“But the rapid growth in people dropping out of the workforce and dropping into the disability welfare system, is something that will be very hard to undo.”
Agree given the upcoming demographic challenges and that the government is literally recruiting to put people on disability. We face long term structural and political issues that are going to be huge inhibitors to growth.
You both might enjoy this talk:
http://www.econtalk.org/archives/2012/04/autor_on_disabi.html
I listen on my commute.