Stimulate me. Please.
I’m feeling gloomy. And I’m not sure that a Washington plan to fill a bunch of potholes, build some shiny new schools, or construct windmill farms on the Great Plains is going to bounce me out of it.
I’m glad there will be a new Web site where I can monitor every new dollar the government spends, since I don’t have enough Web sites to monitor already. But that URL, www.recovery.gov, makes me think of a tedious 12-step program, not a bold new American era.
Tax cuts. Okay, so President Obama fulfilled his campaign pledge. But an extra 20 or 30 bucks in my paycheck – if I’m lucky enough to keep getting a paycheck - isn’t going to get the endorphins flowing, either.
[See why Obama's bailouts will look like Bush's.]
Obama’s nearly $800 billion stimulus plans sounds necessary. His pledge of transparency is welcome. But it’s not enough. Here’s what else Obama needs to do to start making me feel better:
Come clean about the banks. Are Citigroup and Bank of America dead in the water? If they are, what does that mean? How many other banks are going to collapse before this is all over?
I understand – nobody knows for sure. It depends on how bad the recession gets, and how many more consumers default on their mortgages, credit cards, and other loans. But as a preferred shareholder of Citi, B of A, and a bunch of other banks, Washington has a lot of inside information that might be useful to know.
How about sharing it. And providing an honest public assessment of how deep the banking crisis is, and when it will likely be over. Those private estimates of $4 trillion in total losses, with more than half of them still unacknowledged by the banks: Accurate? If so, use it as a baseline to project what's likely to happen over the next 12 or 24 months. If it’s bad news, fine. Hearing it all at once would be be better than dribs and drabs over months.
[See why there's a bright side to the bank bailouts.]
And if the feds go ahead with plans to form a government-backed “bad bank” that will soak up all the money-losing assets that are crushing the less-bad banks, the prospectus should include estimates for how much it will cost, how long it will exist, how long it could take to unload all those rotten assets, and whether taxpayers are likely to see any return on the investment. And no excuses about how hard it is to predict such things: The rest of us have to form our spending and lifestyle plans with a lot less ability to predict the future.
[See where the bottom might be in the job and housing markets.]
Put the CEOs on the spot. Most of the CEOs whose companies have gotten bailout money have had private convsersations with the top brass at the Federal Reserve and the Treasury Dept. – but not with the rest of us. Every one of them should be required to testify publicly about why they need the bailout money, and what they plan to do with it.
A good model is the ordeal the CEOs of General Motors, Chrysler, and Ford had to go through, while making the case for an auto bailout last year. Each of those CEOs testified four times, and each company submitted a public “viability plan” that laid out its problems and its turnaround plans. We need the same thing from Citigroup, Bank of America, and legions of others.
[See instructions for how to grill a CEO.]
Set some clear benchmarks, so we know if the government is succeeding or failing. One reason we can’t tell if the first half of the financial rescue package is working or not is we don’t really know what it was supposed to accomplish. If it was intended only to stop the financial panic of last fall, then it worked, more or less.
But that’s not very ambitious, and if the rescue was supposed to restore the banks to health and pave the way for a resumption of normal lending, then it failed. There’s still another $350 billion worth of financial rescue funds on the table, plus that huge spending spree known as the stimulus plan. I’d like to know what exactly those are supposed to accomplish: How many new jobs? How will we measure them? Let's see monthly job-creation targets. And how about some target turnaround dates for the ongoing plunge in housing prices? Sure, it’s risky to make those kinds of economic forecasts. Take the risk.
Reveal the dire economic forecasts behind the stimulus plan. Obama keeps saying that it’s going to get worse before it gets better, and that catastrophe will basically ensue without nearly a trillion dollars of new spending. So spell it out: How bad could it get? Part of this is the old political game of lowering expectations so it’s easier to claim success. But how much? What are Obama’s advisors telling him that’s so scary?
The vague scaremongering harkens back to the perplexing days of last fall, when Fed Chairman Ben Bernanke supposedly worried privately that there would be NO ECONOMY without dramatic government intervention. If taxpayers can fund all of these bailouts, we ought to be able to handle the ugly truth.
Tell me whether to spend or save. We Americans have been dreadfully irresponsible, spending more money than we earn, borrowing the difference, and saving practically nothing. So what do we do now?
The savings rate has finally gone up a little bit, partly because nobody will lend money for cars or homes, so the bank suddenly looks like a reasonable place to put our cash. That's good. But wait - that's bad, because the policymakes keep saying it will take consumer spending to revive the economy, and if you're saving you're not spending. So is it suddenly our civic duty to STOP saving and start spending? Is profligacy patriotic?
It's enough to make me want to take a nap. Call me when the stimulus arrives.