Going social
Stability Plan. Just one quarter after ARRA took effect, the economy began to turn around. The recession officially ended in the middle of 2009, although it has taken nearly four years to return to the level of GDP that was reached before the recession began, and the US still has a very deep hole to dig itself out of in terms of creating jobs and raising middle class incomes. The US needs to do two things at once: sustain the recovery and return to a fiscally sustainable path for the federal budget. Rather than contradictory, these goals are complementary. If markets and households believe that the US is on a sustainable long-term fiscal path, there is more headroom for supporting the economy in the short term. As the world economy struggled with shocks from the Japanese earthquake, rising oil prices and financial stresses in the euro zone, President Obama proposed the American Jobs Act to strengthen growth and increase employment in the near term while rebuilding the economy over the longer term. The American Jobs Act would strengthen aggregate demand by extending and expanding the payroll tax cut and Emergency Unemployment Compensation. It also includes US$50 billion in upfront investments for highways, highway safety, transit, passenger rail, and aviation activities, and $10 billion to establish a national infrastructure bank that would direct funding to the most high-value projects. Infrastructure investments produce many benefits to the economy, such as improving safety, increasing land values, reducing travel times, and boosting productivity. The costs of infrastructure investment are quite low at the present time, with real interest rates close to zero and rates of resource utilisation in the construction industry at low levels. President Obama has tackled structural problems that, if not addressed, could lead to weak employment growth in the future. First is the rising cost of health care. Early in the second year of the Administration, the Affordable Care Act was passed, which will lower the growth of health care
$4 billion in grants to states raising standards, measuring performance, and holding education leaders accountable for student gains. The competition sparked widespread reform as states attempted to meet the requirements for competitive grants. The President has proposed a similar competitive grant process for early childhood education and has taken steps to make the funding for the government’s early childhood programme, Head Start, more performance based. Structural changes in the health care and education systems along with investments in infrastructure and innovation lay the foundations for stronger economic growth and employment
If markets and households believe that the US is on a sustainable long-term fiscal path, there is more headroom for supporting the economy in the short term and income growth in the future. These actions will build on the recovery already taking place. Since the middle of 2009, the US economy has now grown for nine straight quarters and since February 2010 private employers have added 2.8 million jobs on net. The US recovery has persisted in spite of substantial headwinds that have threatened the world economy, and sustaining and strengthening the recovery remains a paramount goal, even as we work to address longstanding structural and fiscal issues. Recommended link US Council of Economic Advisers: www.whitehouse.gov/administration/eop/cea
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The US needs to do two things at once: sustain the recovery and return to a fiscally sustainable path for the federal budget spending in both the public and private sectors through the creation of health care exchanges, stronger risk pooling, insurance regulations, and greater transparency, as well as provide health insurance coverage for the vast majority of the uninsured. Second, President Obama has made improving the quality of education and increasing educational attainment a focus of his Administration. He launched ambitious education reform through Race to the Top. Race to the Top provided
OECD Yearbook 2012 Š OECD 2012
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