James B. Stewart, always worth reading, has some good thoughts in his Journal column on what Obama needs to do to fix the busted economy. One important thing is: Do Not Be a Neo-Hooverite!

Among other boons, for the time being we can forget about the deficit, because one thing we know from the Great Depression and Keynesian economics is that in crises like this the government has to get out there and spend.

The government is going to have to spend to help soften the blow to the economy, which is in free-fall right now. We’ll hear a lot about trillion-dollar deficits over the next year, and that’s a terrible reality, but the alternative seems to be much worse.

Here are a couple of smart ideas:

The U.S. needs a comprehensive policy for faltering industrial concerns, probably starting with the auto industry.

This can’t be another case-by-case, ad hoc approach that arbitrarily favors some companies deemed too big to fail while consigning others to bankruptcy court. I favor the Warren Buffett approach: preferred shares that pay interest and warrants to acquire an equity stake at an attractive price. In fact, I might even ask Mr. Buffett to step up to this task. This can’t be a bailout of private-equity firms or existing shareholders. Someone in the Treasury will have to start thinking like a distressed-asset manager…

—Another lesson from the Depression is that spending on infrastructure helps, and can also be an excellent long-term investment. China just unveiled a $586 billion program that includes spending for airports, rail lines and highways, housing and other programs. These should raise quality of life, enhance productivity, and provide an economic boost. There’s no shortage of similar needs in the U.S…

—I’d end compensation for failure. I’d legislatively ban employment contracts that call for huge severance payments without regard to performance. And I’d make prosecuting those guilty of fraud a top priority. When the government injects capital and takes a stake, I’d oust incumbent management unless there was a compelling reason not to. But I wouldn’t cap pay for success, including at big banks.

Hey, Obama: How about Stewart for Treasury chief? That would probably be better than Larry Summers.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.