The U.S. is on the verge of becoming the most competitive economy in the world.
Some of that is the result of a private sector that quickly, and meaningfully, adapted to the crisis and re-built itself, with help from the government, into a leaner, meaner engine of global economic growth.
And some of that has been the direct result of the good works of the Federal Reserve, which pulled the nation from the brink of depression and engineered a recovery that, while in some ways is unspectacular and broadly unsatisfying, has still lifted economic growth and financial markets to levels higher than they were before the last crisis.
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However, the Fed, by its own admission, cannot shoulder this burden alone, and it's nearly time for the Fed to pass the baton to the legislative and executive branches, which can enact policies that will promote a more enduring economic recovery that will usher in a new era of prosperity for an economy that is poised to grow even further.
Here is a five-point plan that I'd like to suggest to reinvigorate an economy that requires urgent actions:
1. Upgrade infrastructure. Pass and sign legislation to bring the nation's critical infrastructure in the 21st Century thereby creating new capital assets of the government, as opposed to deficit-financed make-work programs.
Specifically, appropriate $1 trillion to upgrade the nation's electrical grid so that it reflects the reality of a wireless, rather than a wired, world. Such a program would eliminate the productivity-eroding effects of an aging power systems and lines that fail under stress and drain resources from an economy.
The project could be funded with a 50-year bond, paying a 5-percent coupon, so that banks, insurance companies, and other yield-starved investors would use the interest payments to meet a variety of capital, investment and actuarial needs. In addition, user fees paid by those who benefit from the upgrades will be used to pay down the debt incurred, making the program revenue neutral to revenue positive.
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Fully fund a national highway-reconstruction act that breaks through the capacity constraints that prevent the nation's, roads, bridges, railways and airports from becoming more efficient and more reliable.
This can be achieved with the active participation of states and municipalities who will share the cost burden, by issuing both Build America Bonds and traditional municipal securities on a triple tax-free basis.
2. Pass immigration reform that enhances border security, allows for a path to citizenship for the nation's 12 million undocumented immigrants and relaxes advanced visas for highly skilled workers.
As a nation of immigrants, each successive wave of new Americans has added new flavors, and new strengths, to the melting pot of citizens from around the world. Rather than let those who learn here take their knowledge home, they should be given incentives to stay and perform the productivity-enhancing work that each new wave of immigrant has provided throughout the rich, multi-cultural history of this country.
3. Relax export restrictions on the sale of crude oil, liquefied natural gas and other energy products, both refined and raw, to those countries, particularly our closest allies, who are currently held hostage by nations whose energy exports are becoming increasingly unreliable.
The rapid increase in energy exports would likely turn our trade and current account deficits into surpluses, and radically alter the way in which future budget deficits are funded, if so required. In addition, the impact on foreign policy, strategic priorities and defense spending would likely radically be altered by becoming increasingly energy self-sufficient and less reliant on hostile nations for energy supplies, both for us and our allies.
President Obama should call the leaders of Canada and Mexico to gather for a North American Energy Summit which would create an energy bloc, NOPEC, more powerful than OPEC.
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4. Set up a job-training program. Create a public/private partnership with business and universities to offer re-training and re-education programs to ensure that those who have remained unemployed the longest have the requisite skills to return to the labor force with advanced knowledge in software, robotics and engineering. That would help those marginalized workers take advantage of the energy revolution, manufacturing renaissance and latest wave of technological innovation to advance in a knowledge-driven economy.
5. Implement entitlement reforms as drafted by the Simpson/Bowles Commission. Raise the retirement and eligibility ages for Social Security and Medicare for future beneficiaries, while means-testing both programs for current and future recipients. Simpson/Bowles says such simple measures would increase the solvency of those programs by 75 and 85 years, respectively. In an even bolder move, immediately raise the retirement age to 70 for all able-bodied, and willing, workers while offering larger monthly payouts in the future. Such a policy would recognize the increasing life expectancies of current workers, while reducing the financing burden on younger Americans. Those who can afford to refuse Social Security payments and government provided health care should be allowed to opt out, if desired.
By just acting on these five items alone, however difficult that may seem in a political and deeply partisan environment, the benefits would far outweigh any political — or fiscal — costs.
As we celebrate the Fourth of July, our multi-century experiment in self-governance and self-reliance, it's also time to look ahead to ensure that the American Dream remains intact for centuries to come.
Only by taking the long view can our country fully pay forward the rewards that have been won by past generations and return America to past economic glories.
I hope you, as our elected representatives, provide the leadership necessary to advance our future goals while honoring our past achievements.