Two charts for today: Policy uncertainty and debt are killing us, especially if you are young

by Ryan Streeter on May 1, 2012. Follow Ryan on Twitter.

I’ll have more to write about these topics later, but for now, take a look at these charts. Via Kevin Hassett, here’s a chart that measures uncertainty due to coming tax hikes and other variables, from a fascinating new paper by Baker, Bloom, and Davis.

Via Jim Pethokoukis, here’s a chart on the cumulative effect of debt on GDP over the long run, from a paper by Reinhart, Reinhart, and Rogoff.

Out here in the heartland, as I talk to small business owners and corporate executives alike, I’m convinced these two issues weigh heavily on their minds and influence decision-making negatively. Uncertainty prevents hiring and new investment, and growing debt creates pessimistic expectations about possible growth going forward.

And I’ll point out in passing: this is exacting the biggest toll on 20-somethings who find themselves in a world where their college debt buys them next to nothing. The uncertainty and pessimism are combining to create a prolonged period in which someone who turns 30 in a few years might find herself in the same miserable place as she was when she was 20. Not good.

And on these two issues, Obama’s parlor game of blaming Bush and tsunamis and ATMs or whatever rings more and more hollow. Uncertainty and debt have grown tremendously on his watch as he has submitted farcical budgets that his own party has rejected. These two words – uncertainty and debt – are the two pillars of a successful anti-incumbent strategy that Romney should be pursuing.

  • Rodger

    I’m past my 20-somethings and moving through my 30’s with a few years to spare. While these graphs are telling, no one has a real solution. In DC and around the country conservatives want to cut taxes — for the rich. Liberals want, well, I don’t know what they want. In each case, there’s a lack of leadership.

    What are the answers? Contraction for decades? Higher taxes on the rich and middle class? Decreased spending in all areas of government? A complete revamping of our monetary system to reduce inflation? A return to the gold standard?

    In the coming years we must think differently. That means throwing American expansionism ideology out and turning inward to clean house.