Full disclosure here, Ive been in the defense industry for 33 years. What we need is called self-amortized debt. You build a coal-fired power plant and sell the power. After a while, the plant pays for itself and then it produces pure profit. Then, you use the profit to build another plant, which is free and clear. From there you continue to invest with everything paid for.
If you build weapons, they give nothing back to the economy. Weapons are a net negative. They may or may not be used in battle but they continue to cost until theyve been disposed of. Some of them cost more to dispose of then they cost to build. We have tons of poison gas stored in bunkers that is now too dangerous to even touch; let alone destroy.
Some economists are stuck in the myth that the defense build up of WWII is what ended the depression. It was the fact that the rest of the world was unable to produce food or necessities that ended it. The United States exported our debt to other countries in the form of goods and services. Unfortunately, export opportunities of that type are a once in a lifetime opportunity. Now third world countries make their own stuff and try to sell it to us; cheap.
I'd bet there isn't one person in a thousand that recognizes the windfall that fell into our lap. While we were building up our own productive capacity in support of the war effort, we (along with both our allies AND our enemies) were bombing most of the rest of the world's productive capacity to smithereens.
There are people who optimistically think things will turn around(as it has many times in the past)...frankly I think they live in a TV(not real) world...as I don't actually see a realistic pathway out of this particular malaise.
Any type of major austerity measures will be met with resistance(AKA Wisconsin). There are many baby-boomers who(through their own fault/no fault of their own)are going to have to rely on a non-pension source of income in their retirement years...why should we assume that source will(or should) automatically come from the government?
Fear is an effective weapon(especially in a mass entitlement society), and that weapon is used as effectively on the left(socialists)as it is on the right(military industrial complex types).
To solve this problem someone is going to have to think outside the box, WAY outside the box, and this will include the ability to speak truth to power in order for the masses to accept their role/responsibility in trying to put us on a path to recovery(exclude prosperity for the time being, when you are trillion$$$ in the hole).
An effective(domestic source)energy policy, with a clear objective/timetable, could provide that path(especially seeing as many pointed to $150 bl. oil as a culprit during the initial economic slide).
With that said, if Palin/Perry(from oil rich states)could push an effective domestic energy policy initiative...it could propel either to the White House...their opponents would find it hard to explain any other reasonable solution...well, with a straight face anyway.
(Come to think of it, Herman Cain also brought up possible energy policy solutions during the debate).