Can the U.S. Continue to Flex Its Economic Muscles? Are Burgeoning Budget Deficits, National Security Overruns, Burdensome Government Regulations, Medicare Funding Woes, and Stiff Global Competition Endangering America's Powerhouse Status?

By Weidenbaum, Murray L. | USA TODAY, November 2003 | Go to article overview

Can the U.S. Continue to Flex Its Economic Muscles? Are Burgeoning Budget Deficits, National Security Overruns, Burdensome Government Regulations, Medicare Funding Woes, and Stiff Global Competition Endangering America's Powerhouse Status?


Weidenbaum, Murray L., USA TODAY


THE PRESIDENTIAL ELECTION campaign hits started early. That usually is a bad time for any serious discussion of public policy. Before we get caught in the campaign crossfire, however, let us examine the serious economic questions facing the American people. We may yet be pleasantly surprised by a candidate willing to deal with some of the tough issues. In any event, these problems will still be here after the polls close on that fateful Tuesday in November, 2004.

Whoever is inaugurated as president in January, 2005, Republican or Democrat, will face seven key questions of economic policy: (1) In what ways can the U.S. achieve a stronger economy? (2) How can the nation avoid inflation as well as deflation? (3) What action should be taken when the temporary tax cuts expire? (4) Arce there ways to finance Social Security and Medicare when the baby boomers retire? (5) How is rapidly expanding government regulation to be dealt with? (6) Can the U.S. meet global competitive challenges, especially from China and India? (7) How are future threats to national security to be handled?

A stronger economy. Although the American economy is not exactly booming, an upturn is underway. Indicators rose by about 21/2% this year. Three rounds of tax cuts and quadruple that number of interest rate reductions have provided substantial stimulus. A drop in the international exchange rate of the dollar is encouraging exports. The continued upturn in military procurement is another boost. Coincidentally, my rubber band theory of business cycles seems to be working well--at least better than the more formal econometric models. Sharp and long recessions generate big snapbacks. Mild recessions, however; usually are followed by shallow recoveries since there is no opportunity for the accumulation of large backlogs of unmet business and consumer demands. Surely, this is the current experience. The result is a slow and drawn out recovery.

Policymakers in Washington should let the economic medicine do its work and not overdose the patient. Politicians always want to show the public how active they are. Now, however, they would be well advised to take an economic form of the physicians' Hippocratic Oath: first pledge to do no harm. The summer of 2003 provided a good reminder of the need for a moderate economic policy. When the new higher budget deficit numbers were published, interest rates began to rise. Additional Federal spending programs, designed to prod recovery, could have further adverse economic effects--especially if they lead to interest rate increases.

Americans must get used to the fact that this is a very different economic climate from the 1990s, That was an unsustainable boom time. The financial future probably will be more modest than the feverish pace of the last 10 years. It is unlikely that the coming decade will see economic growth of well over four percent three straight years, as we experienced in the late 1990s. Fortunes will not be made as frequently, nor lost as quickly, in this new and more resourceful economic environment.

Many people, however, are suspicious of any report that the economy is turning up, whatever the rate, as long as unemployment stays high. A little lesson in economics may be in order. This country's population is growing by about one percent a year. Thanks to rising productivity, the average worker produces around two percent more per annum, That means that the economy has to glow by three percent just to keep unemployment steady. The unemployment rate declines only when the economy is expanding faster than that, which is why, earlier this year, while the economy was growing slowly, joblessness was edging up.

Inflation and deflation. In recent years, the U.S. has avoided the economic extremes of inflation and deflation. Of course, some individual expenditures--especially of services--continue to rise even when the economy is weak. Meanwhile, the cost of other items, mainly manufactured goods, decline even when the economy is expanding. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Can the U.S. Continue to Flex Its Economic Muscles? Are Burgeoning Budget Deficits, National Security Overruns, Burdensome Government Regulations, Medicare Funding Woes, and Stiff Global Competition Endangering America's Powerhouse Status?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.