First, with an economy this close to full employment, does it 
seem necessary to provide any economic stimulus with government economic policy?  
And, if policy is to be used, should tax changes or government spending changes be 
used??

The natural rate of unemployment is thought to be about 4% in the US
now, so todays' 5.4% unemployment rate (although lower than the peak
of 6.3% in 2003) isn't very close to full employment.

This link shows unemployment rates for recent years (notice the 4%
near the end of 2000 showing that this rate is obtainable):
http://research.stlouisfed.org/fred2/series/UNRATE/12/10yrs

2 things in recent years that have been done to stimulate the economy are 
1) Tax Breaks:  The tax breaks that Bush implemented have helped spur
the economy, but not at the desired rate.  It has been a few years now
and unemployment is still 5.4%.  Further, this is partly to blame for
the huge deficit during the last few years which will put a strain on
the economy in future years.
2) Lower Interest Rates:  The Fed greatly reduced interest rates over
time to fight the recession.  This has increased consumer spending
(especially with large purchases such as homes and cars) and has also
increased business spending which has helped create jobs.  Now the Fed
is slowly increasing interest rates because they believe the economy
is recovering at a reasonable rate and we're not in danger of another
recession.

I am a fan of both of those policies (especially the 2nd).  The first
is good if the budget can be handled reasonably, but unfortionately
our lawmakers are and have for decades been terrible at managing
government spending.

Close to full employment.  You're kidding, right?  Please do not
listen to any Republicans.

vonsedric, two comments about the other posts, then my comments (i'm a windbag...)

1. jack is speaking based on government statistics and data. He is
using information that must be accepted with a few caveats. The
government numbers for unemployment do not include all people that are
unemployed. See how the number is calculated here (along with much
other helpful information):

http://www.bls.gov/cps/cps_htgm.htm

Although this comes from a conservative source, I think there is also
some helpful data (especially the graphs) along with an interpretation
you can take or leave here:

http://www.heritage.org/Research/Labor/wm456.cfm

2. nelson, jack mentions up front that 5.4 isn't very close to full
employment. Although he likely is a republican, your ad hominem attack
is unsound.


I certainly can't calculate unemployment better than the government
does, and while I'm not happy with it, the final criteria for
unemployment stats require compromise. As long as the definition
doesn't change too frequently or drastically, it's primary usefulness
is in watching the progression.

What the unemployment numbers don't say is more relevant to your
question of the necessity for employment stimulus. As our economy
moves from manufacturing to service-based jobs, a lot of people are
going to need training/education. Also, while outsourcing has been a
strong trend in the last decade, there seems to be a reverse trend
beginning, as some jobs just aren't working out overseas (think about
getting your computer warranty problems answered by anyone with an
extremely thick accent...no offense to anyone, I am an ethnic minority
too!). There is always a need for higher productivity and efficiency
in this global economy, and in the context of the post-war
construction where the economies of the world were all devestated
except for us, their rebuilding and the emerging economies in the
Pacific have placed a lot more pressure on the U.S. (I assume this is
your context also).

From the government perspective, more workers and less unemployment
means more tax revenue. A healthy, productive efficient economy means
not only more of the same, but more clout in the global arenas of
economics and politics.

From our perspective, it means hopefully less crime and better or
sustained standard of living.

Whatever your political persuasion, both tax change and fiscal
spending policy can always be improved (think of $400 government
hammers, etc.) People are expensive, and so are societies. (I like my
highways and parks!) Freedom has a price, and the world is catching
up. Taxing and government spending affect all the people in this
nation, regardless of whether they are counted as unemployed or not,
so even though I have friends that are unemployed, and don't count as
unemployed anymore, it still helps my buddies that fall between the
cracks. (Although he sure doesn't feel like its helping). thanks for
the great question, hope this helps.

That was not an ad hominem attack, which would involve attacking
someone directly.  I was attacking the entire Republican party.  Also,
my comment was directed at vonsedric, not jack.  I fully agree when
jack states that the current situation isn't very close to full
employment.

I hate to get a little off topic to describe what unemployment is
rather than talking about full employment and govt policy, but I am
rather enjoying the direction this is going.

This is from the first site Eschat cited:
"People with jobs are employed.
People who are jobless, looking for jobs, and available for work are unemployed.
People who are neither employed nor unemployed are not in the labor force."

Eschat, you claimed "I'm not happy with it" and "even though I have
friends that are unemployed, and don't count as unemployed anymore"
when talking about how the government calculates unemployment.  Their
statistical measures are far superior to any I've seen for political
polling or even medical research, so I doubt that your beef is with
their statistics which leaves me to believe your issue is with who
fits the above description of "unemployed".  Please do tell us what it
is that you're unhappy with and how (if you had all the resources of
the government) you would go about fixing the problem.  I'm always
interested in creating better, more useful statistics.

I very much appreciate your comment, "As long as the definition
doesn't change too frequently or drastically, it's primary usefulness
is in watching the progression."  A lot of people never really
understand this concept and its importance to comparing data.

I look forward to hearing your response.  

**by the way, I do tend to vote republican about 75% of the time
however I wouldn't go so far as to say I'm Republican.  I'd much
rather relate to specific issues and/or specific candidates than to a
party, as there is no way I'd ever completely agree with everything a
party stands for.