US slips from No. 1 to also-ran in global economic rankings

The United States is losing its competitive edge.

So says a new report from the World Economic Forum which found the U.S. slipping in dozens of areas compared with just a few years ago. Perhaps most troubling is the conclusion that since 2008, the United States has slid from No. 1 in the world in "global competitiveness" to No. 7 this year.

Out-ranking America are: Switzerland, Singapore, Finland, Sweden, the Netherlands and Germany.

Sure, it's just a number. But the WEF's ranking takes into account a broad range of factors, from debt to corruption to regulation to red tape to education to health care.

And virtually across the board, the U.S. is falling behind.

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"The slide in the global competitiveness report is almost certainly due to ... policy-related factors," James Gwartney, economics professor at Florida State University, told Gwartney, with dozens of other institutes, has co-authored a separate report on economic freedom set to be unveiled next week.

The World Economic Forum study reflected both the slack in the U.S. economy from the 2008 financial crisis and subsequent recession, and the increasing anxiety over the nation's skyrocketing debt, among other factors.

In the latest report, the U.S. ranked at number 140 out of 144 on its government deficit as a percentage of GDP.  The U.S. ranked at 97 four years ago.

The ranking on "public trust in politicians" has likewise fallen, from 41 to 54. The ranking on government wastefulness fell from 67 to 76. On government regulation, it fell from 50 to 76.

Gwartney said it's unclear whether the U.S. can turn things around anytime soon. With the debt hitting $16 trillion this month and no plan in place to actually reduce it, Gwartney called that figure "nothing more than future taxes" that will eventually have to be paid.

The fiscal outlook for the country is decidedly dim, with a raft of tax hikes and spending cuts set to kick in at the end of the year without congressional intervention.

U.S. policymakers face a difficult choice -- between economic and budgetary peril. Lawmakers could decide to stall the spending cuts and tax hikes, to the detriment of the budget deficit. Or they could let them go into effect, to the detriment of economic growth.

"I think it's going to be difficult to do anything better than hold the line (on the U.S. global ranking)," Gwartney said. "There's not much evidence that either political party is serious about attempting to reduce government expenditures and reduce the size of the debt."

President Obama, in his nomination acceptance speech last week, reiterated the goal of reducing the deficit by $4 trillion over 10 years. Yet speaker after speaker at the convention slammed GOP running mate Paul Ryan for his plan to tackle entitlements -- and the deficit -- by overhauling Medicare.

Republicans at their convention in Tampa hammered the debt issue, displaying two giant debt clocks inside the convention halls and calling for fiscal discipline. Yet Democrats have criticized the GOP ticket for proposing a new wave of tax cuts while declining to detail which tax loopholes they would close -- which Democrats warn could exacerbate the country's budget problems.

There is some good news for the U.S. in the latest World Economic Forum study. The U.S. is still in the top tier for categories dealing with innovation. And, according to the study, the availability of airline seats in the U.S. is second to none.