"the $700 billion bank bailout in danger of becoming the most unpopular use of public money in the history of the republic — unless something is done

My man for Treasury Alan Blinder on TARP:

"An economy isn’t supposed to work that way. Our celebrated capitalist democracy is designed to be a participation sport — not a spectator sport — and one in which the average American can still win. So the new president’s most fundamental job is to restore the people’s confidence that the economy will perform — for them.

While any new president would prefer a loftier starting point, Barack Obama will have to begin with the troubled Troubled Asset Relief Program. The way the Bush administration started it has left the $700 billion bank bailout in danger of becoming the most unpopular use of public money in the history of the republic — unless something is done fast.

If it’s not already too late, the new president must convince Americans that the bailout is being managed for their benefit, not for Wall Street’s. Because the first $250 billion or so is being doled out to banks without asking anything in return, this will be no easy task. Quick changes in the bailout program — and I mean changes that ordinary people can understand — are necessary."

Good luck President Obama.

"I’d start by sending a large dollop of that bailout money to Main Street — literally. That means devoting substantial sums to refinancing home mortgages that might otherwise go into foreclosure, which is what the head of the Federal Deposit Insurance Corporation, Sheila Bair (bless her heart!), has been urging for months. The president-elect can be a powerful ally for Ms. Bair.

There are a number of ways to mitigate the impending wave of foreclosures. To those who object that refinancing mortgages one at a time is too slow, Mr. Obama should have two replies. First, let’s end the delays and get started. Second, the Home Owners’ Loan Corporation took on a much larger task — relative to the economy’s size — in the New Deal, and succeeded admirably. Can’t we match the speed of the 1930s? Yes, we can."

I believe that he's been for dealing with the mortgage problem all along.

"Next up, after reforming the bailout plan, is the Economic Recovery Act of 2009. Given the likely severity of the economic slide, a large dose of fiscal stimulus — amounting to perhaps 2 percent of G.D.P., or roughly $280 billion — is needed either in the lame-duck Congressional session this month or soon after Inauguration Day. The new president must guide Congress away from passing an unprincipled hodgepodge of members’ favorite projects that would just remind the public of what’s wrong with Washington. Instead, we need a bill that has clear objectives, is well designed to achieve them, does not do long-term harm in the name of short-run help — and can be explained to the body politic."

Very good advice.

"Regarding objectives, I’d suggest sticking to two: creating jobs by creating new spending, and alleviating the misery that accompanies deep recessions."

Read the rest, but I basically agree. Maybe more of an emphasis on infrastructure, but I agree that the social safety net spending is something we need to do, not part of the stimulus.

Now, don't you wish President Obama would have taken my advice?