In 1933, President Franklin D. Roosevelt unveiled the first of his New Deal programs, intended to stimulate economic growth during the Great Depression by creating jobs and reforming business. Now, more than 70 years later, Americans are once again scared about the economy and some are wondering if Barack Obama should follow in Roosevelt’s footsteps. Do we need a New Deal for a new generation?
Mindless stock purchases will not help contain mortgage losses or margin calls. It will not keep people employed or create new jobs. It will not gently reduce consumer debt, nor keep Wall Street from deeply negatively consequential actions.
On the other hand, restructuring loans or taking an equity participation in people’s homes might help the real economy. So would investing in job creation instead of bank stock via capital injection. We have become a borrowing society because of mass inequality, spurred by enormous debt and an overly risky banking industry.
The New Deal meshed government rescue with economic restructuring and accountability. That’s precisely what we so deeply need today.
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