When economics was taken seriously...

Posted: Jan 22, 2002 12:00 AM
On January 12, former Congressman Henry Reuss, Democrat of Wisconsin, died at age 89. I worked with Mr. Reuss for several years back in the early 1980s, while he was chairman and I was on the staff of Congress's Joint Economic Committee. Although he and I disagreed strenuously on economic policy, we got along well because he had respect for economists and Congress as an institution. Capitol Hill would be a better place if there were more people like him there today. Lest Mr. Reuss's memory be tarnished by praise from a conservative Republican such as myself, let me quickly note that he was no conservative nor even a moderate. Henry Reuss was an old fashioned New Deal/Great Society liberal. As chairman of the House Banking Committee, he attacked the Federal Reserve and high interest rates. Later, as chairman of the JEC, he was an implacable foe of just about everything the Reagan Administration ever did. I used to spar regularly with Mr. Reuss's top staffer, James Galbraith, economist John Kenneth Galbraith's younger son. For two years, Jamie was Executive Director of the JEC, while I headed the Republican staff. Then, for two years we reversed positions and I was Executive Director, while he headed the Democratic staff. What I remember most about that time is that Members of Congress took economic policy far more seriously than they do today. In part, that is because the economic issues of the day were more serious. Also, the differences within the economics profession were much deeper and more profound than they are today. The JEC was an important forum for discussing these issues. Established in 1946 as the congressional counterpart of the President's Council of Economic Advisers, the committee attracted many of Congress's best and brightest. Among its chairmen was Senator Paul Douglas, Democrat of Illinois, who in real life had been a professor of economics at the University of Chicago. The Cobb-Douglas production function, which is named after him, is still taught in every economics textbook on earth. Among the staff were prominent economists such as Otto Eckstein, Norman Ture and Robert Weintraub. During the 1950s and 1960s, the JEC was a bastion of Keynesian economics, and helped lay the groundwork for many of John F. Kennedy's economic policies. In the 1970s, the JEC was among the first prominent economic institutions to question the validity of Keynesian economics. Because of the hearings, reports and studies done by the JEC, even die-hard liberals like Mr. Reuss conceded the error of their ways and voiced support for supply-side economics. "We have learned from our mistakes in the past," Reuss told the New York Times in 1981. "We've given up blind pursuit of Keynesian demand acceleration." He added that supply-side economics was important in depriving "demand-side" economics of "an undeserved primacy." Mr. Reuss did not run for re-election in 1982. Even then, his kind of cerebral approach to legislating was already out of style. It has gotten far worse since. Congressional hearings today, in both the Republican House and Democratic Senate, are little more than PR events. They are held not to inform Congress or the public, but simply to get press and promote an agenda. Important legislation is often passed these days with no hearings at all. I think that the JEC has suffered more than other committees from Congress's abrogation of responsibility to deal seriously with public policy issues. Since it has no power to move legislation, the JEC is totally dependent on the power of its research and analyses for influence. If no one in Congress cares about quality studies and thorough investigations before making important decisions, organizations like the JEC really don't serve a purpose. This is not to say that Congress's need for quality economic analysis has disappeared. Quite the contrary. It needs it now as much as ever. I just don't think anyone in Congress has the interest or patience today to sit through a hearing where they might actually learn something. Witnesses at hearings today are simply gladiators, whose job is to score debating points against the other side's witnesses. I think it is more than nostalgia for the "good old days" that makes me lament the current state of affairs. The country pays a real price when misguided, poorly drafted and ill-informed legislation passes Congress, while pressing national needs are ignored because they can't be explained in sound bites. I think this is one area where Henry Reuss and I would see eye-to-eye.