How to Unlock America's Bottom-Up Innovation

Friedman points to America's cities, from Chattanooga to Minneapolis, as places where local Democrats and Republicans are coming together to invest in infrastructure, spurring innovation and job growth that could propel the country into a period of growth. The key to unlocking this growth, he says, are "a couple of grand bargains" around the issues of taxes, deficits, and investment.

"I get why the president needs to stress that the wealthy will have to pay higher taxes before he can go to his base for spending cuts to restore long-term fiscal balance," says Friedman. "But here’s what I hope we’ll see more from the president: a sense of excitement, a sense that if we can just get this grand bargain done, we can really unlock growth again, we can really, as Mohamed El-Erian, the C.E.O. of the bond giant Pimco, puts it, 'restore economic dynamism, ensure financial soundness, and overcome political dysfunction,' which collectively would have a huge stimulative effect."

"If everyone has to take their castor oil — the rich more, the middle class some — make them feel that it will enable us all to get stronger. Make them feel that we’re embarking on a new journey — not to punish but to solve, not to sock it to the successful but to create more abundance for all. Because the right mix of tax increases, spending cuts and investment incentives will spur more start-ups, lead to more risk-taking, inspire more entrepreneurship and create more jobs. Elections are win-lose, but successful negotiations are always to some degree win-win."