Jobs Council Issues Growth Proposals, Acknowledges Dysfunction

Distrusting elected officials can be a drag on economic growth.

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In addition, a pervasive, dark economic outlook can potentially make politics even more dysfunctional, as worried voters fall for poor economic logic, says Burtless: "I think when people don't have much confidence, then all of the nasty arguments that opponents to sensible policy make seem to make a lot of sense to people who are not particularly economically sophisticated," Burtless says.

While U.S. politics is paralyzed by partisanship, it is important to look at its dysfunctionality within the context of a very unstable global economy.

"Faith in other governments is deteriorating, too," Burtless says. He adds that, while the European Union's sovereign debt crisis could threaten U.S. economic stability, a crisis of confidence can work to the advantage of a historically strong United States economy. He points to the EU and Japan as two major economies where governmental strife could discourage foreign investment. If the United States looks relatively stable to investors, it could stand to benefit from this trend. Faith in the U.S. government appears hard to shake; even after ratings agency Standard and Poor's downgraded the United States' credit rating in August, investors did not flee from American debt; to the contrary, yields on the 10-year Treasury note dropped.

The Jobs Council's report includes a push for greater foreign direct investment in America as a key component of its plan. The council cites a report from the Boston Consulting Group, estimating that up to 3 million jobs could be created by enticing businesses to bring operations to the United States. Of course, some of the requisite policies—tax reforms, for example—would require agreement among lawmakers. And though tax reform does have some bipartisan support, Americans could be forgiven for not being optimistic about its passage.

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