1) Increase the H-1B visa-limit ten to twenty fold. These are non-immigrant visas that allow employers to essentially cherry pick the best and brightest from across the world, especially in engineering. The limit is currently a ridiculously low 6,500 per year. These highly skilled positons are critical to developing private sector employment and growth.
2) Repurpose $5B from unspent TARP funds and start a revolving government venture fund to seed startup investments. The government could invest anywhere from $10K to $1M in promising businesses and take a flat 25% equity stake. 10 experienced fund managers could be recruited as SES (Senior Executive Service; the highest level of career government employees, who are eligible for bonuses for good performance) to serve on a board to approve applications and provide oversight. Future cash flow from those that succeed would pay down the deficit. The fact of the matter is we live in an information and service-based economy. Unemployment insurance, State aid and new highway spending help with cyclical unemployment, but structural employment is best created with new, sustainable, innovative companies.
3) Enact a larger follow-on investment in next generation transportation. The stimulus bill had a measly $10B for high speed rail. Follow-on with another $50B to buy a lot more cars, build more tracks, and connect major population centers. Through the multiplier effect and contracting a lot of this out, these funds' employment effects could be amplified and drive permanent private sector employment. The U.S. is falling behind in the efficiency with which it can move goods and people, prerequisites for sustainable growth in a global economy. (*Postscript: the White House just announced a $50B transportation package to stimulate the economy.)
4) Revamp, rebrand, and rerelease the Public-Private Investment Program rolled out last year. This program is designed to increase the market for banks' bad mortgage backed securities, as well as mortgage related loans. (More details here - http://www.financialstability.gov/roadtostability/
publicprivatefund.html). Unfortunately, a specific design has stalled and the program has been delayed. The terms and capital levels should be reevaluated in order to make them sweeter for private partners, and then fund managers hired to scale this up and start the auctions.
5) Tax credits/rebates based on purchases. The idea here is to combined tax cuts with smart purchases that will increase aggregate demand. I.e., invest in clean energy or buy an electric hybrid and get cash back, or hire people who are unemployed and get a payroll tax holiday. This would create a strong incentive for both immediate spending, and immediate hiring, while developing new markets. This would essentially build off the phenomenally succesful Cash for Clunkers model. That was one of the most impressive government-private policy team-ups in recent memory and I'm surprised how quickly it has faded from policymakers' collective memory.
6) Reform the Payroll/FICA Tax to increase aggregate demand. Lower income individuals have a higher marginal propensity to consume than the wealthy. Poorer people also pay a larger share of their income in payroll taxes than the rich. In fact, some 75% of Americans pay more in payroll taxes than in income. FICA should be exempted for the first $20,000 of income (thus increasing spending the most) and the current cap on FICA should be raised from $106K to more like $250K. Warren Buffet has had a wager going for years for any executive who can prove they pay more in payroll taxes than their secretary. So far, no takers.
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