Milton Friedman Has a Solution for the Supercommittee: The Ticker
The late Nobel laureate, he of "Chicago School" fame, said he would replace the Fed with a computer that would print a specified amount of money each year to add to the money supply. He said the Fed had a few periods of good performance but for most of its existence has been a "loose cannon, and not a source of stability."
Imagine what he'd say about Congress. The Joint Select Committee on Deficit Reduction, as it is formally known, was charged with finding a minimum of $1.2 trillion of deficit reduction over the next 10 years by Nov. 23. Failure to deliver a plan, which would be subject to an up-or-down vote in Congress, would trigger an automatic $1.2 trillion of spending cuts, divided equally between defense and non-defense, beginning in 2013.
The two sides of the 12-member committee seem to be dug in.
Republicans aren't budging from their offer to increase tax revenue by $300 billion in exchange for lower tax rates while Democrats oppose entitlement cuts that hurt the middle class without higher tax rates for top earners.
Lawmakers in the House and Senate were even considering ways to prevent the sequestration should the two sides fail to reach a deal. Talk about kicking the can down the road and the road kicking the can back. Friedman was right: A computer could do better.
(Caroline Baum is a Bloomberg View columnist.)