US Economy – Muscular or Obese?

As dark clouds gather over Europe and the growth in the BRIC’s slow, the world once again looks to the old steady engine of growth: US. Some analysts are even finding new sources of strength for the US economy to rebound and presumably save the world. While US certainly possesses tools to revitalize its economy in long run, it faces serious challenges in short term. US may not be ready to save the day at this point in history (…..) This is the context in which America’s admitted, obvious problems, must be solved. State, local, federal levels of government have promised far more than they can pay out. Total costs of pensions and medical support for Medicare and Medicaid programs will, current trends, absorb total taxes in a decade or two. Some local governments have declared bankruptcy, and others are imposing harsh cuts in wages and hiring levels. While higher revenues are part of necessary solution, total taxes have declined by 4 percent of GDP since 2000, new ways must be found to pay for health, renegotiation of many pension benefits will be required. Massachusetts, state model for universal health care developed by Obama administration, is experimenting with fixed per-capita payments to health maintenance organizations rather than pay for procedures. Pessimists point to a battle not just between rich and poor, also between young and the old. It would be unseemly and inefficient for the old to take a disproportionate share of resources could go to education and other services that invest in the future. If infrastructure is also starved, all would suffer. The American Society of Civil Engineers gives the nation’s overall infrastructure a “D” grade and estimates it would cost more than $2200 billion to bring roads, bridges, ports, water systems, airports up to standard. This is more than total investment each year, though repairs could be scheduled over several years. In the meantime, costs of congestion, breakdowns, accidents, vehicle damage cost hundreds of billions of dollars a year. Not just money is stuck; organization and procedures are also arthritic. Higher user fees and taxes, better efficiency in repair and use, and streamlined procedures for new construction would solve or ameliorate many infrastructure problems. Yet something as basic as storing nuclear waste is emblematic of a stuck system. Nuclear waste, more than 70,000 tons, sits in pools or dry casks around country, waiting for $24 billion already collected to deliver a permanent site. New air control system has gone well over budget and is many years behind schedule. With growing air traffic, the 1950s system in place risks being overwhelmed, but part of the new system, supposed to be installed in 2010, may not be operational until 2015. The financial infrastructure is another example of private and regulatory failure, with heavy lobbying paralyzing attempts to limit risk and fraud. So, US economy has potential to rebound, but the ability to tap this potential is uncertain. Aside from Erskine-Bowles deficit reduction plan, which received little support from either party, presidential candidate, there is no serious discussion of how to proceed on necessary, painful, efficient, fair tax increases, spending cuts. Both are needed, along with sense of purpose and urgency. Neither Tea Party fundamentalism nor plans to target a few rich will solve the problems facing the US.



Acerca de ignaciocovelo
Consultor Internacional


Introduce tus datos o haz clic en un icono para iniciar sesión:

Logo de

Estás comentando usando tu cuenta de Cerrar sesión /  Cambiar )

Google+ photo

Estás comentando usando tu cuenta de Google+. Cerrar sesión /  Cambiar )

Imagen de Twitter

Estás comentando usando tu cuenta de Twitter. Cerrar sesión /  Cambiar )

Foto de Facebook

Estás comentando usando tu cuenta de Facebook. Cerrar sesión /  Cambiar )


Conectando a %s

A %d blogueros les gusta esto: