By Brent Budowsky - 01/15/08 06:16 PM EST
Congress returns with the nation sailing in stormy economic seas and voters marching toward a thunderclap election against business as usual in Washington.
Let’s begin the battle against recession by calling on CEOs of lending institutions to publicly announce a six-month freeze in mortgage foreclosures, and enacting immediately a $30,000 bonus for Americans who served in Iraq and Afghanistan, to end the era when 1 percent of the nation assumes 100 percent of the sacrifice in war.
House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) have extended their hand to work with the president. The president should respond by hosting a Camp David retreat including congressional leaders from both sides of the aisle, business leaders and the leaders of the national unity group that met in Oklahoma on Jan. 7.
My advice to the Speaker and majority leader is to immediately seize the high ground and invite all of the national unity voices from Oklahoma to meet with Democratic leaders, committee chairmen and the caucus and invite interested Republicans to join them.
These actions would inaugurate a period of 100 days of change that would be acclaimed by our people and send a powerful message to consumers, business and markets.
The imperative for policymakers is to restore stability, confidence and crediblity for markets, consumers and business.
While Federal Reserve policy must always remain independent, Chairman Ben Bernanke should be brought into major policy dialogue. The Fed under both Alan Greenspan and Bernanke shares responsiblity for being behind the curve of the credit crisis.
Within 30 to 45 days the Fed should cut the the federal funds rate by at least 100 basis points and cut the discount rate by at least 150 basis points, to create breathing space for consumers and lenders alike.
These Fed actions should be part of an implicit policy deal in which lending CEOs would publicly announce a temporary foreclosure freeze and credit card CEOs would publicly announce that they will not raise rates on good customers, with solid credit histories, to Draconian levels above 30 percent if only one or two payments are missed due to financial emergency.
These moves can be implemented quickly with immediate impact on money flows and psychology while leaders back reasonable policy initiatives such as demand-side support for Middle Americans through tax rebates; supply-side support for alternative energy including a targeted capital gains tax cut for new energy and conservation companies; and social equity support for the poor.
For now, Congress should put aside “pay as you go,” but in return earmarks should be cut by 10 percent, revenue should be raised through an oil profits surtax, and wealthy Americans should forgo their tax cuts for the greater good. The American people should be enlisted to the cause through a Patriot Bond, with proceeds going to veterans and children in need.
It is time for Washington to begin the first 100 days of change.
Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then-chief deputy whip of the House. He serves on the Advisory Council of the Intelligence Summit and as contributing editor of Fighting Dems News Service. He can be read on The Hill Pundits Blog and reached at firstname.lastname@example.org.