The Obama administration has focused on quick fixes that have done little to fix the intractable problems facing the U.S. economy, Stamford Economics Professor Edward Lazear told CNBC Wednesday.
"I would not be doing things like 'cash for clunkers' or 'first-time homebuyers' " credits, said Lazear, chairman of the Council of Economic Advisers under President George W. Bush. "That’s exactly the wrong type of policy."
To solve the country's problems, policy makers need to focus on long-term growth and not focus on the short term, he said.
Long-term growth "is affected primarily by having high investment rates, and high investment depends on having high rates of return to capital," Lazear said. "So that means low taxes, a pro-investment environment, open economies. Those are the kinds of things we need to be focusing on."
The Obama stimulus program might've had some small benefits, "but what we got as a price for that is an enormous increase in the size of our debtthat’s going to create these very significant long-term problems. That's my concern right now."
Infrastructure projects, a big part of the stimulus program, are important but they also "can’t stimulate the economy in the short run," Lazear said.
"The problem is, when you put a dollar in the Department of Transportation, at best you’re going to get 25 cents of that spent during that year," he said. "It’s just a very slow process and it’s not because people are inept, it’s the nature of the beast. It takes a long time for that money to get into the economy."
While extending payroll tax cuts "might be a positive step," it won't lower the unemployment rate from the current 9 percent, Lazear said, "so don’t hold your breath for any major changes in the next year or so."