American economic problems consist of both short-term, or cyclical problems and long-term, structural problems. The supply-side policies of the 1980s have exacerbated our structural problems and severely constrained opportunities to use fiscal policy to get out of recession. Both cyclical and structural problems need to be confronted. Priority should be given to a dramatic increase in federal spending on physical and social infrastructure, targeted in such a way that pressure on state and local government is relieved. Then, as the economy improves, federal taxes should be increased in order to reduce the structural federal budget deficit.