A road map to economic recovery

Peter Goldmark, a former budget director of New York State and former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund.

Let's sketch what a road out of our economic trouble might look like.

It's tough enough to construct a path out of the quicksand we're in without factoring in today's political turbulence. So let's not introduce the constraints of what might be politically doable just yet. A good starting point is some common sense about what we have to do to right the ship. This is a column about what, not how.

We want to rein in the deficit carefully, not abruptly, and get on a firm course to achieve balance over five to seven years. That'll mean trimming the rate of growth of entitlement programs, including Social Security, Medicare and Medicaid. For Social Security, it'll mean retiring a little later, and if you're in the upper income brackets it'll mean contributing more. It'll require some fairly tough brakes on the health cost spiral.

The national security budget will need to be leaner. That's a budget that's nearing $1 trillion by the time you count its numerous departments and agencies.

And it's time, finally, to begin to reduce oil imports, for which we now ship overseas nearly $500 billion per year. This river of money leaving the country makes us more dependent on dictatorships that don't like us; drives a lot of our public borrowing, giving the Chinese and others leverage over us; and shakes confidence in the dollar, which we want to see remain the world's primary reserve currency. Getting off the foreign-oil jag is a tall order, but let's do the tough stuff all at once and get it behind us. Let's spend that half-trillion a year investing in America.

We want to build our way out of the present slump, not spend our way out. That means investing in bridges, roads, rail, efficient energy, state-of-the-art electric grid and communications systems, as well as capital for innovation in the private sector. The jobs created will be here in the United States; and that new investment will make us more competitive and more efficient. A lot of our public facilities are wearing out right underneath us. Rebuilding them is win-win in terms of jobs, competitiveness and growth.

More investment and less consumption will require different incentives for what we do with our money. Every family should have an automatic floor of earnings from savings and investment that are exempt from taxes - say about $10,000 per year. And if we have to find places to raise more revenue, which is very likely, then put those taxes on discretionary goods and consumption - not middle class incomes or investment. It's perfectly fair to tax the rich more. People earning above half a million dollars a year don't carry their share today, and in this national economic emergency, no one gets a free ride.

The kinds of steps outlined here are tough but doable. And look where we'll be at the end of it: a roughly balanced budget; no more living at the mercy of those overseas to whom we owe trillions of dollars; on our way to being free of imported oil and shipping a lot less money to strange governments that funnel some of it to the friends of terrorists. Most important, our economy will be growing soundly and adding jobs.

You say you want an absolutely painless road that allows you to shop and borrow as much as you used to?

You're dreaming. That road doesn't exist. There are two roads, and it's time to choose. One road, the one we're on, plummets downhill toward deep economic trouble. The other looks roughly like what I've outlined above.

The politics aren't right for this today, I know. But the clock is ticking, and it's time to figure out how to make them right.