Meeting the New Challenge to U.S. Economic Competitiveness: Collaboration Among Government, Industry, Academia, And Labor Succeeded in the 1980S. That Coalition Must Act Again‪.‬

The U.S. economy, seemingly a world-dominant Goliath in the mid- and late-1990s, now faces major structural challenges from a new cast of Davids. The nation confronts a host of new economic challengers led by India and China. The U.S. economy recently took an unprecedented path when it regained strength during 2003 and 2004 without creating growth in jobs. The manufacturing sector's share of the economy continues to shrink. The growing service sector, once considered immune to global competition, now finds that advances in information and communications technology have enabled global competition in low-skilled service jobs and the beginning of competition in high-skilled service tasks. Underlying these shorter-term developments is a major demographic shift. Historically, the U.S. economy has relied on steady 1 percent annual population growth to provide additional workers and increased output. In the coming decades, the country will face a rapid expansion of the nonproductive population of seniors. Furthermore, the aging baby boomers are propped up by a network of entitlement programs generally indexed to inflation. The Social Security Trustees recently estimated that the Social Security and Medicare programs create an unfunded liability for the taxpayers of $72 trillion (in net present value terms)--a daunting sum compared to total national wealth estimated at $45 trillion. A debt on upcoming generations of these dimensions, unsupported by any anticipated revenue stream, is an unprecedented national problem and has strong implications for the nation's future ability to invest in growth.