A key fact lost in all the fiscal-cliff wrangling is that neither tax rates nor spending cuts alone can balance the budget. The magic ingredient is economic growth. Consider the Clinton era: despite higher taxes for most Americans, greater GDP growth driven by a tech boom created jobs and turned a deficit into a surplus. Today, say economists like Harvard's Ken Rogoff, we need to get closer to our historic growth of 3% than the current 2% to make the fiscal math work. The trick is taking steps to nurture growth. "But politically, there's almost nothing you can do that's uncontroversial," Rogoff says. "The level of dysfunction is profound." In lieu of stronger pro-growth policies, there are a few things we can do to bolster the recovery. Here are five ideas that have bipartisan support--or don't depend on Washington.
1 GET PRODUCTIVITY GOING
Economic growth is basically the sum of productivity gains plus the increase in the labor force. And it depends, as überinvestor Warren Buffett told TIME, "far more on the dynamism of our capitalist system than on anything in Washington." Indeed, Buffett believes that the recovery would have taken four years no matter who was in office, thanks to the size of the debt bubble and its concentration in our core wealth area of housing.
More robust growth will come down to companies' efforts. The McKinsey Global Institute estimates that individual firms could deliver three-quarters of the productivity-growth acceleration we need to return to a 3% economy by taking steps like adjusting employees' schedules to better match consumer retail habits or leveraging data from sources like wireless sensors placed on products or electronic records to detect waste and make supply chains more efficient.
2 UNLEASH SHALE GAS AND OIL
Back in the 1970s, energy imports were a tax on growth. Today, thanks to the shale oil and gas boom, America is fast becoming OPEC. According to IHS Cambridge Energy Research Associates, the boom in unconventional oil and gas has already created 1.7 million jobs--and $62 billion in new federal and state tax revenue last year alone. Experts believe there's much more to come, and the length of the supply chains involved in unconventional energy production means that "all of the 48 lower states are experiencing economic benefits," says IHS vice chairman Dan Yergin, author of The Quest, which covers the rise of the new energy landscape. How can we get even more growth from shale? Yergin says our logistical systems need to be better adapted to move surging production from the Western U.S. to refineries on the East Coast, which still import oil from West Africa because infrastructure (including pipelines and production facilities) doesn't exist to transport energy quickly and safely from North Dakota.
3 SHOW US THE FOREIGN MONEY