October Times Column: Recovery Plan is Needed-- Just Not for Banks

Economic recovery plan is needed

St. Cloud (MN) Times

October 1, 2008

[posted here a week late, so less relevant than it was on 10/10/08 before the bailout passed]

The spectacular collapse of the Bush administration’s $700 billion bailout plan Monday afternoon apparently took a lot of people by surprise. After all, we were told that the economy depended on it and that it was “too important” for partisan politics to derail.

By many accounts a major factor in the plan’s defeat was public opinion — the fact that “Main Street” just didn’t care to pay for the excesses of Wall Street and made that very clear to their representatives in Washington. Never mind that nobody really lives on Main Street; people outside the media know that’s for banks, jewelry stores and lawyers. Those of us who live on Maple Lane, Mulberry Road, or Minnesota Street still knew they were talking about us, just as we knew we had nothing to do with the toxic brew of lax regulation, shaky investments and unmitigated greed that got us into this mess.

We didn’t invent hedge funds or exotic securities. We didn’t push banks to issue ever-more-risky loans. We didn’t promote the idea of home “ownership” as the only legitimate form of the American dream. And we certainly didn’t expect the regulatory system our grandparents established to end the Great Depression to be twisted into an excuse to pass on what amounts to someone else’s gambling losses to our grandkids.

Here in Central Minnesota people didn’t gamble quite so willingly. Our local banks and credit unions made mostly good loans, and, unlike other places, we aren’t faced with entire neighborhoods of foreclosed homes. Housing prices never grew to insane heights, so had less distance to fall. Fiscally responsible families didn’t cash out their equity to pay for toys or vacations, but continued to save for college and retirement. People cut back in response to rising energy prices and made due with less while working more.

Some folks seem to have forgotten that element of the American dream — that hard work pays off, but sometimes hard times follow good. Most Americans share these same core values. So rather than worry about how we’ll find a way to bail out wealthy hedge fund investors our top priority should be a plan for a much broader economic recovery.

The Fed or Congress must certainly develop a way to stabilize credit markets and keep capital flowing to companies that employ American workers and produce things of value. But what we really want are leaders who will condemn the politics of greed and recognize that what Main Street needs is not a banker’s bailout, but an economic recovery plan that will create jobs for our friends and neighbors, stabilize housing markets, shore up our tax bases, and put families back in the position of planning for the future rather than worrying about today.

We’ve seen what Wall Street wants and luckily on Monday they didn’t get it outright. Before they regroup and try again we should demand candidates for public office address the bedrock issues of economic recovery first and foremost. From John McCain and Barack Obama down to local candidates for school board and city council, everyone who takes office in January will face the challenges of an economy in recession, declining tax revenues, and the continuing burden of the mortgage fiasco.

How will they address these problems next year? When the cuts come what will go first? When things turn around, how will we set priorities to ease the pain of the next recession? Main Street was heard loud and clear in Washington on Monday. Let’s be sure those same voices are heard on the campaign trails across Central Minnesota between now and Election Day as well.