I know there are a lot of underemployed older people out there, but the fact of the matter, underemployment is still employment. You adjust your spending to meet your income.
What is important from a macro-economic standpoint is moving the economic levers in such a manner that long term stability is maintained. When you are approaching full employment, that means positive real interest rates, and with an inflation rate of @1.5%, that means short rates should be at least 1.75% and long term rates between 3% and 3.25%. As for fiscal policy, you are supposed to have a budget surplus at full employment. Instead we have a deficit of 2.5% or so, so you should raise some revenues and cut some spending to close that hole to zero.
Except sequestration and a failure to raise taxes to pay for infrastructure has short funded a lot of things and that is starting to show. The Secret Service has been starved overworking the existing agents who are making mistakes. Now I know certain GOP Congressmen might not care if the Secret Service fails right now, but they would if a GOP type were President and they really shouldn't be that mean and cynical. And they are bankrupting road maintenance by not raising the gasoline tax in over 20 years, while inflation has driven construction costs higher. Why the Congress is raiding the Federal Reserves profits owed to the banking system to pay for road construction is beyond me. And then there is the disaster of corporate taxation, as well as abuse of the carried interest strategy.
Anyway, I know that is not coherent because I don't have a detailed grasp of the budget and that is really necessary to make good concrete proposals. I just know at full employment, the budget should be in a small surplus.
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