Twenty years ago--with the end of the Cold War--American policy got dammed up:
It was clear we needed to do something to balance the long-term social-insurance spending promises both parties were making with the long-term tax base, and we haven't.
It was clear--first for national-security and domestic-congestion reasons, and then for global-warming reasons as well--that we needed to start imposing Pigovian taxes on coal and oil-driven energy use, and we haven't.
It was clear that we needed to reform America's health care financing system, and we haven't.
It was clear that America, as the globe's sole hyperpower, had a unique opportunity to build a world in which we could live very comfortably and peacefully once we were no longer a hyperpower or even a superpower but instead only one (if we are lucky) of several great powers--and we haven't.
To this in the past three years we have added:
A recognition that the "Greenspanist" bet--deregulate finance, rely on financial company shareholders via corporate control to limit moral hazard, and bet that the Federal Reserve can lean up after any elephants that stampede through--was wrong. We need to restructure financial regulation--and we haven't.
A recognition that the "central problem of macroeconomics" has not in fact been solved. We need to solve it--both in the short run of recovery from this recession, and in the long run of creating a world that is net, whether through global imbalances or other factors, as vulnerable to episodes like this as our world turns out to be.
About these six issues, two questions:
Which of these six policy issues will--as many of them have been doing--continue to drift, and what damage will drifting do?
Which of these six policy issues will the Obama administration actually be able to address--and what will be the consequences for the world of how it addresses them?