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Toll Brothers' Plan to Save Economy

Toll Brothers Chairman and CEO Robert Toll and Jim Cramer agree on one important point: that home prices are at the center of America’s economic woes.

Forget about the credit crisis. Forget about the mortgage markets. Fix home prices first, then focus on these other problems.

So what’s the solution? Toll, in an interview with Cramer Tuesday, suggested a plan similar to one President Gerald Ford put in motion back in 1975. Ford offered homebuyers a tax credit as long as they acted before the end of the year.

“The market took off,” Toll said. If President George W. Bush employed the same strategy now, “there’s a good chance that could jumpstart the market and we could get out of the mire that we’re in.”

Of course, a little consolidation in the homebuilding industry couldn’t hurt, either, Cramer pointed out. That might curb the building, reduce supply and maybe bring a bottom to this market. When asked whether Toll would buy a company like Centex , KB Home or Standard Pacific, the CEO wouldn’t rule it out, telling Cramer, “You might have a good idea.”

Toll did say that some markets, such as Naples, are starting to improve. Apparently, homes there couldn’t be given away just a year ago, but now prices are “up a little bit.” As to whether Naples’ good news is a precursor for the rest of the market, Toll said, “I wouldn’t bet on that just yet.”

And that, too, is Cramer’s outlook on housing for the near term: “Not yet.” It’s still too early to make a move on this sector, he said.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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