First, spending on high-return public investments should be increased. Even if this widens the deficit in the short run, it will reduce the national debt in the long run. What business wouldn't jump at investment opportunities yielding returns in excess of 10 percent if it could borrow capital—as the U.S. government can—for less than 3 percent interest?
Second, military expenditures must be cut—not just funding for the fruitless wars, but also for the weapons that don't work against enemies that don't exist. We've continued as if the Cold War never came to an end, spending as much on defense as the rest of the world combined.
[Third] Following this is the need to eliminate corporate welfare. Even as America has stripped away its safety net for people, it has strengthened the safety net for firms, evidenced so clearly in the Great Recession with the bailouts of AIG, Goldman Sachs, and other banks. Corporate welfare accounts for nearly one-half of total income in some parts of U.S. agro-business, with billions of dollars in cotton subsidies, for example, going to a few rich farmers—while lowering prices and increasing poverty among competitors in the developing world.
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