Robert Reich blogged yesterday on the Obama plan to help the middle class.
Reich has a new blog site effective this week, so bookmark it if you are a fan of his writings. Reich offers two suggestions for initiatives that Obama could do now, to make a REAL DIFFERENCE for the middle class.
Reich's post is short (8 paragraphs) so do yourself a favor and read it. I'll summarize below for those to lazy to click a link. ;-)
Also if you missed Reich on an excellent PBS News Hour interview yesterday on this subject, it's worth a view.
First, on the spending freeze that has caused such an uproar here. Reich thinks this will tie Obama's hands to do anything meaningful to help the middle class going forward. In fact, it has eerie parallels to Bill Clinton’s political strategy back in 1994.
In December 1994, Bill Clinton proposed a so-called "middle class bill of rights" including more tax credits for families with children, expanded retirement accounts, and tax-deductible college tuition. Clinton had lost his battle for health care reform. Even worse, by that time the Dems had lost the House and Senate. Washington was riding a huge anti-incumbent wave. Right-wing populists were the ascendancy, with Newt Gingrich and Fox News leading the charge. Bill Clinton thought it desperately important to assure Americans he was on their side.
Two months later, Clinton summoned Dick Morris to the White House to figure out how Clinton could move to the right and better position himself for reelection. The answer: Balance the budget.
I can almost envision a staff meeting where Hillary says, "You know what Bill and I did back in 1994?" But whereas Clinton rode into a second term in 1996 largely on the coat tails of a roaring jobs recovery, Reich sees no such serendipity for Obama.
Reich thinks there are the two things that Obama could do to make a real difference the middle class.
Like Clinton’s, Obama’s package of middle class benefits is small potatoes. They’re worthwhile but they pale relative to the size and scale of the challenge America’s middle class is now facing. Obama can no longer afford to come up with lists of nice things to do. At the least, he’s got to do two very big and important things: (1) Enact a second stimulus. It should mainly focus on bailing out state and local governments that are now cutting services and raising taxes, and squeezing the middle class. This would be the best way to reinvigorate the economy quickly. (2) Help distressed homeowners by allowing them to include their mortgage debt in personal bankruptcy — which will give them far more bargaining leverage with mortgage lenders. (Wall Street hates this.)
Finally, here's a money quote on why mortgages should be allowed in personal bankruptcy. (from the PBS interview cited at the top of the diary.)
ROBERT REICH: Judy, one simple way to help homeowners that are worried about foreclosure would be to change the law and allow them to declare bankruptcy, personal bankruptcy, and personal bankruptcy with regard to debts on their first home mortgages.
Right now, homeowners can do that, can bring their second homes into bankruptcy. They can bring commercial real estate into bankruptcy, but they cannot, under the law, bring their first primary residences into bankruptcy.
Doing that would give homeowners much more bargaining leverage with banks in terms of negotiating better deals. Wall Street doesn't like this very much. But if the Obama administration really wants to show the public that it is standing up to Wall Street, and if Congress is willing to do that, this would be enormously helpful.
Update: Added a link to the PBS News Hour interview on this subject.