Lessons from the History books or If I were a Congresswoman…..

Sometimes I'm very frightened by the fact that we have learned nothing from history. The following paragraph is a very big generalization about the Great Depression and may not be 100% accurate, but it is the more or less what happened.

In 1932, Franklin D. Roosevelt won the presidency by promising a New Deal for Americans. The incumbent Hoover administration had badly bungled things on the economy. They spent a lot of time wringing their hands and saying "Woe is me." The Hoover administration focused their improvements on things that would have little or no impact for the average American. (Sound familiar?) Roosevelt's New Deal kept things simple. He focused on the biggest problem. People were scared of the future and what it held for them. They were scared that they couldn't feed their families. They were scared of losing their homes and their jobs. Roosevelt calmed those fears by creating the alphabet soup agencies and creating work for out of work Americans. By the time that World War II hit, things were improving. Economist still argue about what brought us out of the depression (some say the war was what really brought us out of the Depression) or if we would have come out of the depression on our own. Regardless of the answer to this question, Roosevelt's New Deal was a psychological boost to the American people.

In 2008, the biggest problem facing Americans is fear. It is essentially the same problem that Roosevelt faced. Americans are frightened of losing their homes, jobs, lifestyles, etc. We are not as poor as we were then, but we're frightened all the same. We see rising costs everywhere, we see home values deteriorating, we see record high gas prices, and we've got a new worry, climate change. It is also very clear that our current policies aren't working quickly enough. In fact I would call most of the politicians in Congress and the Whitehouse Hooveresque. (Yes, I made up that word.)

I think it is time for a new New Deal. Here's what I think should be done.

• Bring down the cost of gas by decreasing the demand for it.
  
  • Tax breaks or subsidies for people that buy more fuel efficient cars (not just people that buy hybrids.) Thirty miles per gallon is pretty darn efficient if you've been driving something that gets less than 20 miles per gallon. At 12,000 miles per year and $4 per gallon, a driver can save $800 or 200 gallons.
    
  • Tax breaks or subsidies for people that buy and then drive more fuel efficient vehicles like motorcycles, scooters, or electric cars.
    
  • Subsidize local governments that are hurt by the decreasing demand for gasoline. When things improve, encourage them to increase their gas tax.
    
• Subsidize the building of walking trails, sidewalks, and bike paths to local town centers (I would ride my bike to the store if I weren't afraid of death or disability) and make sure that they have adequate bike racks.
  
  • Benefit: A healthier population usually equates to lower healthcare costs.
    
  • Benefit: Decreases the demand for gasoline.
    
  • Benefit: Creates employment opportunities.
    
• Subsidize the building or expansion of public transit systems.
  
• Create a new industry for green power or renewable fuels.
  
  • Throw money at companies willing to do the research and development of these types of energy and to produce them quickly. (Examples: Solar Panels, Wind Turbines, synthetic fuels, etc.)
    
  • Create government funded training programs for working in this type of industry by working with existing educational entities.
    
  • Offer initial tax breaks and subsidies to companies or individuals willing to purchase these types of goods and services.
    
• Prop up existing essential industries and offer tax breaks to those companies that are willing to gamble on growth.
  
• Provide mortgage relief to distressed homeowners (My ideas for this are all bad).
  
  • This is an extreme idea, but in places where there is a significant glut of excess homes. Purchase them and bulldoze them. This is an easy way to decrease supply. (I think a city in Ohio is actually trying to do this).
    
  • Make the mortgage rates extremely affordable to first time buyers.
    
  • Regulate the market more. Encourage fixed rate mortgages not ARMs or interest only.
    
  • Help underwater homeowners refinance at the current market price of their house. Allow banks and mortgage companies to write off this debt.
    
• For heaven's sake, make sure the media reports some good news. Reporting bad news all the time scares people to death and makes things worse.
  

As Roosevelt said, the only thing we have to fear is fear itself.