To solve the current crisis, Hillary Clinton believes we need sorely missed proactive policies that ask what is best for families on Main Street. That starts with economic leadership that is poised to pre-empt crises.
Last year, when the Federal Reserve and the Bush administration claimed that the subprime mess was "contained," Clinton called on regulators to take pre-emptive action -- including a foreclosure timeout, strengthening the Federal Housing Administration's capacities to respond to a crisis and cracking down on predatory lending practices. She since has called for a plan to encourage the restructuring of viable mortgages through a voluntary agreement to freeze interest rates on subprime adjustable-rate mortgages and a 90-day foreclosure moratorium. She immediately supported legislation by Rep. Barney Frank and Sen. Chris Dodd seeking a more systemic effort to unlock and restructure mortgages, and she continues to consult experts over the most effective method for doing so.
Clinton believes that even when seeking to get ahead of a Wall Street crisis, we must apply a "Main Street test." Complex lending vehicles for sophisticated financiers ultimately must be shown to benefit America's working families. What justifies a $30 billion temporary lifeline for Bear Stearns and more common sense supervision of our mortgage industry is the recognition that hands-off postures toward mindless or mind-numbing lending practices can lead to an economic spiral that can hit Main Street hard.
Sometimes the best way to meet the Main Street test is to assist directly those who live there. Thursday, Clinton proposed a second stimulus package, focused on helping at-risk homeowners and communities. Nationwide, concentrated foreclosures and vacant buildings are leading to downward spirals; they threaten to bring crime and blight into once-viable neighborhoods. In early January, Clinton called for a $30 billion emergency housing fund to give localities broad tools to head off this threat, including the latitude to buy and rent out or resell such vacant properties. Today, even Fed Chairman Ben Bernanke is calling for policies to confront the community harm traced to "clusters of foreclosures."
As important as productivity growth can be, the ultimate tests of our long-term economic policies are the wages, jobs, health care and economic mobility of typical and too often "invisible" American families. The answer does not lie in extending high-income tax cuts or in expensive new corporate tax cuts. Nor is it in creating a spate of new bureaucracies.
Clinton supports policies that empower Americans directly to achieve greater economic security and upward mobility: a health-care tax credit that goes directly to you; a $1,000 matching tax cut that goes directly to your savings account; and higher education tax cuts that go directly to pay for your or your child's tuition and dreams of a better future.
The writer, national economic adviser from 1997 to 2001, is economic adviser to Sen. Hillary Clinton's campaign. This is the first of three columns on the leading candidates' economic plans. Wednesday: John McCain; Thursday: Barack Obama.
THE WASHINGTON POST