’re inevitably looking at strategies and tactics that will reveal the very best—and perhaps the worst—of American politics, especially on Capitol Hill. The implications are huge and the stakes couldn’t be higher.”

Kettl, dean of the UMD School of Public Policy, specializes in the management of public organizations. He has appeared on national television on shows including “Good Morning America,” “ABC World News Tonight,” “CBS Evening News,” CNN's "Anderson Cooper 360" and "The Situation Room," the Fox News Channel, as well as public television's “News Hour” and the BBC. His dozen books and monographs include:The Next Government of the United States: Why Our Institutions Fail Us and How to Fix Them; On Risk and Disaster: Lessons from Hurricane Katrina; The Global Public Management Revolution; and Leadership at the Fed.
Contact: 301-405-6356, kettl@umd.edu 
Bio: http://publicpolicy.umd.edu/donald-kettl

Bill Longbrake: Compromise, Slow Growth a Likely, Cautious Scenario

“Congress will likely try to find a middle ground between 'falling off the cliff' and extending all provisions of current law with the intent to stabilize the public debt-to-GDP ratio (over 71 percent in 2012) between 75-80 percent. Once the economy strengthens, the risks of driving deficits much lower will diminish. Thus, an optimal strategy would be to stabilize the public-debt-to-GDP ratio over the next three years and then begin to bring it down gradually. Such a "slow deficit reduction" strategy could leave the economy, by 2017, healthy enough to handle the risks of more aggressive reduction in annual budget deficits.”

Longbrake, a Smith executive-in-residence and a former FDIC chief financial officer, has extensively served academic, business and public policy institutions, covering finance and investments, macroeconomics and monetary policy, risk management, housing and public policy. He comprehensively analyzes the "fiscal cliff" in the October 2012 issue of his newsletter to financial strategists:http://www.rhsmith.umd.edu/cfp/pdfs_docs/LongbrakeLetter/LongbrakeOct2012.pdf 
Contact: 301-405-9622, Wlongbrake@rhsmith.umd.edu 
Bio: http://www.rhsmith.umd.edu/finance/faculty/longbrake.aspx 

Phillip Swagel: The presidential debate hasn’t prepared Americans for the difficult fiscal choices ahead

“The fiscal cliff and sequestration present a huge challenge for policymakers, but even these are just the prelude to taking on the immensely difficult task of addressing the long-term U.S. fiscal imbalance. Inevitably this will require difficult choices to be made on spending and on taxes, notably for the entitlement programs of Social Security, Medicare, and Medicaid. What is especially discouraging is that the economic policy debate during the Presidential campaign season has not prepared Americans for these difficult choices. President Obama , for example, talked in the debates about entitlement reform as involving mere tweaks, when the needed decisions will require serious choices. Indeed, if only tweaks were needed, these problems would have been solved long ago. A key challenge then for the next President will be to begin a serious national discussion and to prepare Americans for the difficult fiscal choices ahead.”

Swagel, professor in international economic policy at the UMD School of Public Policy, served as Assistant Secretary for Economic Policy at the Treasury Department from December 2006 to January 2009, where he advised Secretary Paulson on all aspects of economic policy. He also served as a member of the TARP investment committee, and was responsible for analysis on issues including housing, financial markets, healthcare, pensions, and macroeconomic forecasts. Swagel was previously chief of staff and a senior economist at the White House Council of Economic Advisers, and was an economist at the IMF and the Federal Reserve Board. Swagel specializes in international economic policy. 
Contact: 301-405-1914, pswagel@umd.edu 
Bio: http://publicpolicy.umd.edu/phillip-swagel

Additional Experts

Supply and Demand for Goods, Services

Curt Grimm, the Smith School Dean's Professor of Supply Chain and Strategy, can discuss strategic implications for U.S. companies – such as whether they expand or retract or raise or lower prices on goods. He has published 80 articles and four books from researching the interfacing of business public policy with strategic management. 
Contact: 301-405-2235, cgrimm@rhsmith.umd.edu 
Bio: http://www.rhsmith.umd.edu/lbpp/faculty/grimm.aspx 

Stakes for the Economy, Finance Sector

Mike Faulkender, associate professor of finance, can discuss how fiscal cliff policy measures can affect the economy at-large and how financial executives manage their company’s assets. His research focuses on empirical corporate finance, primarily in the areas of capital structure, risk management, corporate liquidity, and executive compensation. His work has been cited in the New York Times and Wall Street Journal among others. 
Contact: 301-405-1064, mfaulken@rhsmith.umd.edu 
Bio: http://www.rhsmith.umd.edu/finance/faculty/faulkender.aspx 

Cliff Rossi, Tyser Teaching Fellow and Smith executive-in-residence, has insight from 25 years in senior risk management and credit positions at Citigroup, Washington Mutual, Countrywide, Freddie Mac and Fannie Mae, Rossi can break down financial policy rhetoric encompassing market regulation and related issues involving such sectors as banking, real estate and small business. He writes the weekly Risk Doctor column (http://www.americanbanker.com/authors/1486.html) for American Banker and is a frequent source/contributor on outlets from Bloomberg, CSPAN and CNN to Canada's Business News Network. 
Contact: 301-908-2536, crossi@rhsmith.umd.edu  
Bio: http://www.rhsmith.umd.edu/finance/faculty/rossi.aspx 

About the Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.