"The policy debate in Washington is focused on the wrong question: how to spark a short-term, cyclical recovery. Congress has already passed a fiscal stimulus bill, and the Federal Reserve has cut interest rates. All we can do now is wait for these policies to have their effect, which they will. The real debate should be about how to move the American economy back onto a high-growth trajectory. It can be done, but it would require large-scale and smart government policies across a whole range of issues.
The problems are obvious. The retirement of the baby boomers is going to have a crippling effect on all government budgets—federal, state and local. Unless entitlements are trimmed substantially, America is headed for fiscal bankruptcy. Immigration policy needs reform, most urgently so that the United States can once again attract the world's most talented people. Spending on research, technology and infrastructure needs a big boost. (U.S. spending on infrastructure as a percentage of GDP is the lowest in the industrialized world today.) Energy policy needs to be overhauled. Trade policy needs to be revitalized. Tax and regulatory codes need to be simplified in order to keep America a competitive place to do business. "
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