A Better Strategy for Faster Growth

March 26, 2013

The country needs a long-term strategy to achieve its common goals of personal freedom, noninflationary prosperity, broad-based economic opportunity and mobility, and national security. With a good strategy based on the free enterprise system as a foundation, sound economic policies will follow, say George P. Shultz, Gary S. Becker, Michael J. Boskin, John F. Cogan, Allan H. Meltzer and John B. Taylor, senior fellows at the Hoover Institution.

The obvious place to begin applying strategic thinking is to the budget -- the primary vehicle for setting priorities. Yet, in recent years, the budget process has completely broken down, replaced by disorderly management by crisis. This year the president has thus far failed to produce a budget.

We need to go back to an old-fashioned regular budget order.

  • The president needs to submit a budget that contains a strategic plan and brings the budget into balance.
  • The House and Senate then need to pass a budget resolution that sets spending in line with revenues.
  • The congressional committees responsible for appropriations and entitlements must then produce legislation required to achieve the budget plan, bill by bill.
  • Appropriations legislation should focus on the coming fiscal year and the next, not on 10-year multitrillion-dollar totals that the current Congress can't control and the public can't understand.
  • Annual appropriations should concentrate on supporting the basic role of the federal government, leaving major support for infrastructure and education to the states. Recent promising actions by local governments to allow more choice in K-12 education should be encouraged.
  • The defense budget must be based on a national security strategy, not on across-the-board cuts, ad hoc formulas that simply target defense spending as a share of gross domestic product, or continuing resolutions that put national security at risk.
  • Entitlement legislation should focus on humanely controlling the growth of Social Security, Medicare and Medicaid, thereby saving them from destruction.

Strategic thinking today will produce policies that bolster economic growth, employment and American geopolitical leadership. As other countries again emulate our economic and political system, their prosperity will be to our mutual benefit.

Source: George P. Shultz et al., "A Better Strategy for Faster Growth," Wall Street Journal, March 24, 2013.

 

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