Editors’ Corner

Budget Cuts and the Regional Economy

As debate continues in Washington, a couple of recent Cleveland Fed publications have spotlighted the impact of potential budget cuts on local economic conditions.

Consider this striking statistic from researchers Stephan Whitaker and Christopher Vecchio: In 2010, nine of the 10 largest metro areas in our Bank’s region were collecting federal funds totaling more than one-fifth of their gross metropolitan products (GMP). In two areas—Youngstown and Dayton—federal funds account for more than a third of their overall GMPs.

Dependence on federal money means many areas in our region will take a serious hit from the sequestrations mandated by the Budget Control Act of 2011. The researchers note the pain will be particularly acute for the many, many regions that have pursued an “Eds and Meds” approach to economic development, because the education and health care sectors depend heavily on federal support.

Meanwhile, Senior Policy Analyst Lisa Nelson reports on a recent Cleveland Fed survey of financial institutions, community groups, and local governments, among others. Thirty two percent of respondents ranked “federal budget cuts” as one of their top three worries. “The lack of funding predictably compounds the problems faced by nonprofits, local governments, and the communities they serve,” wrote one community development corporation director.

Of course, the size of the federal budget depends in part on how much the government collects in tax revenue. For a sober look at the role that economics can play in helping design optimal tax codes, check out Daniel Carroll’s Forefront piece. But keep in mind Carroll’s caution that “though economics can tell us plenty about how to build a good tax code, the decision is ultimately political.”

--May 3, 2013

Forefront

New Ideas on Economic Policy from the Federal Reserve Bank of Cleveland

Economic policy is in the forefront of a lot of people’s minds today. Forefront, the Cleveland Fed’s showcase of policy ideas, is devoted to critical policy issues facing our region and the nation at-large.

Economic History, the Great Depression, and the Recent Financial Crisis

Barry Eichengreen

Spring Issue Preview: Economic Historian Barry Eichengreen talks with the Cleveland Fed

Barry Eichengreen goes beyond reporting on history by connecting the past to the present, remaining mindful that “lessons” have a way of taking on lives of their own. In our interview, Eichengreen shares his views on the prospects for the European Union, why so many economists were caught off guard by the financial crisis, and the similarities and differences between the Great Depression and the Great Recession. Read more

Experiments in Education


Flip through this interactive publication

What's Working in Your Town?

Just as every industry requires R&D to prosper, so too does the education system. As educators and policymakers try out new approaches, economists are assessing what works. Take a tour of Anytown, USA to see what's going on. Read more

Plus, Interview with the Brookings Institution's Karen Dynan

 

Commemorating the Federal Reserve System's Centennial

Current Policy

Economic History and a Thoughtful Look at the Federal Reserve at 100

The Federal Reserve Bank of Cleveland kicked off events marking the 100-year anniversary of the Federal Reserve with a gathering of giants in the field of economic history. Presenters at the December 13-14 conference, titled Current Policy under the Lens of Economic History: A Conference to Commemorate the Federal Reserve System's Centennial, included Michael Bordo, Allan Meltzer, and Marvin Goodfriend. Mark Sniderman, executive vice president and chief policy officer with the Cleveland Fed, delivered welcoming remarks. Read more

Also, Forefront used the occasion to ask Bordo about his views on how history will judge recent Federal Reserve policies. Read more

From the Print Edition: Experiments in Education | Fall 2012

Volume 3 Number 3

Download the full print version

Forefront Topics

Book Reviews

Credit

Education

Employment

Financial Crisis

Housing

Inflation

Monetary Policy

Payments

President's Message

Reader Comments

Recession

Regulatory Reform

The Economy