ABSTRACT
Republicans often charge Democrats with being big spenders who would waste the taxpayers’ hard-earned money on unnecessary and corrupt projects. Many economists believe the United States economy has two major economic problems that may damage the future of the American nation: growing inequality and sluggish productivity growth. The largest increase occurred in the gap between the earnings of men who did not go beyond high school and men with a college education. Declining wages and growing inequality reflect falling demand for unskilled labor, and rising demand for skilled labor. Differences in inequality between the United States and Western Europe are instructive. Efficient public investments in education, job training, health care, child care, and other public goods would reduce the harm to individuals flowing from inequality. The level and rate of growth in productivity are the best indicators of the strength of a nation’s economy.
