The Need for a Comprehensive Economic Strategy

Tuesday, September 13, 2011

Chairman Nelson, Ranking Member Crapo and other members of the Subcommittee on Fiscal Responsibility and Economic Growth, thank you for the opportunity to testify at this hearing on “The Role of Tax Reform in Comprehensive Deficit Reduction and U.S. Fiscal Policy.”

The economic recovery from the deep recession is now over two years old. However, the recovery is so weak that it is really a recovery in name only. Real GDP growth has averaged only 2.4 percent per year in this recovery compared with 6.5 percent in the 1983-84 recovery from the most recent very deep U.S. recession. As a result unemployment is still over 9 percent. Fewer people as a percentage of the working age population are working now than when the recovery began.

Some blame the weak recovery on the depth of the previous recession and the need for people to cut back consumption and pay back debt. But during the much stronger 1983-84 recovery, people consumed a smaller fraction of their income. And while housing is weak, it is a much smaller drag than declining net exports were in 1983-84. The economic weakness now is broader than any one sector.

Read the full transcript: testimony_senate_finance_subcommittee_9_13_11.pdf

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