When the next president and congress take office they will be faced with what many are calling the largest financial crisis since the great depression. It will be their job to restore the confidence of citizens and banks in the U.S. economy. They must convince the rest of the world that our economy is going to recover and lay out a plan that inspires investor confidence by citizens and foreign markets. The government needs to have a plan that incorporates ways to save money and ways to stimulate the economy.
In order to reduce government spending the president needs to consider pulling our troops out of Iraq and Afghanistan. It is incredibly expensive to continue our presence in both of those countries so to save money the president needs to get us out. Also the next president needs to repeal the Bush tax cuts. This may be unpopular however the government needs more money to support programs that will contribute to growing the economy. If tax revenue goes back to the citizens through a stimulus package those citizens will use it to pay off their debts or pay their mortgages. While this is the type of behavior we want to encourage it is important to keep in mind that it does not resolve the problems with our economy. The fundamental problems in the economy will still be present and will need to be resolved.
The next thing the president needs to do is develop new regulation for the markets. Someone has to monitor them. Deregulation does not seem to have worked, so let’s go back to regulation. To increase consumer confidence the president needs to work on creating new jobs. The stimulus plan was a one time payment but did not satisfy the need of many newly unemployed Americans for a steady income. The president should create some new depression era type projects. Americans are more confident when they have jobs. Creating a new national park or some new monuments or even beginning major rehab on our current national parks with a focus on creating new jobs will employ Americans who have lost their jobs because of the housing market crash. These types of projects because of their temporary nature encourage employees to save money. As part of the economic recovery plan Americans will have to start saving money. The current negative rate of savings can not be sustained.
Social security, Medicare and Medicaid can not be sustained indefinitely at current levels. At some point the Social Security trust fund will be emptied. If we do not resolve the problem with the system before this time it will become more difficult to resolve the issue. Baby boomers are beginning to retire, draw social security benefits, and use Medicare resources. There will be fewer Americans in the workforce which will lead to a shrinking economy. In the shrinking economy it will be difficult to sustain benefits at current levels especially with rising prices. It is time for the government to resolve the problems with these programs. If they do not do something it will only lead to further economic collapse.
The need for inexpensive energy is not going to go away. The government needs to significantly increase funding for programs whose mission is creating sustainable energy technology. The next internet/technology boom will be cheap and sustainable energy. If the federal government supports scientists and engineers who are creating technology that will enable cheaper and more sustainable forms of energy then the US can become a leader in this market. This would help to increase exports and bolster the energy market while reducing the costs for the average consumer.
Most importantly to restore foreign confidence in our economy the government needs to maintain a balanced budget. I realize it is asking a lot to have the government cut current spending, refocus money on sustainable energy, and create new federally sponsored national projects, all while maintaining a balanced budget but that is what needs to happen. Paying down the debt right now is not an option. The government needs to spend to bolster the economy however; maintaining a balanced budget should be required. The pay as you go objective is not working there are too many entitlement programs that are exempt from these rules and there are too many ways around them. Regulating itself has always been a struggle for government but it is time to tighten the purse strings. If you can’t pay for it within a reasonable amount of time then it should not be done. Eventually when the economic crisis has passed paying down the debt will need to become a priority. In the meantime we need to stop adding to it. If the average American has to stop spending more than they take in then so does the federal government.