6/03/2008 @ 6:00AM

A Real Memo For The President-Elect

With some 230 days to go for the Bush administration, what should be the national priorities for the next president? Nearly everyone with a computer and an editor is keen to weigh in.

Sens. Richard Lugar, R-Ind., and Sam Nunn, D-Ga., wrote in a New York Times op-ed last week that the “overriding priority of our national security policy must be to prevent the spread of weapons of mass destruction.”

Thomas Friedman thinks the big one is a “scalable alternative to oil.” Howard Zinn would pull the troops out of Iraq immediately.

Retired Gen. Anthony Zinni, who is now teaching at Cornell, would tell the new commander in chief to “take a hard look at this world,” as though the president-to-be would need someone to tell him that.

And in a new book titled Memo to the President Elect, Madeline Albright offers the banal advice that the new president should assemble a “first-rate foreign policy team,” which, presumably, would include herself.

The shared assumption is that any change will be for the better, and a new president with a new style will be able to solve all our problems (and the world’s) with elegant rhetoric or an open attitude or the stroke of a pen. In fact, the problems confronting the country are so awesomely complex and soberingly dangerous that it would take a President Hercules to unravel the Gordian knot–or, more aptly, to clean our Augean stables.

While almost anyone can construct a laundry list of obvious priorities–such as developing an effective strategy for dealing with terrorist attacks and natural disasters, restoring America’s reputation and leadership in the world, fulfilling Ronald Reagan’s dream that “nuclear weapons will be banished from the face of the Earth,” eliminating dependence on foreign oil, making peace in the Middle East, managing climate change or closing Guantanamo–my No. 1 priority for the new president is mostly ignored by the pundits: developing a strategy to maintain American competitiveness.

No informed observer can doubt that we are losing ground to the other major players in the global marketplace. Some say we are in a crisis.

Since 2002, we have become a net importer of technology. Our current account deficit exceeds $800 billion per year, which is 7% of gross domestic product, with budgetary deficits approaching the $500 billion mark. Our savings rate is zero. Median income is flat. Our entitlement commitments are unsustainable.

As any American traveler to London or Paris is all too painfully aware, the dollar is in the tank. While the cheap dollar may tend to spur exports and permit us to pay off foreign creditors in debased currency, the inflation caused by the burgeoning price of oil more than offsets those positives, and the net result is a profile of sluggish growth and rising prices. In a word: stagflation.

Newsweek editor Fareed Zakaria argues that the world has been “U.S. designed” since the end of World War II, but its position of pre-eminence is now imperiled by the “rise of the rest.” He says we have to fix our political system and start thinking strategically about how to improve competitiveness. If we don’t, he writes, “the U.S. risks having its unique and advantageous position in the world erode as other countries rise.”

This is no longer a world of physical goods. Our industries today are largely brain-based to a degree never thought imaginable. In the period from World War II to the 1980s, America was the leader in global innovation. A foreign policy scholar, David Rothkopf, has written that we are being gradually supplanted by a global “superclass,” which has greater influence on economic outcomes than most national political leaders.

Rothkopf’s “superclass” might consist of the emerging nations–China, India and Brazil–and even a sketchy “superclass,” such as business leaders, media moguls, even organized criminals, terrorists and warlords. The new president must figure out a way to deal with these challenges.

Our diminished capacity for innovation stems from flaws in our educational system. While our colleges and universities are second to none, we are gradually losing ground to other nations when it comes to the quantity of degree-seeking scientists and engineers. China produced six times the number of bachelor’s degrees as the U.S. did last year, and India twice our number. The National Science Foundation estimates that China turns out 200,000 engineers per year. India’s figure is said to be 125,000. The U.S. trails at 70,000.

The government discriminates against most skilled people from foreign countries who want to work here, as if we have a protectionist policy to keep smarter people out. Sixty percent of our graduate students are foreign-born, but most will take advantage of their degrees in their home countries because of an absurd cap on work visas issued to Ph.D.s, scientists and highly trained technical workers.

There were only 85,000 visas available for specially skilled foreign workers in the 2008, of which 20,000 were set aside for workers who hold a master’s or doctorate degree from a U.S. institution. There are some additional visas available for workers in higher education, nonprofits and government research. Last year, the cap was reached in June. So we educate skilled foreigners but have insufficient opportunity to exploit their skills and aptitudes. Einstein himself might not have made it over.

Washington, strangely, has inhibited innovation, invention and entrepreneurship for purely political reasons. The most promising area in the life sciences is indisputably stem cell research, which may, among many other applications, produce a cure for juvenile diabetes, Alzheimer’s or even cancer. Yet the government, at the instance of conservative political groups, has refused to allow federal funds to finance such research when it involves experimentation on most human embryonic cell lines.

Oil and gas companies want to plow their profits back into new technologies for extraction and exploration that will increase supply. Yet liberal congressional leaders criticize oil company profits for being “excessive” and see a need to impose further taxes.

Pharmaceutical research can produce longer, healthier lives for our people. But partisan political forces decry the “unfairness” of allegedly unreasonable profits for these pharmaceutical companies, even though much of that profit is re-invested into research and development. While government should do all it can to incentivize research and development expenditure, Congress allowed the R&D tax credit to die quietly on the vine at the end of last year.

Our situation is so alarming that economists project China will overtake us in GDP by 2050. Let’s hope that the new president can stop the meltdown.

James D. Zirin is a New York lawyer. He is a member of the Council on Foreign Relations.