9-1 Discussion: Aggregate Output and Equilibrium

Aggregate Output and Equilibrium

The article that I have selected for the post of discussion is related to current fiscal policy of United States and its consequences on U.S. competitiveness. It is mentioned in the article that for United States to prosper, the government should adopt measures to keep United States as an attractive location for companies to pay competitive wages that are consistent with the high and rising living standards of people. For this to accomplish, a targeted investment by government is required especially in informational and physical structure, education and development and scientific research. But the government of U.S. is using bad measurements and keeping the public in the dark about how required investments for the future are being crowed out due to the government's enormous debt and different other obligations.

The reported national debt has almost tripled to the value of over $16.6trillion just since 2000, and the interest will be required to pay on the debt every year into the future. However, this is not an actual problem. The U.S. is in much deeper financial crisis and that is not evident on the federal balance sheet. The off-balance sheet obligations of nation include U.S promises for future Medicare and Social Security payments, which as of fiscal 2010, summed up to nearly $50 trillion. These off-balance obligations also includes various other promises like unfunded pension and retiree health benefits for military and civil personnel, and for different dependent commitments like grants for mortgage loans, student loans and corporate pension benefits.

For keeping government on a balanced fiscal path, with the carefulness to make investments that benefit the members of the society, it is necessary to solve both the short and long term economic structure and debt challenges, concurrently. Government should set a goal to stabilize the ...