What happened to a small, less intruisive government?
Here's what I think the government should do:
Shelve Social Security for a bit. There is a problem, but there are more pressing problems. Also with progressive indexing and raising the cap on social security taxes, it can be fixed.
Reform Health Care. Health care costs are the number one domestic issues. They are driving the increase in bankruptcies, they are hurting businesses that provide health care insurance, and they are the reason that Medicare and Medicaid are far bigger problems than Social Security. If we can't find a good system, then copy some other countries. We pay about twice per capita that other industialized countries do on health care, and we don't get statisically better care. Plus we need to break the connection between health care and employers, it's weird and doesn't seem to benefit anyone. Oh, tort reform isn't going to do jack. Just look at the states that already have limits to malpractice rewards.
Attack the deficit. Roll back some of the high-income tax breaks. Keep the estate tax, but adjust the threshold. Also adjust the Alternative Minimun Tax to inflation. Cut the military as we withdraw from Iraq (I hope at some point). Not popular, but the EU, India, and China become economic powers, our massive military becomes a hinderance to our economic security. Without economic security, a big military really doesn't server to help us that much. These changes with health care reform hopefully will help get a handle on runaway debt.
Invest in green technology. Stop talking about how protecting the environment will cost jobs, start investing in environmental technologies that will create jobs. There will be a huge need for alternative clean energy and pollution control in the world, let's become a leader instead of fighting it.
I have other ideas too, but they are all probably equally lefty.