New Agenda for America: How to Start Anew

To mark the 80th Anniversary of the Great Crash of ‘29, we asked 15 progressive thinkers to write about lessons learned and what lies ahead. Together, their reflections constitute a New Agenda for America — a message of how the ideals of a fair society should apply to the economic and social policies of our time.

Much like Herbert Hoover, who failed to respond adequately to the fallout from the Crash of 1929, Barack Obama cannot seem to cut himself free from conventional wisdom. The Administration is attempting to reform the unreformable — to revive a zombie economy full of insolvent banks, instead of shutting them down and restarting them anew as FDR did.

Obama and his advisors must free themselves from the discredited dogmas of neo-liberalism and channel the spirit of FDR’s bold experimentation. We need less deficit terrorism. Fiscal policy must be much more oriented to personal balance sheets, not bank balance sheets. We need to turn around the private sector and begin to produce more tax revenue, so that the large deficits would be short-lived.

If we continue down the current path, we slow recovery and court large budget deficits for many years to come. Far better to spend now to create jobs and get the private sector growing again.

We need to make loans truly affordable for households. We need large -cale employment programs that restore households’ capacity to pay. We need to deal with the over-supply of homes. And we need swift and cheap bankruptcy procedures that provide households a fresh start.

Most of all, we need to turn the financial system away from the trade-and-fee model and toward a system that focuses on carefully evaluating creditworthiness and on limiting the growth of Ponzi processes over an enduring period of economic growth.

Roosevelt Institute Braintruster Marshall Auerback is a market analyst and commentator.