Making It In America: Building The New Economy

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Executive Summary

We can’t pull out of the present downturn and return to the economy of the past—a high-consumption, low-wage economy based on asset bubbles and foreign borrowing. We need to look ahead. Our response to the current crisis must plant the seeds for the economy of the future.

The contours of the new economy are starting to take shape. Barack Obama set a different tone with an inaugural address that promised a “new foundation for growth.” Some of this is happening already: Construction crews are fixing bridges, filling potholes and laying new airport runways; work has started to improve our nation’s electric grid and create new, renewable sources of energy, and Congress is working on the biggest boon for college student financial aid in a generation, shifting $87 billion in subsidies from banks to students over the next decade.

Outside of government, we hear talk of sustainability, about returning to a real economy based on production, not consumption, and manufacturing, not finance. Celebration over cheap Chinese imports is giving way to alarm over the loss of jobs, currency manipulation, low environmental standards and dangerous workplaces that lower Chinese costs and give Chinese imports an unfair advantage.

But the opposition to reform is fierce. Wall Street is mobilizing against financial reform and regulation. Obama’s decision to impose tariffs on Chinese tires was called “economic vandalism," and modest “buy American” provisions in the Recovery Act met accusations ranging from “counterproductive” (U.S. Chamber of Commerce) to “the worst instincts of Congress” (The Wall Street Journal). And federal budget deficits generate concern across the political spectrum.

The next economy must be built on a solid platform. We need to rebuild our infrastructure, renew our manufacturing base and educate our people. America needs an industrial policy to help fit these pieces together. From workforce development to component manufacture, we need a strategic collaboration between the private sector and the government to reach our shared national goals. We need an opportunity for stakeholders to come together to remove obstacles, allocate resources, and create rules that work for everyone involved.

This report makes the case for that policy and explains what should be the key elements.