Just How Bad Is the American Economy?

What’s the Latest Development?

Despite the high-wire histrionics in Washington over the debt ceiling and America’s recent credit rating downgrade, the economic crisis is fundamentally about jobs and prosperity. “What is needed, and what the system appears unable to deliver, is short-term action on jobs and credible long-term deficit reduction.” The debt ceiling agreement just passed by the Congress, which ultimately defers to the yet-to-be-seen “super committee” of Democrats and Republicans, fails to provide either action on jobs or long-term deficit reduction plans.

What’s the Big Idea?

What federal action is necessary to get the economy going again? “Providing subsidies to businesses that hire new workers is one. Extending extra tax cuts to firms that build new factories and offices is another. More radical ideas include investing in infrastructure projects, importing a version of the job-sharing scheme that Germany has used, and launching a national community-service program.” Whether these ideas are implemented will ultimately depend on the willingness of the G.O.P. to negotiate in good faith.