The op-ed piece Why We Need a Second Stimulus by Laura Tyson spells out in very simple terms what the government’s fiscal plan should be.

Laura Tyson, a professor at the Haas School of Business at the University of California, Berkeley, was chairwoman of the Council of Economic Advisers and the National Economic Council in the Clinton administration. She is a member of President Obama’s Economic Recovery Advisory Board.

SPOILER ALERT: Here is the summary of her prescription:

Faced with these risks, as long as the economy is operating far below potential, policy makers should do two seemingly contradictory things. First, they should provide additional fiscal support for job creation and growth. And, second, they should enact a credible multiyear plan now to stabilize the ratio of federal debt to gross domestic product gradually as the economy recovers.

By easing capital market concerns about the government’s future borrowing needs, such a plan would permit larger deficits and slower debt reduction while unemployment is still high. The long-run debt problem — the result of imprudent fiscal decisions before the recession, escalating health care costs and an aging population — must be addressed once the economy has recovered. But for now the priorities of fiscal policy should be jobs and investment.

Please take careful notice of the proviso that she states, as long as the economy is operating far below potential. In case I still have not conveyed the point strongly enough, the implication is that when the economy starts operating at its potential, then the prescription changes.