I reported on the other candidates' economic plans yesterday. Obama released his plan to stimulate the economy after I had already released my post so here's an update.
If he had taken a few days, as the Wall Street Journal was reporting he might, Hillary would have been whipping that delay-horse for all it was worth. Obama's plan is similar enough that she still gets to say that she was first and he's a copycat. The only way Obama could have won this little political spar was to have thought outside the Democratic box. He didn't and now they will debate about the little differences each plan has.
Instead of paying heating bills for people, Obama wants to give 150 million people a $250 tax credit. This would put money in their hands immediately instead of filing applications for help with heating which could take months or years with the government.
Is $250 really going to help stimulate the economy or will that money just go toward the heat bills, credit card debt, and mortgage? I understand the theory of giving money to people that will spend it but will this amount really result in a change?
$10 billion will be used to help people avoid foreclosure.
Let's be very clear on this because both Hillary's and Obama's plans help people in foreclosure.
What they are really doing is making sure that the banks get their money. It's a nice side effect that people get to stay in their homes but the reality is that the money is going to the banks or is being used to refinance so that banks aren't stuck with devalued homes.
Not that I'm for kicking people out of their homes but I do believe that banks have a duty to themselves to make loans that they reasonably believe will be repaid and people borrowing money should be borrowing an amount with terms that they believe they can repay. If there has been some type of fraud, the government might be asked to step in but otherwise, the two sides should live with the results of the deal that they made.
Bailing either party out removes the logical result of their action and rewards the wrong kind of behavior. It's also bad for morale. People who made agreements that they could keep and then kept that obligation get no reward for doing the right thing. Where's my share of money to help me with my mortgage? If I stopped paying on my loan, would the government give me some money too?
Many people probably don't understand it but under these types of plans everyone is penalized in order to bail out a few home owners that made bad decisions. I haven't been able to find out how Obama will get the $120 billion for his plan but since it's similar to Hillary's, my guess is that it will be new money (you know, cuz new money stimulates the economy - ha!). That means that the value of the dollar will go down, inflation goes up, costs go up for everyone, and we all get to help make sure that the banks get their money. Awfully nice of us, don't you think?
Let's also not forget that financing the war is our biggest economic problem, not the housing bubble.
$10 billion will go to state and local governments to help make up for lost taxes because housing values are going down, home sales are going down, and foreclosures are going up.
$10 billion would go to boost unemployment insurance.
The plans are similar and the fighting points for now are that Obama's plan puts money in the hands of consumers more quickly but Hillary's helps more with the housing problem.
After explaining all of this, it should be noted that Hillary, Obama, and Ron Paul are trying to take action now because waiting for a whole year before doing anything is going to be ugly. It also should be noted that it's highly unlikely that any of them will succeed. All of Ron Paul's bills are killed in Congress and if either Hillary's or Obama's plan made it through, Bush would likely veto it.