A new New Deal

By: - September 30, 2008 4:58 pm

It doesn’t take a rocket scientist to figure out that America is in desperate need of strong federal action to counteract decades of neglect and malfeasance that produced the market fundamentalist, economic free-for-all that’s now in its dying throes. Even I (as I mentioned yesterday in an offhand comment to a John Quinterno post) can see that what America needs is a new New Deal.

Now it turns out, not surprisingly, that other, smarter people are making the same argument. Check out this post in The Nation from Katrina vanden Heuvel and Eric Schlosser from this past Sunday. It’s entitled “American Needs a New New Deal.” Here is an excerpt:

Firstly, we need relief for ordinary Americans. At the moment, four million households are behind on their mortgage payments and facing foreclosure. Some estimates suggest that an additional two million may face eviction next year.

On Wednesday in the Wall Street Journal, Sen. Hillary Clinton called for a revival of the Home Owner’s Loan Corporation (HOLC). Organized in the early months of the New Deal, the HOLC avoided widespread foreclosures by purchasing troubled mortgages from banks and then reissuing them with more favorable terms. It proved a tremendous success — for homeowners, taxpayers and banks.

A new HOLC should be created immediately, and with the power to keep people in their homes.

As winter approaches, millions of families will need help keeping those homes warm. During the past year, the cost of heating oil has increased about 30 percent. Meanwhile, the Bush administration is now trying to cut funding for the Low Income Energy Assistance Program. Instead of cutting, the federal government should more than double the current budget of $2.6 billion. That is awfully small change on Wall Street these days.

Second, we need reform. In recent years, one federal regulatory agency after another has been handed over to the industries they were created to regulate. It should come as no surprise that during the Bush administration the US has witnessed the largest recall of contaminated beef in its history, thousands of deaths from unsafe prescription drugs, and one of our worst financial meltdowns.

Advocates of the free market must confront the fact that both the Great Depression and the current financial chaos were preceded by years of laissez-faire economic policies. Strictly enforced regulations not only protect consumers, they protect companies that behave ethically from those that don’t. The sale of tainted baby food in China demonstrates, once again, that when industries are allowed to police themselves, there’s absolutely no limit on what they’ll do for money.

Third, we need reconstruction, not only of America’s physical infrastructure, but also of its society. Today close to 50 million Americans lack health insurance. About 40 percent of the nation’s adult population is facing medical debts, or having difficulty paying medical bills. A universal health-care system would help American families, while cutting the nation’s long-term health-care costs. And a large-scale federal investment in renewable energy and public-works projects would build the foundation for a strong 21st century economy.


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Rob Schofield
Rob Schofield

NC Newsline Editor Rob Schofield oversees day-to-day newsroom operations, authors and voices regular commentaries, and hosts the 'News & Views' weekly radio show/podcast.