Last week's largest decline in the stock market since October 2008 combined with zero growth in employment in August will certainly re-ignite a debate about what the federal government can and should do to get the economy moving and reduce unemployment. In addressing this issue, it's important to learn from the past and focus on the future.

Government's failure to properly oversee and stem high-risk practices by financial institutions contributed to the last recession, which resulted in huge bailouts of financial institutions and a large stimulus package—both funded by issuance of additional federal debt. The bailouts did not contain adequate conditions to ensure that the institutions benefiting from federal assistance would begin lending again. Furthermore, the stimulus package was neither properly designed nor appropriately implemented. Not surprisingly, both resulted in the government over-promising and under-delivering, thereby reducing the public's confidence in their elected officials and other policymakers in Washington.

Relying primarily on additional deficit-financed government spending is not the answer to our problems. It's time to start treating the diseases rather than the symptoms. To do so, government policy must take steps to increase private sector lending, enable further refinancing of homes at today's historically low rates, and unleash the trillions of dollars of cash and long-term oriented investment capital held by businesses and institutional funds both domestically and internationally. These steps can be accomplished through changes in existing tax policies and regulatory approaches.

For example, allowing a deduction for dividends distributed to shareholders would force businesses to either invest their excess cash for growth and job creation, or distribute such excess funds to try and accomplish the same. In addition, providing temporary tax relief to repatriate offshore earnings of multinational corporations in exchange for a credible and enforceable commitment to invest in America would help significantly. Creation of a National Infrastructure Bank that promotes public/private partnerships to revitalize and upgrade our infrastructure would be appropriate. Additionally, prudent regulatory relief that would promote more domestic exploration, production, and distribution of various energy sources is necessary.

As we look to the future, the Joint Committee on Deficit Reduction needs to exceed its $1.5 trillion 10-year deficit reduction target by taking credible actions based on the individual elements in the CBO's current law baseline. The federal government must also take concrete steps to provide more certainty to businesses regarding future tax policies and regulatory conditions. This means taking steps that will result in comprehensive tax reform and regulatory relief beginning in 2013.

Finally, it's time to undertake a fact-based and nonpartisan public education and engagement effort regarding our nation's economic challenges and deteriorating financial condition. This effort can help pave the way for much-needed and long overdue budget controls and process changes, entitlement program reforms, defense and other spending reductions, and comprehensive tax reform. This effort should be supported by both the Administration and the Congress, and it would serve as a supplement to the upcoming 2012 campaigns. Public engagement will be critical to help ensure that policymakers opt for tough choices regardless of the election results in 2012.

It's time to quit trying to use 20th century strategies to deal with 21st century problems. We need to quit just living for today and to start taking steps to help create a better tomorrow. The time to start is now!

The Hon. David M. Walker is founder and CEO of the Comeback America Initiative. He served as Comptroller General of the United States from 1998-2008.