Policymakers Must Secure Economic Recovery While Strengthening Middle Class
Part of a Series
The debate over federal budget priorities has kept its momentum as Republicans are threatening not to raise the federal debt ceiling unless programs are aggressively cut back. Keeping the debt ceiling in place could lower growth and jeopardize job creation, while severe spending cuts could substantially reduce middle-class economic security. American families are only now starting to see a modest labor market recovery strengthening. The unemployment rate is dropping, household debt continues to decline, and financial distress shows signs of easing. These tentative gains could quickly evaporate if growth, job creation, and income gains slowed.
Policymakers have to secure the gains of the recovery while strengthening America’s middle class. This means maintaining consumption and investment growth in the short run and addressing trade and budget deficits in the medium term. The current budget negotiations thus need to find a growth-enhancing balance between spending and revenue changes that do not unduly burden middle-class families who have already suffered a lot from the economic fallout of the Great Recession.
For more on this topic, please see:
- Economic Snapshot for May 2011 by Christian E. Weller