The hot topic here in the Beltway is Simpson-Bowles, which is shorthand for “how much pain are you willing to inflict on the American people to get to a balanced budget?” That’s a question that surely should be asked. But given that our country is so deep in the red because government has assumed much of the debt that ordinary Americans took on over the past quarter-century, and that ordinary Americans took on that debt because they were offered loans when their incomes stopped rising, how about some questions that touch on the most important development in the nation’s economy for the past several decades: the stagnation and decline of household income?
I’d like to hear both President Obama’s and Mitt Romney’s take on what’s behind this epochal shift in the U.S. economy. Why have wages gone nowhere while productivity and profits have increased? Is globalization to blame? If so, does that call for changes in our trade policy with nations such as China? Is the way to increase competitiveness in a global economy to reduce our wage levels to those in the developing world? If so, how low should we go?
Most American jobs are not in competition with those in Chinese factories. Waiters, carpenters, truckers and nurses don’t have their wage levels set by their counterparts in Chengdu. But their wages have stagnated as well. What’s behind that? Would full employment help workers bid up their wages? Should the Federal Reserve seek to boost employment during downturns, as its recent actions have sought to do, or should it focus solely on inflation even when none is on the horizon? Has the near-total disappearance of collective bargaining from the private-sector economy played a role in income stagnation? Should the government try to make collective bargaining more widespread? If not, what are the candidates’ scenarios for increasing incomes in the private sector?
Americans’ incomes are not keeping pace with the rising costs of medical care and higher education. Should the government be able to bargain with pharmaceutical companies over the price of prescription drugs? Are medical specialists overpaid? Should the government do more to hasten the shift from fee-for-service medical care to integrated group care? As to colleges, should the federal government increase its financial aid to students? Should it set a tuition and fee threshold at colleges and universities, and deny all grants and aid to those institutions that exceed it?
Has the growth of Wall Street been a boon or a bane? Should we reenact the Glass-Steagall Act, which separated commercial and investment banking, as even former Citicorp chief executive Sandy Weill has advocated? In moving toward a balanced budget, should the United States enact a financial transactions tax? Is the phenomenon of the wealthy sheltering income in tax havens such as the Cayman Islands a problem that the federal government should address? Is the solution to lower our taxes to Cayman-like rates? Or should we enact a special tax on Americans’ income sheltered in such places?
Is CEO pay out of whack? Are “golden parachutes” a good thing? Have corporate boards done a good job of setting pay rates for top executives? Should there be public or employee representatives on the boards of corporations over a certain size, or on their executive compensation committees?
Does government spending on the military that takes place within the United States stimulate the economy? Does government spending on non-military projects within the United States stimulate the economy? If the answer to the second question differs from the answer to the first, explain.
Why has intergenerational mobility in the United States declined? Why is there more in Europe? Why has life expectancy for whites who haven’t graduated from high school declined over the past 25 years, while it has risen for everyone else? Is the American economy less fair than it used to be? Do ordinary Americans have the opportunities that their parents and grandparents once did? If not, who’s to blame?
These questions do not frequently pop up in the chatter of well-heeled Washington, but they bear directly on the lives of most Americans. It would be nice to hear a few answered in the coming debates.