A New Economic Agenda

In my long career as an economic journalist and forecaster, I've become known for my steadfast optimism about America's future.

In times of deep public gloom -- such as the severe recession of 1981-82 and the months following the trauma of September 11, 2001-my Kiplinger colleagues and I reminded our fellow Americans of the fundamental strengths of our society and its long tradition of adapting to changing economic circumstances.

"This too shall pass," I would say, if America just made some minor course corrections and built on its strengths. My confidence in America has been validated by our nation's remarkable record of rising productivity, output and standard of living.

Bold actions. That progress isn't over, but it is now threatened, I believe, by daunting challenges that we Americans are not taking seriously enough. I am not referring to the current financial crisis and the emergency measures being taken to combat it. There's no doubt that some of the challenges I address here are interwoven with the issues that are claiming the headlines today. But the $700-billion rescue package, although necessary, is not transformative. The most daunting challenges facing our nation must be addressed with bold, creative measures-a total rethinking of what Americans and government must do to prosper in this new century.

We will soon have a new president and many new members of Congress. As candidates, they may have felt limited in their boldness by fears of alienating key constituencies. I'm not running for office, so I don't have to worry about that.

Here is my list of the America's eight toughest economic problems:

Overconsumption and undersaving by individuals and the federal government, as evidenced by rising personal debt, budget deficits and the resulting dependence on foreign capital.Soaring old-age entitlements, which, if not reined in as the baby-boomers retire, will crowd most other public priorities.Addiction to fossil fuels (petroleum for our vehicles and coal for electricity), which contributes to dirty air and global warming.Dependence on imported oil, which aggravates the U.S. trade deficit and impairs national security.An overly ambitious foreign policy of promoting democracy by forcible regime change. However idealistic the intent, America cannot afford it.Failing public schools and inadequate vocational training, which leave many youths unprepared for tomorrow's high-tech jobs.Uneven access to health care. Medical care should be preventive, universal and delivered in lower-cost settings-not hospitals.A broken immigration system, which should be replaced with a broad guest-worker program and improved border controls.

Now, here are my proposals for fixing these problems. Please note they are a mix of public and private remedies -- governmental policies and behavioral changes that we Americans must make ourselves.

Increase savings. Everyone in America-from the super-rich to the middle class-would benefit financially and emotionally from trimming spending and boosting savings, anywhere from 10% of gross income for average folks to a third or half for the very wealthy. Simple living reduces energy consumption, and it lowers the stress of managing complex lives, in which we sometimes feel like a captive of our possessions.

A robust savings rate would boost the capital available to American business, reduce the need for consumer credit and provide savers with future retirement income. Some of Americans' lower spending on consumer goods should be diverted to more charitable giving -- to schools and colleges, social-service agencies, cultural organizations and overseas charities.

Reduce spending. Voters should insist that Congress begin reducing the federal budget deficit, starting first with spending restraint. Tax hikes could come later--but only if proved to be needed.

My nominees for frozen or gradually reduced federal spending: military hardware; a wide array of subsidies to business, especially energy and agriculture; and health care for the elderly and poor (not less care, but more efficiently delivered).