Planting the Seeds of Our Renewal : Economy: America can meet the challenge of the fierce global market by taking these strong competitive steps.
As global upheavals have heralded the thawing of the Cold War, so too do they augur substantial cuts in our defense budget. If we are wise, we will use the coming peace dividend for more than federal deficit reduction. We will use it to plant the seeds for tomorrow’s America, with increased investments in education, infrastructure, job training and technology development.
In the fierce global markets of the 1990s, America’s economic vitality will be a far greater determinant than military strength of our future national prosperity. Some of President Bush’s competitiveness proposals are steps in the right direction. But even the best ideas put on the table so far will, in sum, be little more than an economic pacifier, creating the illusion that we have actually tackled the tough problems. We need more from the President. We need a State of the Union message that looks forward to meeting our needs in the year 2000.
As it has been stated so far, Bush’s current package would relax antitrust laws for joint manufacturing; make permanent the R&D; tax credit; reduce the tax on capital gains and institute tax-free savings accounts; and end the practice of masking federal deficits with Social Security surpluses.
Although a number of these suggestions, such as significantly reducing the deficit and creating a sliding-scale capital gains tax, would be beneficial, they do not go nearly far enough toward revitalizing our industrial base. Tinkering with the tax and antitrust laws should not be viewed as the silver bullet that will reverse two decades of declining market share in critical technologies.
Our national leaders must embrace the major new economic reality of the ‘90s: Not all technologies are created equal. America must recognize that the primary influence on our nation’s economic health will be our ability to capture a strong market share of the vital high-growth industries of the 1990s, such as high-definition television, biotechnology and superconductors. Conceding these technologies risks losing control of our economic destiny.
A State of the Union package that would really prepare America for its coming economic challenges might include proposals for:
A Technology Corp. of America. As President Wilson created RCA to meet the technology challenges of the 1920s, the United States should now create a private-sector Technology Corp. of America, setting up a “wise man’s council” to provide a permanent framework for industry-government cooperation and to manage the transition from a defense-based to a commercial-based high-technology economy.
A “Fannie Mae” for the electronics industry. Based on the recommendation of the Presidential National Advisory Committee on Semiconductors, the United States should create a privately run investment bank to provide billions of dollars for cutting-edge industries. With a carefully designed federal guarantee, modeled after the successful Fannie Mae and Sallie Mae loan guarantee programs, we could help develop our strategic technologies without increasing the federal deficit one penny.
More civilian research and development. The federal government should return to the traditional 1-to-1 ratio of military to civilian R&D; spending, rather than its current 2-to-1 tilt in favor of the military. This would generate an estimated $19.6 million over the next three years for civilian technologies--and almost $40 billion if matched by the private sector.
Restructuring the Department of Commerce. It currently lacks the resources to be an effective advocate for and developer of U.S. exports and technology. The time has come to transform it into a Department of Industry and Technology, including an advanced civilian technology agency. Such remodeling would allow us to meet the new global standard for national prosperity: economic, not military strength.
A longer school year. In addition to the needed quality reforms in education, the school year should be extended to between 220 and 240 days. While American students spend on average only 180 days a year in school, Japanese youth spend 240 and Europeans 220, giving our kids an unnecessary competitive disadvantage.
Special investment bonds. The Treasury should issue small-denomination bonds to finance investments in strategic commercial industries and technologies, creating “War Bonds” for the economic battlefield of the 21st Century.
The challenge we face is simple: We can leave our children a legacy of debt or a promise of prosperity. To make good on that promise, we need more than short-term solutions; we need vision.
We must design dynamic and promising national policies to match America’s vast human and natural resources and deep well of entrepreneurial vitality.
