What THREE ideas do you have advise him to focus on? Why?
If President Obama where to select me to advise him on three economic policies to promote his re-election, then it must truly be a situation where all economists or anyone with such knowledge have disappeared from this planet. Regardless, thanks to Dr. Harris class, I may have some ideas.
First, a rapid but well-planned move to green sources of energy. Obama's current office probably has done the most for that cause than others lately. But all infrastructure in our country is aging, and with a push to improve infrastructure through new, green, rising technology, a new, 21st century nation will replace the old. To set this up, new construction techniques, materials (environment friendly for example), and organization would have to be created. This would open new employment, new industries, and focusing capital stock toward all these new industries. Hopefully that will create an increase in spending growth and money velocity to combat our current liquidity trap and crowding out effect that is tying the Fed's ability to infuse money into the economy. Plus, its the way to go if we want to be competitive NOW. Oil will be a minimal source of energy within this half century, I believe, and we MUST be the first to introduce, manufacture, and develop green sources of energy.
Second, triple the pay of all active duty military service members. Why? And for what cause? Simple. Anyone who knows, or is, or has been in the military, knows how the life style of the majority of young service members (and many of older range, too). Work hard, play hard. Weather people like to believe that or not it is a basic truth in the military. The portion of 'play hard' is what might send a spending shock (positive) and increase spending growth and push that AD curve to the right! Spending 3/4 of a paycheck or all (or direct deposit as today) on a whirlwind spending spree is a common practice for service members. It is not just that the economy would experience a positive effect by tripling (or more) their pay, but imagine the flood of new recruits! As long as they remember that it's their lives (and more importantly other's lives) they are potentially signing away. Unless they join the Air Force. A joke, I love the Air Force, they most likely saved my boys' and my life once upon a time. If this would bring an uproar of a spending issue, a good remedy would be to just give the Marines all huge raises. That money would be infused into the economy in 24 hours. It's a win-win situation; Americans love their service members and Americans love their economy.
Third, a long shot, but would generate a huge increase in spending growth. Cuba. Fidel Castro is going to drop dead any day now, and trying to reconcile differences with Raul Castro would be a good move. Without bending to any sort of communist or socialist ideals (hope for a democracy), we could join with Cuba to re-build their infrastructure (green of course) and specifically the coastal areas. The coastal and marine environment circumference of Cuba are enormous. Imagine a developed (environmentally friendly of course) Cuban coastline of resorts and vacation spots, only 90 miles from Florida. The amount of US dollars that would flow in there from tourism would be very large. And if some contract or deal, including the US receiving a cut from the resort/vacation boom, it could be a solid source of spending growth. This truly might seem a long shot, but it could work. Cuba, a GIANT Caribbean island, with some of the most beautiful coastlines, beaches, waters, and geography in the Western Hemisphere (many might not know this, Cuba being a closed communist dictatorship), is a treasure chest of riches. And that is not meant to place Cuba as a place for plunder, but our neighbor and hopefully one day our business partner.
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