Prime Time for the Public Policy Initiative

Only days after the historic U.S. 2012 elections, Mark Duggan was ready to make sense of the new political climate in Washington, D.C.

“It seems like a good time to do an event,” he told the overflowing audience at the first-ever briefing given by the Wharton Public Policy Initiative, for which he is the faculty director.

If anything is new in the U.S. capital, it is perhaps not that partisanship and legislative gridlock will end overnight after the re-election of President Barack Obama. What has changed for sure, nonetheless, is that policymakers, politicians and their staffs have to face serious issues confronting the United States, rather than devote energies entirely to re-election campaigns.

Professor Mark Duggan

The first such issue is the so-called “Fiscal Cliff”—a combination of tax increases and spending cuts that is set to occur in 2013 if Congress fails to pass some other compromise to manage the fiscal deficit and federal debt.

As Duggan reported, the Fiscal Cliff would equate to a 5 percent hit to the U.S. gross domestic product (GDP)—upwards of $800 billion in calendar year 2013 alone. Such a slashing to the deficit has not been seen in decades. The best-case result of the Fiscal Cliff would be a recession in 2013.

“That’s a very, very big change,” said Duggan, who also serves as the Rowan Family Foundation Professor, a professor of business economics and public policy and health care management, and chair of the Business Economics and Public Policy Department.

“The short-term economic impact will be gigantic.”

Duggan told the audience he believed that policymakers would do something to stop the country from falling off the Fiscal Cliff. But it is highly uncertain what that something will be. As an academic, he said, Duggan would like to think that policymakers would create a response to the long-term debt issue and the short-term deficit that would be optimized for effects and tradeoffs and based on excellent research like the kind found at Wharton and Penn.

“Instead, it might be a little bit of a feeding frenzy,” he said.

A veteran of D.C. policymaking, after a stint in the Council of Economic Advisors working on health care reform at the start of President Obama’s first term, Duggan knows that D.C. is filled with smart people who mean well. The mechanisms for policy creation are broken however.

The Wharton Public Policy Initiative could be a “game changer” in Washington, providing access to Wharton research and knowledge that could help policymakers understand the tradeoffs and effects of one policy change versus another.

The Wharton Public Policy Initiative plans to offer independent, practical, timely, nonpartisan research and resources to government policymakers and key decision-makers. Forging this strong connection between the University of Pennsylvania’s Wharton School and Washington’s policymakers, the Public Policy Initiative will bridge the intellectual divide that currently exists between policymakers and the business community. As a result, federal, state and local government—and the global business community—will be better prepared to address today’s most pressing policy challenges.

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