Recovery actions

As the current administration approaches the end of its first year, it seems to have grasped the key elements to economic recovery. There is still a lot of skepticism about this but in the areas that matter I believe they understand the fundamental needs to foster a true recovery.

First, having avoided economic collapse by infusing capital into the banks, it is time for the Government to consider removing that money from the economy. Now, despite what many would like you to believe, the amount of money in circulation has not actually increased, since the reserve requirements imposed on the banks led to a significant reduction in available money. Of course the banks need to be cautious in reintroducing liquidity into the economy and the Government needs to make sure that capital requirements don't allow the reckless behavior of the last few years.

Second, we need to pursue the ongoing replacement of foreign energy sources with renewable or native alternatives. The lure of cheap oil has left us in a position where we face significant export imbalances. This change in the form of numerous initiatives will expand over time and while it will face challenges as foreign oil will go down in price, we need to make sure our policies equalize the playing field. One way to assure this is to determine a price below which alternative energy is uneconomical, and make sure that imported energy costs at least that much. This could be accomplished via a tax that would also help reduce the deficit. Now the tax shouldn't be designed to drive energy prices higher than required to continue economic recovery, but it clearly can help in the transition from oil to cleaner and more available energy. Also, Cap and Trade will lead to greater use of alternative energy and lead to installation of new technology and jobs. Also, providing tax incentives for home renovations to install more efficient or alternative energy will further reduce our addiction to foreign oil.

Third, we need to replace the jobs lost due to secular changes in the economy. The two most significant changes are related to reduced need for construction and the technological changes that are eliminating entry level jobs. If we can inspire a greater amount of renovation to convert existing housing to be more energy efficient that will absorb a large number of construction skills. Also, if we are going to convert the economy to a greater use of items like Natural Gas and Alternative Energy, these infrastructure changes will create many jobs. The jobs being lost to technology, need to be replaced by an increase in health care and manufacturing opportunities. As we convert energy from foreign to domestic, we will see energy costs come down. If we can combine this with some improvements in our tax system, we can stimulate increased in manufacturing. Also as we improve health care to cover all Americans we should see opportunities in health care jobs. Of course, these jobs need to be in fields that supplement our Doctors and Nurses.