Tuesday, September 17, 2013

What Policy Actions Would End Economic Malaise? Top 10 Policy Remedies

Despite record economic stimuli from the Federal Reserve and the federal government, the U.S economy continues to stumble. The August employment report attests to the failed economic policies.

In August 2013, more than 300,000 unemployed Americans became so discouraged they quit looking for a job. This is the 40th straight month the number of workers leaving the workforce exceeded the number finding a job. In fact, the percentage of the working age population employed plummeted to its lowest level since August 1978. If all of these discouraged workers once again began looking for a job, the nation's unemployment rate would rise from the current "too high" 7.3 percent to approximately 10.0 percent.

Even the biggest boosters of past economic intervention must concede they have not succeeded. Government/Fed actions would perk up the economy (long and short term) if they:

1. Reduce the incentives for not working. A new Cato Institute study concluded the myriad of government benefits provided the non-working including food stamps, federal disability pay, housing assistance, Medicaid and more exceed $12 per hour.
2. Pass an immigration reform bill.
3. Approve the 19 pending applications for licenses to export LNG (liquefied natural gas).
4. Approve the Keystone XL pipeline application.
5. Allow kids to escape failing schools by providing vouchers (long term).
6. Continue federal spending sequestration. This provides businesses with greater certainty.
7. Raise the debt ceiling without conditions.
8. Begin raising the Social Security retirement age.
9. Reduce the yearly cost-of-living adjustment to Social Security payments.
10. Begin unwinding the Fed's excessive money expansion labeled QE3 this month (again provides businesses with greater certainty).

Ernie Goss

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