The White House and those who aspire to it need to be reminded of how grim the past several years have been for millions of Americans and how little has been accomplished in an era of trillions in quantitative easing and near-zero interest rates, says Mortimer Zuckerman, editor-in-chief of U.S. News & World Report.
“It is the nature of recessions that the bigger they are, the bigger the comeback, yet the period since the Great Recession ended in 2009 has seen the weakest U.S. recovery since World War II,” he wrote in The Wall Street Journal.
“The little improvement we have seen hasn’t benefited a significant percentage of Americans. It is also the nature of recessions that they occur about every eight years; America is ill-prepared to weather the one on the horizon.”
But he observes there is little urgency from the White House these days regarding the economy.
“And what is the focus of the current presidential candidates and the media covering them? Email servers, the fantasy of overturning the Affordable Care Act, immigration and criminality, CEO pay and other matters with only the barest relation to what matters most: economic growth and the jobs that come with it,” he said.
"America’s overall fiscal health is similarly alarming. We have staggering budget deficits and future obligations to retirees that will result in a steady, unsustainable increase in federal debt. Social Security payments will soon outpace payroll tax revenues, and the fund is expected to bottom out in less than 20 years. A day of reckoning is coming for America’s political leaders who have shamefully neglected entitlement reform, more concerned about protecting their political futures than safeguarding the nation for future generations," he said.
"In this season of presidential debates, what we need is a public discussion of where, precisely, America is headed economically. So far the answer would be: nowhere in particular."
Zuckerman’s warnings come in the wake of a chorus of caution from some of the world’s sharpest economic minds.
For example, former Federal Reserve Chairman Alan Greenspan has warned of a bond-market bubble amid dismal growth.
"[The economy] is extraordinarily sluggish," he told Fox Business Network.
"It's fundamentally being suppressed by a very low increase in productivity, in fact, close to zero, and you can't get more than a 2 percent growth rate out of those numbers," he said.
Indeed, the Atlanta Fed's forecasting model puts third-quarter growth at only 1.3 percent. As for productivity, it rose at an annualized rate of just 1.3 percent in the second quarter, after falling 1.1 percent in the first quarter.
“The basic problem is that we are not getting any capital investment that significantly adds to the growth of output per hour,” he stated.
And there are other problems, he adds.
“Entitlements have been growing under the administrations of Republicans and Democrats close to 10% a year for a half century,” he noted. “We’re finally at a point where it is, essentially, crowding out.”
So why hasn't the Fed's massive easing program boosted the economy more? "The basic problem is that we're not getting any capital investment that significantly adds to the growth in output per hour," Greenspan said.
"The best way of looking at this whole process is the fact that the sum of gross domestic savings and entitlements has been a constant relative to GDP for 50 years. That means for every dollar increase in entitlements, you lose a dollar of savings."
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