What it might take for the US to remain No. 1
Economists call for greater thrift, less dependence on foreign oil, and a closer watch on Wall Street.
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If you listen to economists, the answer is very much in doubt.
Mr. Sinai is "incredibly disappointed" by the damage Wall Street excesses have done to American capitalism and the economy. Americans are already far less rich than they were a year ago, he says, adding, a bit sardonically, that some families will have to live with two cars, not four or five.
Another economist, Peter Morici of the University of Maryland, College Park, also sees "a real danger" of the US losing its top economic status. He suspects the American standard of living could decline by as much as 10 percent in the years ahead as the country moves to reduce its massive trade deficit, restore a reasonable savings level, and eventually bring its federal budget into better balance.
"The [President] Bush years will seem like a walk through the park compared to the real income losses Americans will suffer during the [President] Obama years," he maintains.
Such views have grown from the widespread greed, dishonesty, and inadequate regulation on Wall Street in recent years. That trend, some economists say, could badly weaken the financial sector's competitiveness in the world and its ability to help finance the US economy for years to come.
"The current financial crisis presents the greatest immediate threat to America's prosperity and financial leadership in many decades," writes Robert Hormats, vice chairman of Goldman Sachs International in The International Economy, a magazine.
These economists and others offer policy suggestions to avert, or at least ameliorate, the damage from the present crisis to the long-run economy.
Sinai welcomes President Barack Obama's effort to end the current recession with a massive stimulus package. He hopes that Mr. Obama will do more than the Bush administration to achieve greater energy independence, keep health costs in better control, and get the nation back to "basic principles of thrift." That includes getting the federal deficit under control once the economy is growing again.
Moreover, he urges Obama to be "more alert" in supervising the financial system and preventing it "from running amok" again.
"The kind of society we live in does not take action until we have a crisis," he notes. But Americans, he says, also have a "DNA set for renewal and regeneration."