South By North Strategies, Ltd.

A Different Approach To Fiscal Security

Earlier this month, a coalition of leading think tanks released “a budget blueprint for economic recovery and fiscal responsibility.” From the executive summary:

The most pressing economic problem today is the recession. Among our longer-term problems is the unsustainability of the national budget. Bush-era tax cuts and a shrinking economy have led to significant budget deficits. These deficits are expected to decline as the economy recovers; however, national debt is projected to grow to unsustainable levels in the coming decades as rising health care costs lead to rapidly increasing federal expenditures.
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National economic policy should be designed to address these dual considerations – the need to create jobs and invest in America today, and the need to place the federal budget on a sustainable path for the future.
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Our Fiscal Security (OFS), a collaborative effort of Demos, the Economic Policy Institute, and The Century Foundation, proposes a budgetary path to achieve these goals. This path stabilizes debt as a share of the economy without demanding draconian cuts to national investments or to vital safety net programs. In fact, we believe that job creation and long-term investments should be enhanced now to ensure a strong economy in the future.

Unemployment Among College Graduates

In a recent post, Rortybomb looked at the argument that the American economy is demanding more workers with bachelor’s degrees and above. As the graph below shows, the unemployment rate among highly educated wired has soared over the past decade; in fact, it has reached a record high. Moreover, young college graduates with fresh skills are struggling to find work. Such facts call the structural employment argument into question.

Around The Dial – Dec. 7

Economic policy reports, blog postings, and media stories of interest:

• The Baseline Scenario notes “what Jamie Dimon won’t tell you.”
• Christina Romer looks at the real sources of economic uncertainty.
• Naked Capitalism says that “the deficit hysteria is misguided and destructive.”
• Joseph Stiglitz lays out “alternatives to austerity.”
• Economix views “the tax-cut retreat” through two lenses.

Unresolved Economic Problems

The Economist recently had a cup of tea with Nobel-laureate Joseph Stiglitz.

In Stiglitz’s opinion, poor policy choices are setting the stage for years of lost growth. Additionally, Stiglitz argues that the recovery package was useful but oversold, while noting that the financial system remains a threat to the American economy.

A Downward Trend

The following graph from Calculated Risk shows that the labor force participation rate of American men between the ages of 25 and 54 — a key segment of the working-age population — has fallen to the lowest level on record.