State of the Union 2002: Addressing the Issues Abroad and at Home

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State of the Union 2002: Addressing the Issues Abroad and at Home

January 29, 2002 7 min read
The Heritage Foundation
Domestic Policy

Creating Jobs and Economic Growth
Job creation, unemployment, and economic growth will be a major concern of Congress in 2002. Americans always prefer the independence of a paycheck to being dependent on government unemployment and welfare checks, and the best "job creation program" is faster economic growth.

Anyone who has run a business knows how important it is to have workers and capital available for expansion. They also know how much time and money government regulations consume. The ability of businesses to save their income for future expansion, or borrow those funds at low interest rates, can make the difference between success and failure. Likewise, the availability of workers eager to spend more productive time on the job is equally crucial to expansion. However, high taxes and costly regulations drive up the required rate of return on capital and choke off some investments and job opportunities. Only those investments that can make the higher required rate of return are undertaken. Similarly, some Americans will think twice about working and earning more if higher taxes eat-up most of their additional earnings.

Reducing the Burden of Taxation
We support full implementation of President Bush's tax plan and acceleration of tax rate reductions to help our economic recovery. The total tax burden is at near-record levels, marginal tax rates are far too high, savings and investment are subject to discriminatory taxation, and needless complexity foments corruption and adds a hidden compliance tax on the economy. To maintain America's competitive advantage in the global economy, lawmakers should reduce the tax burden and reform the tax code. Proposals that simply give people money, such as rebates and credits, do not lower the price of productive behavior and therefore have little or no positive impact on economic performance.

Getting the Federal Budget Under Control
The General Accounting Office and Congressional Budget Office have identified hundreds of billions of dollars annually allocated to agencies and programs that are wasteful, mismanaged or unnecessary. We support eliminating and consolidating these programs which would substantially reduce the size and cost of government without endangering programs that are vital to the national interest.

The budgetary situation has changed, but commonsense budgeting principals have not. Just as before, the federal government should reduce taxes, cut wasteful spending, reform entitlements and fully fund America's national defense priorities. As quickly as the money arrives.

Strengthening America's Cities and Suburbs
An expanded federal focus on middle class quality of life issues would divert attention and resources from those communities still confronting serious social and economic problems. Existing federal urban policies are premised on the false notions that all central cities are in trouble, the problems are beyond the scope of local initiative, issues are similar from city to city, and more money will cure them. Favorable findings from the recent census suggest that much of the urban problems of the post-war era are being solved through local initiative. America should declare victory and shut down existing broad-based national, urban programs. In their place, a new voluntary program, based upon financial incentives related to achieving quantitative performance measures should replace it to help those areas still in trouble.

Health Care
A health care system in which government officials make the decisions simply will not work. Individuals and families must make their own health care decisions. Policies that advance personal ownership and control over health plans and benefits within a framework, such as the health care tax credit, of patient choice and free market competition must be adopted.

Crime: Cracking Down on Crime
State and local efforts have proven to be the most successful in fighting crime. Current federal crime prevention programs are in desperate need of reform. Many federal programs, such as COPS, need to be abolished, and more funds need to be allocated to the states in order to effectively fight crime.

Social Security: Improving Retirement Income
Social Security is approaching financial crisis. Younger and minority workers will not receive sufficient returns for their payroll taxes in the near future. Workers must be allowed to invest a large part of their existing retirement taxes in personal retirement accounts. Current retirees' benefits should not be reduced and minimum standards must be met through social security reform.

Welfare: Completing Welfare Reform
Congress will re-authorize welfare later this year. We must not return to a welfare system that exacerbates social problems by rewarding non-work and non-marriage. Welfare reforms initiated in 1996 must be expanded, and recipient requirements must be toughened. Welfare reform policies can make a huge difference to many social problems facing America today.

Regulation: Reining in the Regulators
The immense federal regulatory bureaucracy imposes its burden on all Americans. Unsound regulation results in exorbitant regulatory costs, which lower productivity and slow economic growth. The federal regulatory system must be open, transparent and accountable while maximizing benefits, minimizing costs and making smarter decisions regarding social regulation and industry targets. The relentless rise in the volume and costs of regulations demands that Congress must make regulatory reform a priority.

Energy: Achieving Energy Independence
The United States faces a growing imbalance between supply and demand of energy. Sufficient and reliable supplies of energy are vital to national security. Responsible stewardship of the nation's natural resources, diversity of fuel sources, regulatory reform and sound trade policies must be incorporated into national energy policy. Energy policy must be a national priority.

Foreign Policy

Homeland Security: Securing the American Homeland
The federal government must work with state and local agencies to assist them in acquiring the tools they need to be effective first-responders to a terrorist attack. The U.S. must also prepare for terrorist attacks involving weapons of mass destruction, and must mobilize the National Guard as the nation's key homeland defense response mechanism. Additionally, the entry and border security systems of the United States, including the visa and entry process, require significant reform.

Missile Defense: Building a Layered, Global System
The importance of developing and deploying a global architecture composed of a layered missile defense system remains a critical defense requirement for an effective Homeland security policy. To facilitate rapid deployment of a U.S. missile defense program the Bush administration should continue supporting U.S.-Russian cooperation on missile defense, at the same time strongly opposing any restrictive management requirements offered by Congress or other restrictions designed to alter the new program.

Defense Budget: Maintaining U.S. Military Strength
The United States must modernize and transform its current armed forces, by means of a sustained and robust defense budget, to be prepared for an unpredictable future. The Department of Defense's Quadrennial Defense Review (QDR) lays out a clear strategy to diversify force projection and achieve a necessary level of readiness.

Trade: Promoting a Prosperous America
The United States continues to lag behind other countries in free trade agreements. Trade promotes sound foreign policy and helps to foster adherence to the rule of law. Domestically, trade gives Americans higher paying jobs and provides increased incomes for American families. The U.S. should seek new trade agreements to lower tariffs and barriers on the our exports. Priorities should include implementing a Global Free Trade Association, establishment of additional bilateral agreements, and continued liberalization of the World Trade Organization.

The Middle East
The Middle East is a volatile and dangerous region posing serious threats to U.S. interests and regional stability. Islamic extremists groups, and the states that harbor them, the failed Arab-Israeli peace process, and Iraqi dictator Saddam Hussein's clandestine program to build weapons of mass destruction all pose a significant danger to global security. In 2003, the United States should relentlessly uproot terrorist groups and punish the states that support them through isolation and military reprisals. The U.S. must work to overthrow Saddam Hussein's dictatorship in Iraq.

U.S.-Russia Relations
Russia's immediate pledge of support and continued contribution to the war effort have helped transcend cold war mentalities. The Bush administration should continue to encourage Russian integration into the global economy and the international security system by supporting Russian integration with the West through WTO membership and develop a road map for Russian cooperation with NATO that goes beyond the 1994 Partnership for Peace (PfP) respectively.

U.S.-China Relations
The United States seeks good relations with China. In some areas, the United States and China share common interests, such as pursuing free trade and seeking stability in the Korean Peninsula. However, the United States and China have diametrically opposed interests, with the United States seeking to ensure open seas and freedom of navigation and to support democracy in Taiwan, while China seeks to expand its influence-by force, if necessary. China's economic growth relies heavily on trade with the United States; therefore, Washington must not be bullied into compromising key strategic, political and economic interests in Asia. The United States should stand firm when China takes coercive actions.

European and NATO Relations
The events of September 11 reinforced America's security commitment to its NATO allies. However, the changing dynamics of the post-Cold War era and the intervention in the Balkans reveal the need for reform within the NATO alliance. The Bush administration should support a policy favoring European defense integration through ESDP to help alleviate burden-sharing problems within NATO, and extend NATO membership to countries that meet select criteria in a cautious and incremental expansion program.

Western Hemisphere-U.S. Relations: Improving Security and Economic Opportunity
Democracy and stability are in trouble in South America. Crime and terrorism are now rampant in the region. In 2003 the United States must implement a long-term strategy to promote democratic institutions, expand free markets, modernize hemispheric security to defeat terrorism, improve cooperation with Mexico and Canada on migration, and help Colombia eradicate drugs and defeat its terrorist armies to bring stability to the region.

U.S. Policy and the United Nations
The U.S. relationship with the United Nations remains tumultuous, although the events of September 11 forced renewed cooperation. While some of the UN's criticism of the U.S. has been muted, UN reform remains partial. Ongoing issues that require resolution include enlisting UN support for America's war on terrorism, giving due scrutiny to proposed expansion of international law and authority of international bureaucracies, ensuring that UN peacekeeping missions are restricted to appropriate circumstances, and continued pursuit of reform.


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