Thaw Frozen Credit, Ignite Spending

There’s been a lot of controversy over the $700 billion bill passed by Congress to stabilize the nation’s financial markets. Some say it was a bailout of greedy executives, while others say it was an important rescue for Main Street businesses and consumers.

I’m definitely on the side that believes this package was a Main Street rescue plan. Let’s face it, retailers need quick and dependable credit to purchase inventory, make payroll and keep the lights on while waiting to get paid by their customers. And consumers depend on the credit cards, car loans and home mortgages that keep the economy going. If the credit markets grind to a halt as they did this fall, it may be Wall Street executives who get blamed, but it is Main Street that gets hurt.

NRF lobbied heavily for the rescue package bill because we were hearing from retailers across the country that failure to act could lead to a further economic downturn that would seriously harm retail sales – and put some retailers out of business.

Along the way, the bill picked up additional provisions to win votes, and two happened to be major retail priorities long sought by NRF. One would let retailers who own their stores deduct the cost of improvements over the same 15-year period as retailers who lease, rather than the current 39 years. That’s a pretty arcane piece of tax code, but it will save impacted retailers more than $1 billion a year. The other would require health plans to provide the same level of coverage for mental illnesses as physical illnesses. We think that’s important because of the productivity losses that occur when any illness suffered by an employee goes untreated.

So you can see the rescue plan was a major win for more than just Wall Street. Still, even before the Wall Street crisis, our nation’s economy had been flat or barely growing all year despite the $100 billion-plus in tax rebate checks mailed out over the spring and summer.

In early fall, Congress began talking about another round of stimulus. That’s why I wrote to leaders of the House and Senate in October asking that they once again set aside politics and partisan differences and hold a lame-duck session as soon as possible after this month’s elections to pass a second round of stimulus legislation in the form of direct relief for the consumer. With consumer spending representing two-thirds of GDP and supporting tens of millions of jobs in retail and retail-related manufacturing, construction and transportation, it would be difficult to foresee an improvement in overall economic growth until consumer confidence and spending improve.

We know that the President, Secretary Paulson, Fed Chairman Bernanke and Congress are all taking this crisis seriously. We call on them to continue to work together and use all the tools at their disposal to help jump start the economy.