Why Growth Is an Economic Grand Slam

Four of the top issues the public says it cares about most—jobs, the budget deficit, Social Security, and Medicare—have something significant in common: Each one automatically improves when the economy does.

The Pew Research Center recently updated a study that should remove any lingering doubts about which topics the presidential campaigns will be covering—or perhaps evading, as the case may be—over the next four months. Their research reveals which policy areas the general public considers “top priority” for the president and Congress in 2012. The top ten priorities are shown in Figure 1 below.
Besides confirming the obvious—that the public’s number one priority is to get the economy back on track—these results reveal something less obvious. The four items highlighted in yellow in Figure 1—jobs, the budget deficit, Social Security, and Medicare—have something significant in common: Each one automatically improves when the economy does. Today’s anemic growth rate is 1.9 percent; for the private sector’s economic engine to achieve and sustain a real growth rate of 3.5 percent or more would require an expanding workforce, which in turn yields cascading benefits: More revenue from income taxes, more revenue for the social insurance funds, and federal receipts that grow faster than outlays—even if there is no increase in tax rates.
In other words, the current fiscal imbalance, shown in Figure 2 above, would automatically improve due to rising receipts, just as it did from 1996 to 1998, when the economy grew at an unanticipated 3.7 percent rate.

Read more: http://www.american.com/archive/2012/july/why-growth-is-an-economic-grand-slam