There has been constant disagreement throughout this long economic slump about what the government should be doing to stimulate the economy and reduce unemployment.
But we may have finally reached the point where the best thing Washington can do is simply get off the front page and out of the way.
Many experts now agree that gridlock in Washington over deficit reduction is not only getting in the way of a recovery, but is a threat to the entire global economy.
Politicians will argue forever about the government’s response to the U.S. economic crash, from the bailouts to the stimulus to the quantitative easing.
Despite everything, here we are five years later on the doorstep of a slow but solid recovery. Banks are stable. The stock market is up. People are buying homes, cars and smart phones.
“I think the U.S. economy wants to be strong,” Mary Callahan Erdoes, CEO of JPMorgan Asset Management, told CBS news last week at the World Economic Forum in Davos.
But she noted bickering in Washington is holding us back.
CBS said the mood at Davos was “markedly upbeat this year.” After four years of crisis there is a sense the global economy has turned a corner.
“The U.S. has to realize it’s got so much going for it,” Erdoes said.
If you believe instead that the U.S. is facing inevitable economic decline, we recommend Robert J. Samuelson’s Sunday column in the Washington Post, which is a swift summary of a more detailed report by Goldman Sachs, which is also worth reading.
The Goldman report marshals voluminous data showing that the United States is still the world’s preeminent economy and will remain so for years.
Goldman analysts say the U.S. has “key economic, institutional, human capital and geopolitical advantages” that surpass any other country.
We still have the world’s largest economy by far, $16 trillion, which is nearly twice that of second-place China, and our per capita GDP is higher than any other large nation.
We still have a bounty of arable land, five times as much as China and twice as much as Brazil.
Energy has been our Achilles’ heel for decades. Now, experts predict we will become the largest oil producer by 2020.
Long-term projections show the U.S. will have a younger workforce than either China or Japan, the next two largest economies.
We remain the destination of choice for the world’s most energetic and ambitious immigrants, and we have 29 of the world’s top 50 universities.
We have far less governmental corruption and more transparency than most of the world’s economies, plus we still have the world’s dominate military force by far.
But the problem we face is shared by many aging nations: we have promised more benefits to older people than younger people may be willing to support through higher taxes.
That has resulted in stalemate, crisis budgeting and paralysis.
Democrats are determined to preserve those entitlements and other government programs for the needy and less fortunate, while Republicans believe that course will be impossible to sustain.
That’s certainly not a simple problem, but we desperately need a long-term plan that gives our economy the confidence to grow.
What’s more, a strong economy could play a key role by providing more tax revenue and less spending on unemployment and welfare benefits.
The time has arrived. President Barack Obama is in his final term and congressional elections are nearly two years away.
Let’s solve this problem and let this economy roll.
rrhoades@sunjournal.com
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