As echoed by Obama’s Chief-of-Staff today, the new administration recognizes that the economy is the number one priority for immediate action after the inauguration.
Way back in early September, I posted some ideas for what could be done to jump start the economy. I decided to dust those off and add a few more as very inexpensive advice for the new president and his team.
Plus, when you blog, you are setting yourself up for lots of crap (I guess the polite term is “feedback”) from those who read your posts. That, too, should give the president some stuff to think about. Hey, just count it as my small patriotic contribution.
Help for the unemployed —
1. Extend group medical coverage through COBRA for laid off persons and their families for up to six months, with the premium payment split in equal thirds between the former employer, the federal government, and worker.
2. Allow the laid off employee to use up to 50% of their 401k balance without penalty, and with the tax being deferred until they find employment. Include a restriction that they may not use this money to find a major purchase such as home or car.
3. Allow the temporary conversion of the mortgages of laid off employees to an interest-only format, with reversion to the original loan terms upon employment.
4. Fund college or trade school retraining programs with a 1% loan to workers who are 25 or older, who have been laid off from the same field at least twice in the previous five years, and who maintain a “C” or better grade average. Require repayment to begin within one year after completing training, via non-punitive garnishment of pay.
Help for the economy —
1. Restore confidence in the system by forbidding public corporations from paying bonuses to executives when the firms are not profitable.
2. Make high levels of profitable stock sales by executives with intimate knowledge of pending and undisclosed financial difficulties equivalent to criminal conspiracy. Aggressively prosecute such crimes.
3. Regulate the “packaging” of mortgage-backed securities with other, higher valued items like bonds. Ensure that individuals and businesses that invest in such instruments do so with the benefit of full disclosure.
4. Revise loan underwriting standards to remove the risk of significant foreclosures due to softening of home values. Ensure that borrowers have the ability to sustain the loan payments without any additional source of funding. Tightly regulate balloon payments and interest only loans.
5. Revamp the Council of Economic Advisors (if it still exists) as follows. Require that the makeup be 1/3 presidential appointees, 1/3 appointed by the US Chamber of Commerce, and 1/3 appointed by the AFL-CIO. Require the Council to prepare and deliver a report to both the President and Congress twice a year, in September and March, that:
A. reviews the two previous complete quarters of economic activity,
B. reviews the effect of major legislation and policies enacted in the previous two years on those periods,
C. projects the next two quarters’ results,
D. and makes specific recommendations on new laws and policies to improve economic performance
Yes, all of these things probably cost money. But they are a great deal cheaper than doing nothing.