A New Economic Agenda

My candidates for higher federal spending: support for elementary and secondary education, basic scientific research, and infrastructure (bridges, airports, harbors and parks).

Bringing the federal budget into balance will slowly reduce Washington's rising need for foreign loans. It will help firm up the dollar and keep interest rates low.

Reform the tax code. The best thing Washington could do to supercharge private savings would be to tax consumption rather than income. The Byzantine U.S. tax code (all 60,000 pages of it) should be scrapped. All present federal taxes -- on personal and corporate income, capital gains, estates, even payroll taxes (FICA) -- should be gradually replaced by a new, national consumer sales tax, collected by the states at the point of purchase and forwarded to Washington.

At every income level, big spenders would pay a lot of taxes, super savers much less. Poor people would get all their sales taxes rebated. (For more information on one version of a consumption tax, visit www.fairtax.org.)

Restrain entitlements. Washington should be honest with us that future senior citizens will have to finance more of their own retirement needs for income and heath care. Congress should reform Medicare and Social Security accordingly.

With regard to Social Security, some simple fixes would suffice: raising the benefits age to 70, flattening future payments and subjecting more current earnings to the payroll tax. Ditto for Medicare.

But it would be better for the U.S. economy and for today's younger workers if Washington allowed them to divert some of their Social Security taxes to private retirement accounts, which are likely to yield them a higher retirement income than Social Security will 30 or 40 years from now.

Curb fossil fuels. We should simultaneously develop more of America's oil reserves (offshore, in Alaska, everywhere) and radically decrease our need for all petroleum, whether imported or domestic, by practicing conservation and shifting to alternative fuels as rapidly as possible. That means more ethanol in our tanks-made not from corn, but from wood chips, sawgrass and other cellulosic biomass. And more biodiesel, too, made from used cooking oil.

Plug-in electric cars will lessen our foreign-oil addiction and help trim the trade deficit, but they won't clean up our dirty skies and warming earth if their juice is generated by coal-fired power plants.

Sure, we should also learn to burn coal more cleanly, but America's electricity future should focus on atomic power, wind farms, photovoltaic panels and hydrogen fuel cells.

America's total carbon emissions should be limited -- in a sense, taxed -- in a "cap and trade" marketplace. Meanwhile, conservation made possible by new energy-saving technologies and the simple-living trend will flatten America's demand for electricity from all sources, whether fossil or new age.

Limit foreign intervention. There are too many tyrants in the world for the U.S. to undermine or overthrow even a few of them -- and some of them, regrettably, are U.S. allies. The primary responsibility for regime change rests with the oppressed citizens of those autocracies, occasionally helped financially and militarily by the western democracies.