Dr. Alice Rivlin, former director of the Office of Management and Budget in the Clinton Administration, will speak at the Emerson Center Sat., February 2.  Rivlin is the second speaker in the Emerson Center’s Celebrated Speaker Series, following former Florida Gov. Jeb. Bush.

Rivlin worked in the Johnson, Ford, Carter, and Clinton administrations, moving from the Congressional Budget Office to become vice chair of the Federal Reserve System.   Rivlin was also a member of the Bowles-Simpson Commission on Fiscal Responsibility and Reform.

In advance of her appearance at the Emerson Center, Rivlin answered the following questions for InsideVero.

InsideVero: Has enough been done to reform regulation and enforcement of regulation of the financial industry?

Dr. Rivlin: The Dodd-Frank Act is still a work in progress. The catastrophic financial crash of 2008 threw the economy into a deep recession and cost millions of people their jobs, home, savings, and hopes for the future. We can’t allow that to happen again. Congress acted quickly to pass the Dodd Frank Act in 2010, but implementing that complicated piece of legislation has been slow. If it is implemented effectively and well enforced it will reduce the chances of another crash. It will improve lending standards, prevent predatory lending, keep financial institutions from taking such big risks, and provide early warning of “systemic” risks that might cascade through the whole system. But not all the regulations have even been written yet. It is important to keep reevaluating the legislation and trying to simplify the provisions so they accomplish the purpose with minimum regulatory burden.

InsideVero: Will the recent deal struck between the White House and Congressional Republicans go far enough to raise taxes and cut expenses?

Dr. Rivlin: It’s a start, but far from the “Grand Bargain” that would be sufficient to keep the debt from rising faster than the economy can grow. The New Year’s Day deal was important because it avoided the “fiscal cliff”—the combination of income tax increases for everyone and across-the-board spending cuts that threatened to push the economy back into recession. The deal raised tax rates on high earners, which will increase revenues by about $600 billion over ten years. The Budget Control Act of 2011 restrained discretionary spending (annual appropriations) and saved about $1trillion over ten years from previous projects. Both actions helped reduce the growth of future debt, but not enough. Debt is still expected to grow faster than the GPD as the baby boom generation retires and health care costs continue to rise. Congress and the Administration need to come back to the bargaining table. They need to craft a bargain (maybe less than “grand”) that reduces the future growth of Medicare and Medicaid, puts Social Security on a firm foundation for the future, and reforms the tax code.

Inside Vero: Assuming the current level of deficit spending cannot continue indefinitely, what do you think are the practical solutions to putting the financing of the federal government back on sound footing for the long term?

The rising cost of the federal health programs, especially Medicare and Medicaid, is the main driver of future spending. We need to find ways to deliver health care more efficiently, so that we can preserve these programs, but slow their cost growth. Comprehensive tax reform could also produce more revenue from a simpler and more pro-growth tax code.

InsideVero: Are you concerned about the increasing concentration of wealth in the U.S.? If so, do you think the causes are market-based, or do you think government policies have contributed to the growing economic disparities in America?

We have been witnessing an extreme concentration of income gains at the very high end of the income scale—the top on percent or less–and a resulting rapid increase in the concentration of wealth at the top. This is a market based phenomenon, but is reinforced by policies when big money is able to dominate political decisions. However, I am much more concerned that we are not creating enough opportunities for low-income young people to acquire skills and education and move up the income scale.

InsideVero: What shifts in public policy, and/or business strategies could reverse the U.S.’s economic slide in relations to the emerging economies?

We can grow faster if we get our budget back on a sustainable path for the long run (debt declining as a percent of GDP), while we invest more both publicly and privately, especially in skills and education.  But we are a mature economy that will not grow as fast as emerging countries. That is not bad—we benefit from their growth and they from ours.

Dr. Rivlin will be speaking at the Emerson Center Saturday at 4 a.m. and 7 p.m.  For ticket information contact the Emerson Center Box Office at 772-778-5249.