America's 5 step plan

Jeffrey Sachs, considered by many to be one of the top economists of our time, recently wrote a Financial Times editorial on what he believed to be the solution to America's current issues. He initiates his solutions by first criticizing American politicians (Democrats and Republics both) for having a very short-term vision for financial stability. He says that while Americans were exhausted from a decade of over spending on consumer items, the government promoted more spending (i.e. on cars and houses). Contrarily, the government needed to promote long-term, sustainable growth, as opposed to a quick, rapid turnaround. According to Sachs, by focusing on investments for the long-term, instead of a focus on short-term consumer buys, the US and the west will get back to a time of sustained development.

He continues on to lay out his 5 step plan as to how the US can get back to this focus of long-term, sustainable investments.

Step 1) This has been mentioned many times before, but a continued focus on investment in clean energy, and the upgrading of a new national power grid. Instead of using the cap and trade system (or emission trading) that has been talked about before, Sachs suggests to use guaranteed clean energy price subsidies that will be financed through rising carbon taxes.

Step 2) A 10-yr program of infrastructure redevelopment. Things such as new high-speed rail systems, new water and waste treatment facilities, and new highways should be the focus. This should be financed with a combination of contributions from the Federal government, local governments, and private institutions.

Step 3) Higher public spending for education. And not at the elementary level as others have mentioned, but rather at the secondary, vocation, and bachelor degree levels. This is to re-teach individuals that have been struck hard by unemployment, and to train and develop the younger generation for the future.

Step 4) Boost infrastructure exports to Africa and other developing countries. I'm not sure how significant of an impact this would make but Sachs believes that there are huge benefits to be had, such as increased exports, increased African development, and increased international goodwill and stability.

Step 5) A 5-yr plan to reduce the budget deficit to sustainable levels. He lists a couple ways to do this like cutting defense cuts by leaving Iraq and Afghanistan, as well as cutting back on weapons development. He also includes increasing taxes on Wall Street profits and bonuses, and high-end marginal tax rates, and potentially even adding a value added tax.

Although in theory this 5-step plan seems like an accurate way for America to get back on the growth plan, I don't think the implementation of this plan is realistic. Party politics plays too large of a role in the American economy, and with parties continually changing every 2 years, it's hard to come up with a 5 or 10 year plan to revitalize America. That being said, if the US doesn't get over party politics and look, together, towards the future, then it's only a matter of time until we'll all be looking back together saying "What if?" and more importantly, "What now?"