I think the world would be a much better place if public policy debates were more focused on cost-benefit analysis. Too often, people refuse to acknowledge trade-offs or opportunity costs (health and military spending are obvious candidates here). Other times, people seem more interested in harming out-groups or "looking tough" than in actually securing better outcomes for everyone (think immigration, prisons, torture). And then there are the obvious cases of legislative capture by special interests (farm subsidies, retroactive copyright extensions). It seems like there's a lot of scope for "no brainer" policy improvements that every reasonable person should be able to agree on. But maybe I'm missing something. So let me take a stab at outlining some of the issues where the answer seems to me completely obvious -- and I hope that others will add more suggestions in the comments, and/or explain where you think I'm going wrong.
Foreign Policy and the 'War on Terror'
War is a hugely expensive negative-sum game, almost never worth getting into if you can possibly avoid it, and probably worth withdrawing from as soon as you can. (You may leave behind a mess, but surely more good could be done by reallocating the saved money to more effect forms of humanitarian aid.)
Military action also seems incredibly counterproductive to the nation's security interests: inflaming anti-American sentiment and hence aiding terrorist recruitment. Security interests would seem better served by investing in "PR" -- e.g. Fulbright scholarships for Arab students to immerse themselves in American culture before returning home to share their (hopefully positive and liberalizing) experiences. Whatever the details, the aim should be to improve America's image abroad, and especially among Muslims. (Torturing their neighbours seems unlikely to help with this.)
Also, let's stop overreacting to terrorism. We're something like twenty times more likely to be struck by lightning than to die in a terrorist attack. It's not worth clogging up airports or abandoning civil liberties over. (You could save a lot more lives by reducing the speed limit to 10 mph, but who thinks that would be worth it? Of course, we don't have front page headlines and official hand-wringing every time someone dies in a car accident.) As Brad Templeton puts it, "The goal of counter-terrorism is not to stop the terrorists from attacking and killing people, not directly. The goal of counter-terrorism is [or should be] to stop the terrorists from scaring people."
Subsidies and Corporate rent-seeking
Farm subsidies, coal and oil subsidies, etc., are obviously detrimental. Likewise retroactive copyright extensions -- which, in the absence of backwards causation, do nothing to incentivize production. IP laws more generally have swung much too far in the direction of regulation. I'm sure there's much more that could be added to this list.
It may be worthwhile, even from a "limited government" perspective, to invest in public financing of elections to help prevent such regulatory capture. (This is not such a "no brainer", admittedly, but at least highly plausible, I think.)
Given limited resources, we should allocate public spending so as to do the most good -- in case of medical spending, that means maximizing quality-adjusted life years. (Of course, people should be free to spend their own money on less-efficient treatments. But they shouldn't expect taxpayers to foot the bill. Personally, I'd rather die peacefully in hospice care than be plugged into life-support and fighting to the bitter end.)
... should be encouraged. However, given widespread misperceptions among conservatives that immigrants are a "burden" on the economy, it might be worth considering Will Wilkinson's proposals to end birthright citizenship and vastly increase the number of temporary worker visas instead.
(Charter cities sound like a promising idea, too. Worth exploring, at least.)
Introduce congestion pricing, price curbside parking at market-clearing rates, relax zoning regulations to allow for increased residential density, and invest in effective public transport -- basically all that sensible stuff that Matt Yglesias goes on about.
Tax and Redistribute
Increase taxes on things that are better used less: carbon / gasoline, alcohol, cigarettes, soda, etc. -- and then redistribute the proceeds.
In general, redistribution seems preferable to government spending (more efficient, respectful of individual autonomy, etc.). Implementing a full-blown universal basic income may be ideal, especially if combined with labour deregulation (abolish the minimum wage, etc.).
Criminal Justice System
End the war on drugs. Legalize (and tax) marijuana. Prison costs a lot of money and ought to be a last resort; alternative punishments should be found for non-violent offenders and others who do not pose an ongoing risk to society. The focus should be on rehabilitation rather than punishment for its own sake.
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Does that all sound right? What would you add?