Whistling in the wind here, along with Matty Yglesias and Felix Salmon. Salmon writes about at a lunch with top fund managers from Loomis Sayles. Here's the crux of it.
This year’s lunch took place [Tuesday], and kicked off with Loomis vice chairman Dan Fuss coming up with a very interesting macroeconomic point. Right now, he said, about 56% of Americans over the age of 16 are gainfully employed. If that percentage were to rise to 64%, Fuss reckons, then the budget deficit disappears entirely. We’re not going to get there. But theoretically it’s possible, if the unemployment rate comes down and if people retire later, as is happening in Japan. And more generally it’s an important reminder that unemployment is a fiscal issue, and that anybody who wants to take the budget deficit seriously should put a lot of effort into increasing the number of Americans with jobs.
We're not going to get there with the political leaders we have now, so that's seems to be more of a political than an economic assumption on Salmon's part. Because that ration of employment isn't impossible, as Yglesias points out. We've been there, as this graph he uses shows:
And what he says: "In a sane world, Congress, the Fed, and the President would all be talking about their absolute determination not to halt macroeconomic expansion until we got back to that neighborhood." It'd sure be nice to be in a sane world.