If the American economy were an automobile, you would say the transmission is failing. The engine works, but not all wheels are getting power. To put the matter less metaphorically: The economy no longer reliably and consistently transmits productivity gains to workers. The result is that many millions of Americans, in particular less-skilled men, are leaving the workforce, a phenomenon the country has never seen before on the present scale.
Well. That was a mouthful. It certainly bites off more than Washington’s polarized politicians can handle at the moment. In the next few months, they need to worry about the so-called fiscal cliff, the round of automatic tax increases and spending cuts that, if not averted, might start a recession. Plus a politically vexing debt-limit bill, which will need to be passed early in 2013. Plus a recovery that, for many Americans, feels more like a recession. (The median family income fell as much during the first two years of the recovery as it did during the two years of the recession itself, according to the Pew Research Center.) Plus a debt crisis and downturn in Europe. Isn’t that enough?
Sadly, no. The U.S. economy has weakened, and much needs fixing—beyond the fiscal cliff—if it’s to regain its strength. A reelected President Obama and a still-divided Congress face a lengthy To Do list for the economy. We’ve chosen eight entries: innovation, jobs, rising health care costs, entitlement programs, college-completion rates, infrastructure, housing, and retirement security. None of them will be easy to fix.