ABSTRACT
Effective policy needs to go beyond conventional monetary and fiscal policy. It requires eliminating the structural defects in the economy that depress productive capacity, productivity, and competitiveness. It has become fashionable to advocate faster economic growth as the elixir to cure all that ails the American society. Substantially shifting the composition of government expenditures to favor investment over consumption can help quicken the economic growth rate in a sustainable fashion. The use of basic economic efficiency tests would surely improve the overall effectiveness of government spending and likely lower its aggregate level while contributing to more efficient use of the nation's resources. A constant theme voiced by tax reformers is the need for increased incentives for saving, capital formation, and economic growth. An extensive array of expenditure, tax, and regulatory reforms could shift the American economy to a sustainable higher growth path.
