One of the recurring topics in the current Presidential race and probably the most serious problem our country is facing today is our flagging economy. The Fed's rapid-fire rate cuts are an attempt to stop the bleeding. Congress and the administration have proposed an economic stimulus package to the same end. Some argue that this is all just an attempt to throw a bucket of cold cash on the raging flames of this administration's economic failures. Probably true, but I don't think it's the wrong thing to do. Perhaps at this point, it's the only thing to do. If it's done it the right way.
Now I'm no expert, but even someone like me who has trouble keeping her checkbook balanced can see that if the point is to infuse the economy with cash, the key to making the stimulus work is to get the money to those who are likely to spend it. That's why it makes sense to include low income workers and seniors, who are likely to put the money immediately back into the economy. But simply handing out cash to folks so they can pay a few bills and buy more Chinese made stuff is putting a band-aid on a gaping wound. So the Senate is attempting to tackle the problem a bit more holistically, and is focusing not just on cash rebates, but help with the more deep rooted issues. One of those, perhaps the biggest and nastiest, is subprime loans. That's where the Kerry-Smith plan hopes to make a real difference. If people can afford their mortgages, they'll pay them, boost the economy, and keep their homes, something that's much more likely to reverse our downward economic spiral and improve the lives of low income families than a $600 check.
The Senate Finance Committee agrees that we have to include more in the stimulus than rebates, and the Kerry-Smith plan passed the committee with strong bipartisan support. The full hearing is available at C-SPAN's video library.
Video Credit: C-SPAN
Kerry-Smith Subprime Mortgage Help in Economic Stimulus Package Provision will help keep low-income families in their homesWashington, D.C. – At the urging of Senators John Kerry (D-MA) and Gordon Smith (R-OR) the Senate Finance Committee today included mortgage financing assistance in the economic stimulus package. An estimated 2.5 million mortgages were in default in the third quarter of 2007; devastating entire communities as entire blocks now sit vacant and families are lose their homes.
“At a time when families across the nation desperately need help to avoid foreclosure, these funds will provide thousands of safe, fair mortgages to homeowners facing foreclosure and families looking for their first home," said Sen. Kerry. “By including $10 billion in targeted mortgage relief to the homeowners, we are standing by our pledge to create a targeted, timely, effective stimulus package.”
“If we are serious about addressing the root of this economic downturn, we need to take a serious look at the housing crisis,” Smith said. “Expanding bonding authority will help homeowners work out their finances instead of having the government bail them out. This is a good way to bring greater stability to the market and ensure families remain in their homes.”
Under current law, state and local governments may issue bonds to finance new mortgage loans to first-time homebuyers. Senators Smith and Kerry’s provision would temporarily expand the use of this program to include refinancing of subprime loans. The proposal would also allow states to issue up to $10 billion in additional bonds over the next three years. This would allow homebuyers facing foreclosure the opportunity to refinance at a safe, fair rate. Nationwide, it’s estimated that the proposal would lead to roughly 80,000 new loans according to the National Council of State Housing Agencies.
The Committee on Finance passed the provision today with overwhelming bipartisan support as part of the economic stimulus package. The bill is expected to come to the Senate floor in the next week.
Another strategic effort by the Senate is to allow small businesses increased tax writeoffs for new investments. Reinvesting in small business creates jobs and stimulates the economy. Again, Senator Kerry is looking at the big picture.
Economic Stimulus Contains Kerry, Snowe Small Business Tax ProvisionsWASHINGTON - Today the Senate Finance Committee passed an economic stimulus package which includes small business tax provisions championed by Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine), Chairman and Ranking Member of the Committee on Small Business and Entrepreneurship. Kerry and Snowe introduced legislation last week to increase small business expensing for 2008 and to increase the net operating loss carry back period. The stimulus bill, which allows small firms to use one of these tax provisions, now moves to the full Senate for consideration tonight.
"While we're working to help families through the housing crisis and get money into their hands quickly we're also working in a bipartisan way to help small businesses," said Senator Kerry. "The most effective way to create jobs is to increase the cash flow and encourage investment for small firms."
"From the onset, I have stressed the role that small businesses will play in our economic recovery," said Senator Snowe. "America's small businesses constitute 99.7 percent of all employing firms, provide work for nearly half of the private-sector workforce and over the last decade have created approximately three quarters of net new jobs annually. As Ranking Member of the Senate Committee on Small Business and Entrepreneurship, I aggressively fought to include in the stimulus package provisions that would increase the amount of investments that businesses can write off in a given year and to extend the number of years that a business can look back upon when offsetting gains with losses."
The Senate's economic stimulus plan includes a Kerry-Snowe proposal to allow companies that are losing money to apply 2006 and 2007 losses to tax returns from profitable years dating back to 2001 and 2002, and receive any applicable refunds. By extending the "net operating loss carryback" from two years to five years, small businesses in desperate need of help will get much needed cash infusions.
The Senate Finance Committee also adopted provisions from Kerry and Snowe's legislation to increase the amount small businesses can write off their taxes for new investments this year.
A check is nice. A house and a job is the American dream.
