A Quick Fix Is Not Enough

This recession is different. That is the raw, uncomfortable reality that more and more Americans seem to know and feel, from university economists in Massachusetts to shipyard machinists on the Mississippi coast. Many Americans sense that the classic cures for a garden-variety recession -- tinkering with the tax code, boosting spending programs or simply waiting for the business cycle to run its course -- may not be enough to restore lasting prosperity this time around. In fact, the U.S. economy needs more than a quick fix. Substantial, structural changes may be required. It may even be time, some economists are suggesting, for a new version of the New Deal.

Few would advocate a literal reprise of Franklin D. Roosevelt's response to the Great Depression, which included strong gusts of government spending and massive public-works projects. Most economists shy away from any agenda that would increase federal bureaucracy or require more direct, activist government intervention in the marketplace.

Yet the U.S. economy stands at an important crossroads. "This is the time to take major steps and make major changes," says Allen Sinai, chief economist of Boston Co. Economic Advisors. "The economy is beset by structural, long-run problems that cry out for a systematic plan of attack. The time has come to create a new economic order." Robert Heilbroner, an economist at the New School for Social Research, argues that the 1990s should mark the start of a new era. The U.S. economy, he says, could be poised for a new "long wave" of growth, following the most recent wave that began after the World War II era and continued more or less through the 1980s.

Each economist carries his doctor's bag of pills and potions for the ailing economy, but there is a strong consensus on the need for one dose of medicine: a dramatically improved infrastructure and educational system. Capital investment for roads, bridges, highways and airports is essential for the long-term health of the American economy. Serious repairs of the nation's transportation system have been postponed, and the evidence can be seen in crumbling bridges and congested highways everywhere. During the past 30 years, infrastructure projects have declined from 3.2% of total U.S. spending to 1.6% today.

In a TIME/CNN poll conducted Jan. 2, a majority advocated such economic remedies as middle-class tax relief, favored by 78%, and a cut in the tax on capital gains, endorsed by 55%. But most also want long-term solutions, including greater spending on education, which 82% support, and increased spending on highways, roads and bridges, which 57% advocate. To finance such projects, 68% want an increase in taxes on households with incomes of $100,000 or more, and 67% favor an increase in taxes on alcohol and tobacco. Only 22% would accept a higher gasoline tax.