Sometimes, when you are sick, you need to take more than one medicine to get over your ailment, and it seems as if this may be what we need to be looking at for our economy. A recent Washington Post- ABC News Poll reports that nearly nine out of ten respondents ‘expressed concern that the failure of the bill could lead to a more severe economic decline’, yet respondents also narrowly opposed the bill 47 to 45.

How can this be? Perhaps it is because the Paulson plan is like one of those pills you need to take when your sick. By itself, it is useless, or perhaps even dangerous, but taken in combination with other pills, it is exactly what is needed to cure our ills.

Let’s look at what our ills might be. The most immediate concern is a liquidity crisis. Everyone who has cash wants to take it out and sit on it. They don’t want to lend, especially short-term funds, during this time of economic uncertainty. This presents problems for would be home buyers, car buyers, or purchasers of other big ticket items, as well as the companies that sell to them, and to companies that need short-term funds to meet operating expenses. Declines in these areas could significantly further weaken our economy.

A plan like Paulson’s would inspire confidence in short-term lending, reduce the liquidity crisis and get the economy going again. Yet at the same time, the high-pitched rhetoric about how we need the plan passed immediately only adds to the lack of confidence.

Let me go back to the medical analogy. If you go to a doctor with a really sick child, and the doctor is calm, but serious, you are more likely to be calmed down. “Yes, ma’am, you child is very sick. We will work carefully and deliberatively to make sure that your child gets the best treatment possible.”

On the other hand, if the doctor’s start screaming, “Oh my God, I’ve never seen anything so serious. We have to do something right away.” Then rushes into the operating room without so much as scrubbing or putting on a gown, it is unlikely that the mother will reassured. This is one of the biggest problems with the Paulson plan.

The other problem is that it does not properly address why we have a liquidity crisis in the first place. People can get all distracted by these complicated derivative securities, but underneath it all is the problem with housing. Housing prices soared over the past eight years and we are seeing a correction in housing prices. This, together with a weak economy, has resulted in high foreclosures, bankruptcies and a decline in housing prices. Unless something is done to address this underlying issue, we will still have difficult times ahead.

According to Bloomberg News, various other proposals have been put forward, including options to get the FDIC involved issuing lenders certificates they could use as capital. This option seems to have Republican support, but not Democratic support. On the other hand, some Democrats are pushing for ‘a provision that would allow bankruptcy judges to alter the terms of a home mortgage for individuals in bankruptcy, even reducing the principal balance’, an option opposed by many Republicans.

I think both ideas are good and should be included. As a matter of fact, they should be linked. Mortgage modifications by bankruptcy judges should automatically be sent to the FDIC for review as part of issuing a certificate.

Beyond the housing crisis, there are other aspects to our financial situation that need to be addressed. T. Boone Pickens talks about the money that is flowing out of our country to purchase foreign oil as the largest redistribution of wealth ever. I do not agree with many aspects of Mr. Picken’s plan, but I think he raises an important point. Until we change our energy consumption habits, our economy will continue to have difficulties.

So, any economic recovery plan, must include provisions to move the United States towards energy independence. Ideally, this should focus on clean, renewable energy and conservation. If we were to spend $700 billion on making the United States the leader in clean, renewable energy, we would change the economic environment drastically, creating new jobs, new hope and a cleaner and safer world.

As with any sort of illness, it is not uncommon to require multiple treatments at the same time. I do not know if the three treatments I am suggesting are the best out there. Instead, we need a serious discussion about which treatments are best, and we need to stop the hysteria of selecting one treatment, right now, at the expense of others.