Last Sunday The Post was good enough to point out that the Obama administration can’t seem to find the right course for the US economy.
So this week I want to give the White House a few suggestions on how to bring the nation back from the brink of a double-dip recession.
While it may be fair to recognize that Obama was dealt a difficult opening hand, it’s equally important to note that he did not play his economic cards particularly well, either.
For one, economies do rise and fall and bounce back on their own without government intervention, let alone over-intervention. So when an awful lot of money was spent and there is little success to show for it except for a large deficit, it is easy to see why so many Americans are disappointed with the results.
So here are a few policy moves that would be both stimulative in the short run and, more importantly, set the table for strong long-run growth.
* One, offer up another payroll tax holiday or extend the reduction. I would definitely do this in one form or another. It’s fast and direct, and anything that makes it less costly to hire people is good.
* Two, it may be controversial, but I’d delay the implementation of all of Dodd-Frank so that there is time to study its aggregate effect on the economy post-implementation.
In particular the Volcker rule, which is apparently taboo to broach but really simple to understand. The rule, to a large degree, keeps banks and brokerage houses from purchasing US credits (think mortgages), credit card notes and car loans, which explains exactly why it’s still hard to get a mortgage or loan for regular people.
The rule, perhaps well-intentioned, just abolished trillions of dollars of buying power, just when we need it most. How does that help a recovery? Jamie Dimon, CEO of JPMorgan, an administration darling, raised a very interesting point this week, when he asked Ben Bernanke, “Has anyone looked at the cumulative effect of all these regulations, and could they be the reason it’s taking so long for credit and jobs to come back? Is this holding us back at this point?”
He also said he feared that someone was going to pen a book about how all the things we did during the recession slowed down the recovery. I couldn’t agree more.
Three, I’d also extend Small Business Administration loans principal repayment periods from 3 to 7 years to give the firms a break and improve their cash flow.
There has been way too much time spent telling business what they cannot do and not nearly enough time promoting US corporations.
None of these economic solutions cost the country money; they are tactical shifts in policy.
Lastly, I’d champion US capital markets and industry, not chastise them.