IS A "NEW" "NEW DEAL” WHAT AMERICA NEEDS?

A 30's "New Deal" Cartoon



I can agree somewhat with opinion writers that say that a “New Deal” type of stimulus package might be very difficult today, as America is much different from the America of FDR back in 1933.

Yes, Americans have a huge challenge today for considering a “New Deal” type of program in the US.

One reason being that, since the early 1980’s and the election of President Ronald Reagan, the number of construction workers, particularly Union workers, that are capable of working on America’s infrastructure for building or repairing; bridges, schools, highways, hydroelectric dams or nuclear power plants has dropped significantly.

And another difference from 1933 is that today, America is the largest “debtor nation” in the world. It is also a nation that has lost hundreds of thousands of blue-collar manufacturing jobs over the past 30 years.

Back in FDR’s time, the America of the 1930’s was the world largest “creditor nation” and even with the Great Depression, it was a world-class manufacturing leader. In addition, the United States was also owed billions of dollars from those European nations that had borrowed from the US to finance World War I.

Today, the US has the world’s highest debt and the largest deficit in world history.

Yes, it is a different America and a different world out there. However, just as it was with the GOP’s economic philosophy of the late 1920’s and early ‘30’s, President Bush’s Treasury Secretary, Henry Paulson’s $700 Billion Bail-Out “mistake” just continues to show that “top-down” is not the proper approach to fix America's economy.

Instead of the current bailed-out banks and finance organizations, using the “Paulson Bailout Program” to provide loans and credit to businesses and the general public, (as they were supposed to do), the tax-payer Bail-Out money is instead being used by big banks to buyout failing smaller banks. This is just making those big banks even bigger banks. Which means that they will now become the new, potential members of the “banks too big to be allowed to fail” club.

"BOTTOM'S UP" IS THE CORRECT WAY:

The proper approach to the economic problems is not a top-down program. It should be an approach that closes the “hopeless” institutions, while supporting the small-to-medium sized banks and financial intermediaries that are more connected to real business producers and consumers.

In addition, part of a real “grass-roots” approach should be to get qualified individuals prepared and trained for the “new” attack on rebuilding America’s infrastructure and for developing and building the new US products for supporting America’s future energy needs.

There should first, be a “Phase One”, federal program at the “hands-on” level for training and to provide corporate financing and tax incentives for developing new “Green” energy and transportation products.

Once Obama takes office, he should declare a “Bank Holiday”, just to get all the facts, and the problems, on the table. The idea, that dumping a lot of money on the problem to “normalize” the banking issues has proven unsound and an enormous waste of the public’s resources.

All that Secretary Paulson’s program has done, is to preserve the large Wall Street financial monsters. It has done nothing for the average consumer, small business owner or the majority of the small to medium size companies that depend on credit, (in modest amounts), in order to maintain their business activity.

As many economists, key analyst organizations and experienced Op-Ed writers agree, the current Bush-Paulson Plan is coming from the wrong direction.

Wall Street and the giant financial titans should not have been the first operations to be chosen for returning them to “normalcy”.

Instead, the government focus should have been on getting the normal lending back in-line and on reviving jobs, incomes and small businesses. Economies depend on more new jobs and consumers spending. Not on employee lay-offs, mortgage foreclosures and bail-outs.

As has been shown many times before, democratic economies will never start working from a “trickle down” or “top-down” approach. They must instead, start from labor, manufacturing and small businesses at the bottom of the pyramid. (Even the Republicans admit that it is America’s millions of small businesses that are the main drivers of the US economy.)

And federal moratoriums must be placed on home mortgage foreclosures to stop the bleeding and where possible, US manufacturing jobs should be kept intact, including those within the US auto and related industries.

Economies that seriously need a stimulus; need preservatives and real reforms, not wholesale bailouts and wishful thinking. And most of all, whatever is done, if it uses taxpayer dollars, there must be ways for the “taxpayer-lender” to eventually get their money back, and with interest.

Can the American government do all this? Yes they can, but like any democracy, it takes time and negotiation to come up with these solutions. This avoids having those so-called “loop-hole problems” and the potential “hasty mistakes” can then be discovered and corrected before the first checks are written.

That’s why the Paulson Plan is bad and still needs to be stopped or fixed. It was implemented too quickly and it has major mistakes and loop-holes the size of a Boeing wide-body jet.

Shame on them, and shame on the US Congress for letting it happen.

Yes, a "REAL New Deal" might be just what we need.

Copyright G.Ater 2008