A professor of economics at the University of Chicago, Gary Becker, a Nobel laureate, has some suggestions for growing the economy and reducing the federal budget deficit:
The most important step in raising the growth rate is not to increase but rather to lower taxes on capital and entrepreneurship. This implies maintaining essentially all the Bush tax cuts, including those on capital gains and dividends, and those on incomes at all levels, including quite high incomes. The estate tax on very high levels of wealth could be reinstated if politically necessary, but it will only bring in a very small amount of tax revenue, and will be more costly than it is worth. Tax reform also implies a reduction in the corporate income tax, and especially reductions in taxes on incomes of small businesses.
Mr. Becker says these tax reductions will reduce federal revenue somewhat. He proposes savings from Social Security and medical care spending. On Social Security, "The best approach is to change from a pay as you go system to a defined contribution system." On health care:
Out of pocket expenses by individuals receiving care should be much higher in the United States than its average level of about 12% of medical spending. If the American system can move even half way towards the Swiss level of an out of pocket share of over 30%, substantial savings in medical spending would occur in ways that would reflect patients' evaluations of how much the care is worth to them. In addition, the American system should be weaned from being mainly tax-deductible employer based health insurance to a more desirable system, where individuals and families can buy insurance in other ways on the same after tax terms as from employers.
Link via Economic Policies for the 21st Century.