Some prominent economists tell us we are starting to come out of the worst recession since the Great Depression, but many worry the uptick won’t last.

Since December 2007, Americans lost $13 trillion in household wealth, and our country is swimming in red ink. Today, the federal debt is $11.4 trillion and growing because of a new round of federal spending. Some economists project it could reach $17 trillion in the next decade if Congress and President Obama continue at their current pace.

Meanwhile, our nation’s unemployment has climbed to 9.8 percent, and according to U.S. Bureau of Labor statistics, 263,000 people lost their jobs in September alone. Federal stimulus money to state and local governments helped maintain some jobs but that was a one-time infusion of cash that will run out.

Dr. Martin Regalia, chief economist at the United States Chamber of Commerce and one of the nation’s top 10 economists, calculates that seven million Americans have lost their jobs since the beginning of the recession. Regalia believes we actually need to create more than 20 million jobs over the next decade for the recently unemployed, for people no longer looking for work, for employees reduced to part-time jobs and for new workers just entering the job market.

So what gives? How will America stem the flow of deficit spending and create the jobs people need to pay their bills, put their children through college and sock away a little money for retirement?

David Gergen, a Harvard professor, editor-at-large for U.S. News & World Report and a senior CNN political analyst who served as White House adviser to Presidents Nixon, Ford, Reagan and Clinton, believes the way out is through good old-fashion American ingenuity. Innovation is the key.

Gergen is right. However, U.S. companies find it difficult to compete with developing nations where wages are lower and regulations are less stringent. Congress and President Obama need to take steps to allow private sector innovation to flourish.

Here is how they start.

First, incentivize the private sector. While we all want to reduce greenhouse gases, imposing costly and burdensome regulations is the wrong approach. It weakens rather than strengthens the private sector. The government should provide incentives for the development of innovative new technology that allows companies to capture carbon dioxide and pipe it to an adjacent facility to grow algae that produces motor fuels. Those fuels, in turn, can propel hybrid cars and trucks that, through innovation, could double or triple the current number of miles per gallon.

Second, rather than increase taxes on business and those making over $250,000 a year, encourage them to invest in new technology. For example, opening the outer continental shelf in the Gulf of Mexico to oil and gas production is expensive but could provide $1.7 trillion in government revenues and create 160,000 new jobs. Encourage investments in new deep sea drilling and extraction technology, expedite the permitting, and allow America to bridge the gap to new energy technologies and wean ourselves from hostile or unstable foreign suppliers.

Finally, reward the private sector for solving problems. For example, Safeway CEO Steven A. Burd described in his Wall Street Journal piece last June how his company’s health plan held the line on costs while expanding coverage. His message: Replicating these market-based innovations could ultimately reduce our nation’s health-care bill by 40 percent.

Burd and his team believe innovation was essential for the company to survive and compete. Sadly, his recommendations have been largely ignored by Congress. Instead, current health- care proposals would penalize employers like Safeway, not reward them.

The bottom line is simple. Encourage America’s private sector to do what it does best – innovate. Innovation will only occur if our elected officials encourage that approach rather than stymie it through higher taxes, costly mandates and a government takeover of private sector operations.