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Mr. President, Please Read This Before Thursday

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Mr. President, your supporters along with the truly independent voters believe you are an excellent speaker, logical and forthright. Your detractors respond that your speeches lack passion and are glib. Your speech this Thursday could be one of the most important you have ever delivered. The following are my suggestions for what the speech should include in order for it to resonate with the American people.

You have announced that the speech will deal with jobs and, of course, that is the priority issue, but I suggest you go further. Most economic observers I've read believe that our economic recovery is being stymied by the housing bubble which, three or more years after it burst, has not been dealt with. Millions of Americans have been in foreclosure proceedings. That resulted in their losing their homes, their most significant asset. Millions more will meet the same fate if the foreclosures are not dealt with and ended. Your administration has relied on the banks to deal with the problem by primarily writing down interest on debt. Some have done so and others have not. In any event, that approach has had little success.

I propose, as many have, that the bankruptcy laws be amended immediately to empower bankruptcy judges to reduce principal as well as interest. Opponents of this proposal generally respond, "moral hazard," meaning it would encourage future borrowers to borrow more than they could repay. If "moral hazard" were the standard, why were the banks, which made decisions that were financially devastating to this country, bailed out to the tune of billions of dollars by laws enacted by Congress and signed by you, as well as actions taken by the Federal Reserve? Remember, Mr. President, that banks were given those billions to provide liquidity to businesses, but instead used the taxpayers' monies to buy U.S. Treasury bonds to enhance their balance sheets with the interest received.

Mr. President, you should propose a quick new foreclosure-bankruptcy proceeding that could restore full title to the homeowners and keep them in possession. Help them with the same alacrity as you did the car manufacturers. Of course, that needs the approval of Congress. You can propose, but Congress must dispose. If they won't, the country will hold them responsible in the election of 2012.

Jobs, jobs, jobs, is the nation's cry. I suggest, as I'm sure your advisers have, that you look to what FDR did in the depression of the 1930s. Again, you can propose, but the Congress will dispose. You should propose work programs comparable to the WPA, PWA, CCC and a host of others.

Call in regional business leaders and ask them, region by region, what they need immediately to make it possible for them to hire workers. What tax incentives do they need to hire? When I was mayor, my approach to helping revive New York City's businesses in 1978 was to get out of the way and use government to help, not hinder. I believed then and I do now that business people know more than government does about how to generate economic activity.

The Republicans are not wrong in some of their complaints concerning the federal government's interference with the economy. One is our tax code as it affects business. But their vision is limited. It is the whole tax code and its loopholes favoring the rich that must in fairness be revised. You should immediately appoint a blue ribbon committee to examine that code and recommend how to eliminate the unfairness that exists. Eliminate the loopholes, make all taxpayers pay their fair share under progressive tax rates, with all income from whatever source subject to the same tax rates. Currently, some taxpayers, who derive their income from the stock market, described as "unearned income," pay only a 15 percent tax, whereas most citizens derive their income from what is known as "earned income" coming in the form of a salary check and pay rates of up to 35 percent. It is not fair and it is not right.

Mr. President, on Thursday you can send a message to the nation that you have heard their voices and you will stand up for them. In the words of your first campaign, "Yes We Can."

Mr. President, after I wrote this commentary, I read the New York Times on Labor Day and saw the letter of Congressman John Conyers (D-MI) with whom I served when I was in the Congress from 1969 to 1977, before I was elected mayor of New York City. His letter serendipitously deals with the issue of mortgage foreclosures. He believes legislation should be adopted "allowing homeowners to reduce their mortgage debt to no more than the current value of their property." He points out that that was done in 1986 to help family farmers. Conyers is the ranking member of the Judiciary Committee in the House and was not long ago its chairman, so I defer to him. In any event, please examine his proposal. His letter follows:

To the Editor:

You are right that the federal government could do much more to help homeowners climb out from underwater mortgages, and that banks have done far less than they can for homeowners seeking relief. The key to unlocking the mortgage foreclosure crisis is the passage of a federal law allowing homeowners to reduce their mortgage debt to no more than the current value of their property. Homeowners and the federal government have not had much leverage to get banks to stop the mortgage crisis. Current law discourages banks from voluntarily making loan adjustments that homeowners need. Giving homeowners the right to reduce their debt through recognized legal processes would no doubt provide additional incentives for lenders to work with borrowers. This is neither a new nor a radical proposal. In 1986, Congress passed a law that allowed family farmers to modify their mortgages in response to a similar foreclosure crisis. It was so successful that in 2005, with bipartisan support, it was made permanent law. If only we could do for struggling homeowners today what we did for family farmers 25 years ago. Last Congress, legislation that would have provided such a remedy to homeowners passed the House but died in the Senate. The bill was reintroduced, and it is my hope that Congress will take up this essential legislation soon.

JOHN CONYERS Jr.