Financial Rescue and Economic Stimulus: What's in it for Main Street - 10/15/08
Money Matters
FCNL’s Federal Budget Interest Group
October 15, 2008:
Financial Rescue and Economic Stimulus – What’s in It for Main Street?
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I.What’s in the Final Financial Rescue Package?
II. Does the Bailout Do Enough for Homeowners?
III. A Second Economic Stimulus Package Looks Likely
IV. Take Action on the Economic Stimulus Package
I. What’s in the Final Financial Rescue Package?
The $700 billion financial bailout that Congress recently passed is designed to stabilize the credit market and keep wobbly financial giants from collapse. In addition to outlining how the Treasury secretary will buy troubled assets, the final package includes extensions of clean energy tax credits, funding for mental health treatment and tax legislation – some of which will provide tax relief for working families. Despite these additions, the final plan is far from perfect.
Read FCNL's full summary of the financial rescue
II. Does the Bailout Do Enough for Homeowners?
Homeowners with subprime mortgage debt are at the epicenter of the financial crisis. FCNL had lobbied for making mortgage refinancing and protection against foreclosure a priority in the financial rescue plan. The final legislation does outline significant responses to the subprime mortgage crisis, including lower interest rates on mortgages and loan guarantees that will allow families to keep their homes. However, the legislation does not include all available measures to help homeowners, and its wording is vague. For example, the final bill does not allow for court refinancing of mortgages when foreclosure is imminent, a provision that FCNL supported.
The Federal Housing Finance Agency stepped in last week with an amendment that will encourage banks to refinance mortgages. Find out more.
III. A Second Economic Stimulus Package Looks Likely
An economic stimulus package that would help millions of unemployed and working families get through the recession has been sidelined, at least temporarily, by Congress’s attention to the financial rescue package. Now many members of Congress are calling for a “bailout for Main Street.” House Speaker Nancy Pelosi (CA) has suggested a bill with a total value of around $150 billion — twice as much as Congress was considering earlier this month. The House is expected to work on a stimulus package when it returns for a "lame duck" session in mid-November. The proposal will likely include money for redeveloping infrastructure , expanding food stamps, and extending unemployment insurance to 13 weeks. All of these measures are designed to stimulate the economy by creating jobs and directing money to people who will spend it immediately.
Learn more about what the Domestic Human Needs coalition, of which FCNL is part, would like to see included in a second economic stimulus package.
A panel of economists called before the House on Monday overwhelmingly agreed that the economic stimulus package needs to include programs focused on helping middle class and working families make it through the recession.
IV. Take Action on the Economic Stimulus Package
Congress is still debating how to fund legislation to stimulate the economy and whether such legislation would provide general tax rebates similar to the first stimulus package that came out this past Spring or focus on programs to help those hurt most by the failing economy — working families and individuals who have lost their jobs. Let your Senators and Representatives know that you support an economic stimulus package that includes:
1. Programs focused on those hardest hit by the recession. Food stamps go directly to people who need them, and the aid is spent immediately in the domestic economy. As a result, every $1 the government spends on food stamps produces $1.73 in economic stimulus. Congress also needs to extend unemployment insurance. About 830,000 jobs have been eliminated so far this year. Extending unemployment insurance by an additional 13 weeks will help individuals affected by the employment crisis stabilize their financial situations as they search for new jobs. Read more.
2. Aid to states struggling to meet their human needs budgets. High unemployment and declining consumer spending are tightening state budgets. States are having difficulty borrowing money because of the credit crisis. As a result, necessary state-funded programs such as Medicaid and the State Children’s Health Insurance Program are falling short. Find out more about the state budget crisis from the Center on Budget and Policy Priorities.
3. Funding for infrastructure repair and development, creating green jobs. Bridges are falling apart, and the highways used to transport the vast majority of U.S. commerce are in desperate need of repair. Funding infrastructure makes us safer and green jobs make our energy production and use more efficient
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