What policies best ensure a growing and prosperous economy? And more specifically, does massive monetary and spending stimulus make sense to end recessions, or would the opposite approach, viz., a stronger dollar, lower tax rates on incomes and capital along with less government spending, be more conducive to economic growth? At a moment when rioting in the streets of London and the cities of Greece over proposed government austerity has followed unrest over concern about declining living standards around the globe — manifested in rising food prices and lack of jobs in disparate places from China to Egypt this year — it is abundantly clear that this is the decisive issue for American voters next year. All other topics, including health care reform, will be evaluated in the context of how they affect economic growth, job creation, and the public fisc.
Appropriately, the core point of contention in political economy, the government's size and role in society, will be at the center of election-year debate. With rioting abroad as a real-time reminder of what happens with loss of spending discipline, the U.S. economy now faces the near arrival of a long-developing fiscal reckoning, and how it is handled will determine what kind of country we have in the coming century.
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