No one would try to argue that the Republicans will be able to do all the things required to put our budget in balance, create jobs and improve the economy in one budget cycle. But they must make some modest cuts ($100B is modest) in the second half of the 2011 budget and more serious cuts in the upcoming budget. In addition they must establish a ground game to create the conditions for economic recovery. Three areas include energy reform, housing reform and tax reform. We recently talked about energy reform ( America Must Have Energy Reform http://t.co/jsK48sO ) and we will continue to focus on the other two areas as well. Reform in these areas will do the following three things.
1) Increase the flow and reduce the cost of fossil fuels and establish an unsubsidized market for alternative energy.
2) End subsidies for Fannie Mae and Freddie Mac and sell off their assets and property portfolios to the banking system. This will permit the housing market to find bottom and we can begin a real recovery in the housing market.
3) Develop a tax reform that reduces taxes on activity that leads to growth and penalizes activity that is bad for the economy.
Each of these categories requires extensive analysis to reach the right mix of carrot and stick. But if America is to continue to be the greatest economy in the world and be a force for good throughout the world we must reform ourselves and lead the way.