The government needs a clear medium-term strategy, to reinvigorate private investment spending, and it will need increased budget revenues in the years ahead for urgent public investments and long-term restructuring. Short-term recovery will be promoted by clarity on the long-term direction of economic changeCan't disagree with the sentiment, but if all the specific proposals will have the effect of crimping investment, it's hard to take this seriously.
The Fed pumped up the economy for years and encouraged the reckless overlending and overborrowing for housing and consumer credit, all in the name of keeping the economy growingI can't see blaming the Fed for today's problems. If they hadn't kept rates low despite low inflation and slow growth, they would have been crucified by people like the author.
Remember, after all, how George Bush encouraged us to shop as the patriotic response to 9/11He didn't encourage us to run up our credit cards, but to keep the economy going. The economy took a huge hit following that day.
Reagan and his colleagues argued erroneously that the problems lay in government regulation, excessive taxation, and welfare handouts rather than on the need for a redesign of monetary policy (which Paul Volcker painfully accomplished) and a sound long-term energy policy. This is ludicrous. Reagan stood squarely behind Volcker's tight money policy, even though it caused a brutal and long-lasting recession.
They proceeded to dismantle much of the social safety netIs he referring to the Social Security reforms? Welfare continued to grow throughout the period. Yes, he smashed up the air traffic controllers union, but does that count?
leaving America ranked 24th in the world in life expectancy and 25th in infant mortality. Reagan didn't cause this! Infant mortality has always been high in the US.
The great myth in America is that capitalism demands such brutal neglect of the poor, a point that is disproved daily by the high incomes, low poverty, and social cohesion of other advanced economies. We can translate this as "Europe does it better". But unless you consider the different circumstances there, including demographics, ethnic homogeneity, the far higher population density, etc., your inferences can be way off.
The Reagan tax cuts led to a generation in which we've been unable to invest in basic infrastructureIf you look at the changes in the federal budget, you see that the big winner is...Social Security and health spending. That's where our infrastructure went.
And the Reagan era began the massive financial deregulation that brought us to today's calamitiesDeregulation began under Carter, notably the airline industry.
Washington continued to dismember the social safety net (by "ending welfare as we know it"Reforming welfare was a bad thing? Not only did it not have the disastrous consequences "1 million children on the street", it freed up money for things that actually did some good.
Foreign assistance in the 1990s fell to rock bottom, a miserly 0.1 percent of GNP, allowing the AIDS pandemic and African hunger crisis to buildIn those days we had no significant bullets to fire re AIDS, and hunger in Africa has been one of its permanent features. One of Bush's accomplishments has been to tie aid to results, while tripling its size. His effort has been celebrated by those without ideological blinders, such as Bono.
Then as now, Americans failed to understand that unattended hunger, disease, and deprivation are the breeding grounds of extremism and conflict People who study terrorism are clear that it is not driven by poverty, but by ideology and a sense of grievance. Hungry people are interested neither in democracy nor in terror.
Big money further infected the political system as well. Both Democrats and Republicans made peace with vast wealth by linking up with the high-flying innovators on Wall Street, the ones who have now crashed to earth. Yet the supplication to the bond market was taken to mean the end of ambitions to solve great challenges of energy, climate, poverty, or infrastructureIf he can repeat so can I. Entitlements swallowed the money for these things. Tax revenues have grown and grown since Reagan. Defense spending (as % of GDP) is way down.
Households were to borrow against their housing wealth to keep the consumption machine goingWho told them to do this? Not Bush. Bush tried to slow the credit train, by tightening not loosening regulation. No? Think Sarbanes/Oxley. Think Fannie and Freddie (proposal rejected by Congress.)
Foreign central banks, mainly in Asia, have accumulated trillions of dollars of claims on the United StatesThis is getting closer to the truth. It is time for the rest of the world to go shopping. One piece of the crash puzzle is that a billion people left the subsistence economy and started to save, producing capital that went looking for a home and found it in what remains the safest haven on the plant - America.
Unconscionable Wall Street bonuses, exceeding $30 billion per year in 2006 and 2007 played their roleThe financial sector needs to figure out a new compensation model that prevents the gaming of the system. But if bonuses go, so will the best people.
There is no national strategy to address the three-sided challenge of energy security, energy availability, and climate change. We've been reduced to a nearly insane call to drill, baby, drillWhile this is a distortion, it does seem like voters showed the energy populists the door. I include Hillary and her gas tax holiday in this group. If Congress follows Obama's proposals (a big if) we could see some progress. But increasing domestic oil and gas production will reduce the severe economic pain that high energy prices are inflicting as we struggle through the transition to a decarbonised economy.

Obama's proposal to auction all permits is very good. The big risk is that Congress will establish too-tight caps on greenhouse gases, which will keep energy prices high, while generating a huge gusher of revenue for Congress to get drunk on.
Serious longer-term alternatives—such as carbon capture and sequestration, properly regulated nuclear power, and large-scale wind and solar power—are caught up in incredible confusion and lack of political leadership. Dishonesty and shortsightedness abound. Under Bush, the federal government has been spending less per year on energy research and development than in two days on the Pentagon. And industry is rightly paralyzed in building new power plants, not seeing any clear direction on national policiesWhile the Feds should put more money into research, the rest of this is just venom. For example, the most significant example is the cancellation of 59 coal power plants in 2007, not because of lack of leadership, but because environmentalists poisoned the discussion.
Indeed, just about the only thing the Bush administration found money for was military invasions and occupations, surely the one investment that is yielding us a nearly solid negative-100 percent returnAnd big increases in foreign aid(!) education spending, Medicare drug insurance, huge (if pork-laden) energy and transportation bills, etc.
The Obama economic...R&D proposal of $15 billion a year is a great advance over today, but it's quite likely that even twice that amount will be neededPrivate energy research is booming, and while more is welcome, picking round numbers like "double" is not really advancing the discussion.
Obama is absolutely correct that America will be much safer if we invest more in foreign development than in foreign warsA little evidence please? There have been no attacks on the US since we went on the offensive.
He has proposed to boost development aid to $50 billion by 2012, an important move in the right direction but one that would still leave the assistance budget at a mere 0.3 percent of GNP, still far too low to address the multiple crises of water, hunger, disease, population, and climate in Africa, the Middle East, and Central Asia that fuel much of the global unrest today—and far below the internationally agreed—upon target of 0.7 percent (of which the United States has been a signatory since 2002)OK. 30B for energy, 85B for foreign aid...Good thing you taxpayers have money to spare.
America will sooner or later have to overcome its extreme allergy to taxationWe are truly heading for a crackup. Even without implementing Sachs' agenda, the federal budget cannot be funded over the coming decades without some combination of up to a doubling of income tax rates across the board or equally dramatic restraints on spending growth, particularly on Social Security on Medicare.
a gradual rise in tax revenues as a share of GNP during the next decadeHe doesn't dare say to what level, but if he doesn't mean something like 25%, he's not being serious.
Our macroeconomic problems require major public investments in new technologies, infrastructure, public education, and poverty reductionThis puts us into the hundreds of billions of increased spending - independent of entitlements. Yikes.

...isn't M. Sachs and his "new macroeconomics" the direct lineal progenitor of the paranoid, decrepit, yet scary-dangerous kleptocracy other wise known as Russia?

Oh, sorry, my bad.....the Obamessiah has cleansed lefty progressives of all previous sins.

Let's start to count the laugh lines in this ludicrous Obamagasm...
1. Foreign aid works. Care to point out even one single positive result of the billions already flushed down foreign rat-holes?
2. "Great challenges" - climate change, poverty (the usual hit parade) - can be "solved". NEWS FLASH....the climate has been changing for - oh - roughly 3 billion years. Oops! Another of my bads, The Obamessiah is going to "solve" this....you betcha! (wink)
3. Higher taxes are good for the economy.....errr....check out the comparative records of Treasury Secretary Mellon in the 20's as compared to FDR in the 30's.
4. The government has a constructive role in the discovery and development of new technology. Riiight, that would be Saint Gore the Baptist and his invention of the internet, for example?

Dry your tears boys and girls....after The Obamessiah wraps up the "new macroeconomics" he'll move on to the "new physics", the "new mathematics"....

P.S. If the "new macroeconomics" works as well as the user registration function of this website then we are headed for way, way deeper weeds than anyone has imagined.

What a disappointing article. The author fails to address ten trillion dollars in public debt, absolutely unsustainable entitlements, a monetary regime worldwide that has become a joke, etc. etc. His answer instead is, what a shock, tax and spend.