What a real stimulus might look like

Sam Smith
2009

– Reduce credit card interest. As one politician once put it, “I’d frankly like to see credit cards rates down. I believe that would help stimulate the consumer and get consumer confidence moving again.” Another politician responded by offering a bill in the Senate to cap credit card interest at 14%. The Senate voted for it 74-19. The first politician was that radical president, George Bush, in 1991. The other politician was that well known progressive, Alfonze D’Amato. Why are Obama and the Democrats more conservative than Daddy Bush and D’Amato?

– Start a movement to nationalize banks. Progressives led by Robert LaFollette did this in the 1930s, giving FDR cover for his more moderate solutions. Today, all the political pressure is coming from Wall Street, which tilts policies in that direction.

– All measures must put the interest of the ordinary citizen first. Neither the GOP nor the Democrats are doing that.

– Deemphasize tax cuts. They are far less effective than many think.

– Emphasize programs that will cheer people up and where they can see things changing for the better. Among the Wall Street bailout scam’s many faults was that no one could tell what was happening as a result. Good economies need optimism.

– Use revenue sharing. It’s a quick way to get money down to the states and cities and to the people who live there. Sure, some of it will get corrupted but far less than is already happening with the phony stimulus packages. The upside is that citizens have a better idea of what is being done on their behalf and have some say in how it is done.

– Fund public works project that have large spin-off benefits and which will be heavy in blue collar employment. These would include new mass transit service and a massive growth of America’s rail system. It would deemphasize fixing up existing systems because the spin off benefits are far less. Would it include the much discussed new energy projects? We haven’t seen any serious discussion of this. What is the blue collar employment potential of such projects?

– Institute a shared equity program for homeowners in distress under which the federal government buys a portion of the mortgage, renegotiates interest rates with the lenders and then gets its part of the equity back when the house is sold. A similar program could be used for building new homes.

– Decentralize decisions and negotiations on foreclosures and real estate interest rates, using local courts and similar bodies as was done in the 1930s.

– Give the government preferred stock in companies it aids. At one point in the New Deal, the Reconstruction Finance Corporation owned bank shares that would be worth at least $20 billion today.

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