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Toward a New Political Economy for the U.S. Ron Baiman Center for Tax and Budget Accountability 70 E. Lake St., Suite 1700 Chicago, IL 60601 Email: Baiman@ CPEG Working Paper 2010-1 January 15, 2010 1 . Abstract The U.S. economy faces a fundamental structural and institutional crises that requires major changes in economic policy and far reaching programs including: A) A federally funded permanent living wage jobs program mostly funded through transactions taxes on finance, B) Emergency measures to cap and gradually reduce the U.S. trade deficit, C) A transparent and coherent “industrial policy ”to increase high value added, competitive manufacturing exports. The goal should be to support “non- predatory” trade and industrial policies that move the U.S. and world economies toward sustainable and balanced trade and development. Key Words: Jobs Program, Full Employment, Trade Policy, Industrial Policy, Living Wage, U.S. Manufacturing JEL Classifications: E - Macroeconomics and Monetary Economics, L - Industrial Organization, H - Public Economics, F - International Economics, P - Economic Systems. 2 Introduction For at least three decades, the U.S. economy has failed to produce an adequate number of well-paid jobs (CPE G, 2009). Current efforts to “jolt” or “stimulate” the economy, while laudable, are inadequate to the task of creating an economy that works for the vast majority of Americans. As of October 2009 the U.S. economy faced a gap of 10.9 million jobs to make up for job losses and new