President Obama and his administration no doubt richly deserved the victory laps they took this week in the wake of their high stakes success in tracking down and doing away with Osama bin Laden. Now, however, they must quickly confront the fact that in a fundamental way he is still winning.

I don't mean that the terrorism and medieval brand of Islam he fomented are gaining support. Indeed, if anything, we have been over-estimating the terrorist threat posed by al Qaeda for some time. I even allowed myself briefly to wonder this morning if we might again be allowed to keep  our shoes on in airport security lines. But terror was only a tactic for bin Laden. His larger strategy, as he wrote to Taliban leader Mullah Omar shortly after 9/11, was to force the United States to over-reach in its reaction to the terror attacks and thereby to incur "great long-term economic burdens" that would "lead to further economic collapse." In that, the late al Qaeda leader continues to be only too successful.

The news of his demise is providing only a brief respite from a looming political clash over the United States' rising debt and how to cap and reduce it. Moreover, this debate is taking place in the context of an international flight from the dollar, slowing recovery from the recent Great Recession, stubbornly high unemployment, rapidly rising trade and current account deficits, and a Standard and Poor's warning of a possible downgrade of the AAA rating on U.S. sovereign debt. Over all this, bin Laden is smiling from his watery grave.

Thus, to really defeat him, President Obama must change his emphasis from geo-politics to geo-economics and revitalize the United States' flagging economic competitiveness. Here's how:

National security

Cut total U.S. national security spending (military and intelligence) in half over the next six years. Even at this reduced amount the United States would still have by far the largest, most powerful military forces in the world. Part of this could be achieved by rapidly drawing down U.S. force levels in Afghanistan and Iraq and by withdrawing U.S. ground forces that have now been stationed in Europe, Japan, and South Korea for well over half a century even as these countries have prospered and become powerful in their own right.

Spending and taxes

Get federal budget deficits under control by closing tax loopholes and adopting a combination of tax increases and spending cuts similar to those recommended by the Bowles/Simpson Commission. Marginal tax rates might actually be reduced if the tax base is broadened. In particular, the mortgage interest deduction should be substantially limited.

Adopt a Value Added Tax (VAT) similar to those of virtually all other advanced industrialized countries which rebate these taxes on their exports.

Reduce the corporate tax rate to the 25 percent levels prevailing in most of the world.

Gradually increase the age of eligibility for early Social Security to 65 and for full Social Security to 70.

Shift the medical payments system from pay for procedures to pay for care and adopt a national system of digitized, on-line medical records.

Trade/globalization policy

Set a target not just to double exports but to halve the trade deficit in the next three years. Because there can be no more stimulus spending and no further cuts in interest rates, this will be the only way to cut unemployment.

Adopt the Colombian and Panamanian Free Trade Agreements, but reject the Korea-U.S. Free Trade Agreement. The Korean deal will increase the U.S. trade deficit and impose a net loss of jobs as it is presently structured. It should be renegotiated to cover the items like currency policy that are the main drivers of our bi-lateral trade.

Establish a new template for free trade agreements with the Trans-Pacific Partnership by including coverage of currency manipulation, competition policy, investment incentives, and third party adjudication of intellectual property disputes.

Emphasize INVEST IN THE UNITED STATES. Establish a fund to match the investment incentives being used by many other countries to induce both foreign and domestic direct investment. Ensure that no business person leaves the presence of the President or any other top U.S. official without being asked about plans to invest in the U.S. Make it the top priority of the Commerce Department to maintain awareness of the investment thinking of the United States' and the world's leading corporations.

Embrace and lead global efforts to reduce the role of the dollar as the world's major currency. A system of several competing reserve currencies or of a global basket of currencies or of a global currency backed by commodities would place discipline on all global market participants to avoid chronic trade surpluses and deficits.

Self-initiate enforcement of U.S. and global trade rules to offset the impact of mercantilist policies on the U.S. productive base. Aggressively use the facilities of the World Trade Organization to challenge practices that tend to negate the intent of the global free trade rules.

American economic strategy

Recognize that the sum of regulatory, anti-trust, tax, government procurement, and a host of other policies greatly influences the structure and productivity of the economy. It is a de facto national economic strategy. Because it is never recognized as such, it is never analyzed in a coherent, comprehensive fashion. It should be the job of the National Economic Council to do this. At the same time, a Congressional Economic Strategy Office a la the Congressional Budget Office or inclusion of a strategy analysis as part of the budget office's remit would be advisable

I could go on, but have probably gone too far already. The main point is very simple. The top priority of Obama in the wake of the demise of bin Laden must be to reconstitute America's economic vitality.