The timing couldn't be worse. The economy is finally showing signs of liftoff as CEOs and consumers feel more confident in the future. But to maintain the new economic momentum, Americans also need to have confidence that their political system can manage serious problems. Right now, there are domestic and foreign policy issues that appear out of control. Congress and the White House need to get real to get things done. Here's the agenda:
-- Energy. The current energy legislation before Congress is unbalanced and unfocused. It relies too heavily on measures to encourage oil and gas production but is light on measures to promote conservation. Relaxing certain regulations and opening some public lands to more oil and gas exploration makes sense. But so does encouraging Detroit to increase fuel economy standards. One easy step is for Washington to seriously promote available hybrid engines that offer twice the mileage of traditional gas engines. Another is to break out legislation bolstering the transmission grid from the energy bill and pass it.
-- Iraq. It is clear that rebuilding the country is going to require far more money and troops than anticipated. Unless the U.S. is willing to increase the size of its army and pour tens of billions of additional dollars into the country, it needs to share the burdens and responsibilities of rebuilding Iraq. It's time to bring in the U.N. The U.N. failed to stop the bloodletting in the Balkans, leaving the task to the U.S., but it has since done a good job in providing soldiers, police, and aid to rebuild Bosnia and Kosovo. The U.N. can help secure the city streets in Iraq while the U.S. pursues Saddam Hussein and terrorists. The U.N. is offering the U.S. a deal under which all troops in Iraq would report to an American general. Washington should do the deal now.
-- Deficits. The budget is out of control. There are few limits on spending in Washington, and the soaring deficit may amount to 4% or more of gross domestic product through the end of the decade, at which time the baby boomers begin to retire. The deficit figures do not include additional billions for the cost of a new Medicare drug benefit, ending the alternative minimum tax, or the overseas war. Enough already. Means-test the Medicare drug prescription benefit so that only those in need get subsidized. Share the financial burden of Iraq with Europe and Asia. And reexamine some of the tax cuts so that Social Security and Medicare don't bankrupt the nation.
America's political system is becoming more polarized and partisan even as most voters become less ideological and more independent. Ideology has defined the debates about energy, the budget, and the war in Iraq. A rational, issues-oriented approach in Washington acknowledging the legitimacy and contribution of both conservatives and liberals would be in the best interest of America. The economy is at a tipping point in its recovery. The temptation in this political season to go to extremes threatens to undermine the confidence the economy needs to keep moving forward. Politicians may well pay a stiff price if they hurt the liftoff.