Years of undisciplined spending and unaffordable promises have led to between $76 trillion and $100 trillion of debt and unfunded liabilities. This unsustainable level of U.S. debt is not being appropriately addressed – instead, misguided monetary and fiscal policies continue to debase the dollar and employ short-term fixes rather than implementing a long-term solution. These policies are also making the situation worse by reducing the U.S. economy’s potential rate of economic growth.
Unless effectively addressed, the policy induced economic slowdown coupled with the massive debt burden will continue to lower the standard of living for all but the most wealthy Americans. What is necessary are policy reforms that will revitalize the U.S. economy’s rate of economic growth. A faster growing economy will go a long way to raising the standard of living for all Americans. A larger economy will also make addressing the U.S.’ debt a more manageable problem.
The Applied Political Economy Project is dedicated to focusing the economic debate onto what policies properly target the problem of low economic growth (simply stated we do not believe that the so-called “new normal” is a fait accompli). The core supposition of the project is that economic policy – for good or for ill – helps establish an economy’s long-run average rate of growth. Evidence demonstrates that sound economic policies, such as those followed during the 1980s and 1990s, drive growth which fuels economic booms. Alternatively, ill-conceived economic policies, such as those followed during the 1970s and 2000s, lead to economic stagnation along with the related problems of social instability and geopolitical uncertainty.
The Applied Political Economy Project will: (a) develop foundational research and empirically-based analyses that connect periods of economic growth and economic slowdown to the policies that are implemented; and, (2) establish and communicate policy prescriptions that are implementable and will help reinvigorate the U.S. economy’s rate of economic growth.