This week, it was announced that the total job losses for 2008 were more than 2.6 million, the highest since 1945. It was no surprise, then, that Congress is rushing to approve a much touted economic stimulus package.
Speaker Nancy Pelosi has said that she expected a House on the matter the week after Obama’s inauguration. She further said that the House will not take a break until the package is passed. Traditionally, the House takes a weeklong break in mid-February.
(Note to self: with almost two months off over the Thanksgiving and Christmas holidays, then one month of work before a week long break… consider running for Congress.)
Obama has encouraged a speedy resolution on the package, saying: “We start 2009 in the midst of a crisis unlike any we have seen in our lifetime, a crisis that has only deepened over the last few weeks.”
However, specifics of the package have been met with criticism on both sides of the aisle. What’s being critiqued the most? The tax proposals. And interestingly, though I’ve heard quite a number of Congressional officials speak up against the current proposal, I haven’t heard one propose a working alternative. My mother always told me that you don’t criticize someone unless you have a better plan. Congress, are you listening?
Kelly, you’re mom was right, but politicians seem immune to that type of thinking… part of the sound byte, perpetual campaign atmosphere that drives everything in politics today.
I’ve got my fingers crossed!
Anne Wayman, now blogging at http://www.aboutfreelancewriting.com
No they are not listening. They are still worried about who has the “power”. If the current plan passes I have no idea what I will do with my extra $10 a week – perhaps buy a new home – or maybe a new car – or maybe a Big Mac – probably the Big Mac. And if my neighbors get jobs building or repairing all these roads I am absolutely certain they will run right out and buy a new home and car. Seriously I know you are not supposed to critize unless you have something better to offer but I simply don’t know of anything better – but I don’t think more bail outs or more stimulus programs are the answer – maybe the answer is to bite the bullet and go through these bad times slowly….I know that will hurt a lot of people but I still don’t think that what they are doing will work any better. But I could be wrong.
Skip
With all the job lossess and pay cuts and layoffs, we had layoffs in the company I work for, that were ecperienced this past year in the US, I don’t see expenses cuts, tightening of the belt in the government. They are just not taking it to heart to get help out to the tax payer quick enough. Where are the cuts for salries in the government? Most companies have considered many options to cut back. Lets get some accountability and some real work ethics in the congress. You work for us, get it moving!
To get the economy rolling again we need money to start flowing from the institutions and the housing market to cycle inventory so that there are manufacturing demands. The government has already appropriated the money for lending, but may need to force their leverage to get it flowing.
What I propose they start for a housing stimulus is a program that would pay 2% of the interest for new mortgages (example; 5 years of 2% payments for existing home purchases / 8 years of payment for new home purchases with a $200K maximum). These mortgages could be piggybacked with a secondary loan for those qualified and interested in the jumbo market. This program would only be available for a 3 – 6 month window of opportunity. This would entice people to BUY NOW, instead of sitting on their hands, waiting on prices to continually drop. A person could sell their house as the payment term ends with no prepayment penalty, so that they could retain their equity (building wealth for investment), or they would just continue at the original rate of the loan (building more equity). Incomes should increase during the time of the payment program, which would allow a homeowner the opportunity to meet their original obligations. A program for refi (2% for 3 years?) could also be effective in helping people with a straining mortgage stay in their residence, warding off foreclosure.
One of the pros for the government is that this program would allow for pay out over 5 – 8 years as opposed to dropping a $trillion dollars in a relative short period of time.
As an example, using simple mortgage calculations; A $200K loan for 30 years at 5.25% equals a monthly P&I of $1,104.41. A $200K loan for 30 years at 3.25% equals a monthly P&I of $870.41. A person would only pay 79% of what they would normally pay for this mortgage. The government would pay $2,808.00 per calendar year. If they helped SELL one million homes in this manner, it would only equate to $2.808 Billion of bail per year. This would equate to $200 billion in residential sales, untold return in tax base revenues, the reduction of housing inventories, new construction starts and a stimulation of the manufacturing sector with the new demand for appliances, HVAC units and other housing related concerns.
Stimulation without incentive is ineffective and should also be accompanied by time constraints. You do not see Black-Friday Christmas type sales all year long. There is a reason they happen and are of such a grand economic scale, as they are limited by an event, timeframe and deadline.
Please quit using our money to pander for votes by trying to purchase them with a $500.00 gratis or $1000.00 tax credit.
I have to agree with Larry Wright on this one. I left the mortgage business a few years ago, the up and down atmosphere and stress was taking a toll on my family. But I still agree with him completely! People need a good reason to get off any money they may have been sitting on and this is the best way I can think of to get many markets rolling again. I just wish our powers that be would quit looking for quick fixes and look @ long term.