LOS ANGELES — Michael Greenstone of the Massachusetts Institute of Technology and Adam Looney of the Brookings Institution document the disastrous fortunes of men in the American labor force. "Over the last 40 years," they write, "a period in which U.S. GDP per capita more than doubled, the annual earnings of the median prime-aged male have actually fallen by 28 percent. This decline reflects both stagnant wages for men on the job and the fact that three times as many men of working age don′t work at all compared to 1969." The result is that middle-income men now earn "about the same as their counterparts in the 1950s."
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Michael O′Hanlon of the Brookings Institution outlines practical ways to pare the defense budget by $60 billion. "There are risks in defense cuts," he acknowledges. "But there are risks to national security in failing to address unsustainable budget deficits. Absent a spirit of shared sacrifice, and a comprehensive deficit-reduction effort that includes defense, the country′s security may erode from within — even if no enemy can hope to mount a successful attack from abroad."
Linda Blumberg and John Holahan of the Urban Institute′s Health Policy Center are cautiously optimistic that health-care inflation can be brought to heel. "It would be possible to achieve savings of 5-10 percent over and above the savings likely from conscientious implementation of the containment measures in the Affordable Care Act," they write. "What′s more, aggressive measures could reduce the rate of growth in spending to a sustainable figure within shouting distance of the growth of national income."
David Autor of MIT and Mark Duggan of the University of Maryland propose radical reforms for one of the most expensive and least-noticed government entitlement programs: Social Security Disability Insurance. "Despite its high price tag, the program does a poor job of supporting adults with work-limiting disabilities," they argue. "Economists and disability advocates generally agree that SSDI needlessly fosters long-term dependency by doing little to assist the disabled to remain employed and economically self-sufficient."
Nouriel Roubini, the economist who warned back in 2005 of a global financial meltdown ignited by a housing bust, minces no words in a one-on-one interview with Bloomberg editor-at-large Tom Keene. A sampling: "It′s completely unrealistic in political terms in the United States, but any economist, Republican or Democrat, will tell you that a carbon tax would be the right way to go."And this: "Tim Geithner says he′s in favor of a strong dollar. But we actually need a weaker dollar, maybe 15 percent weaker on a trade-weighted basis."
Eric Schansberg, an economist at Indiana University Southeast, argues that the historical record shows the government is no better at containing health-care costs than the private market. "In 1965 when the Medicare program was created," he writes, "1990 Medicare expenses were expected to run about $12 billion. The actual bill: $110 billion."
The Milken Institute Review is sent quarterly to the world′s leading business and financial executives, senior policy makers and journalists. Its editor is Peter Passell, former economics columnist for The New York Times.