This country was founded on the principles that people, when allowed to succeed and given a fair chance, were able to grow and prosper to nearly limitless potential. Along the way, we learned that the government can create slaves of us all through the taxation system and the subsequent distribution of that wealth in ways which benefit certain locations at the expense of others. The economic crisis we suffer from today is the indirect result of rules put in place in 1993 by Barney Frank D-Ma and Chris Dodd D-CT when they required changes in the banking laws which coerced lending institutions into making affordable low interest loans to people whose incomes could not support the value of the mortgage they were buying. This was the beginning of what has been termed the sub-prime era of lending. Sub-prime is defined as those who could not qualify for a normal or good credit loan. These loans were often characterized with low interest 5 year rates that gradually increased each year based on market conditions after the fixed rate period expired. This made it possible for lenders to appease congress and activist leaders by making the ownership of homes a reality for people who would have otherwise stayed in rental properties. It was a classic, party now and pay for it later much like so many hangovers I had in college.
The sad reality is that the incomes that many (not a majority) were using to justify the credit worthiness for these loans were barely able to keep up under the (adjustable rate) ARM period. Any economic downturn would have led to a significant increase in the foreclosure rate, but the loss of a primary or secondary wage earner in these homes meant near certain catastrophe for the housing markets. The increasing rates of foreclosure would eventually place a stranglehold on construction and the support jobs that complement this industry. The loss of incomes in these base industries would affect manufacturing and service industries, completing the circle of economic collapse.
The economic stimulus act recently passed will give people who are still working somewhere between 8 and 13 dollars per week additional in their pay check. That doesn't even cover three gallons of milk or a meal for four at supermarket rates. The unemployment woes of this country will continue to accelerate until such time as people feel the confidence to return to prosperity. It is a self correcting mechanism for the market to realize that pent up demand due to uncertainty will eventually break through the fear and anxiety. 8 bucks isn't going to speed the recovery at all. What I am about to share with you is a thought on how to grow our way back to prosperity and it requires buy in from the public. If you agree with this, please consider contacting the people below to tell them that this needs to be considered as an additional program to augment what has already been done and that it will add negligible costs to the current financial obligations this country is facing.
Tell Congress to pass legislation and demand the President sign into law the following:
Allow people who have lost their jobs to use up to 100,000 from their 401 or other tax-deferred savings plan for the purpose of paying living expenses, job training, college or other recurring costs until such time as better and more secure employment may be found. Allow further that normal tax collection on these distributions be suspended for 10 years and that no tax will be paid on monies placed back in the retirement account prior to that ten year expiration date.
This policy will allow people who are facing the loss of their homes or means of transportation or job training to secure their financial futures in the short term and allow them to weather the financial storms we face as a nation and a people.
Since people are not taking distributions now, there is no tax burden to pay for this presently and the finite term for payback provides that beneficiaries of this plan will be encouraged to repay the carrot to avoid the stick of taxes later.
People who still have jobs and businesses and homes will be further protected by increased demand and protection of their home values by people being able to pay their bills.
The only costs to be borne from the implementation of this idea would be the tracking and reporting on amounts taken from retirement accounts and the reimbursement of those accounts over time.
The idea here is to allow a more direct injection of capital into the lives of the people who are most affected. This would create a stimulus that would affect even small towns were 50-100 were laid off and allow companies and local businesses to survive long enough for the economy to turn around. The idea would also present very little burden on the government as the system could be monitored electronically and reported on tax forms.
In support of this idea, please contact the following publications as well as your local, state and federal elected officials and urge them all to push the word up the line that this is our country and we need to save it for our children and their children.
Omaha World Herald --- pulse@owh.com
USA Today editorial edition --- http://feedbackforms.usatoday.com/marketing/feedback/feedback-online.aspx?type=18
Wall Street Journal Editorial Page --- edit.features@wsj.com
New York Times Editorial Page --- letters@nytimes.com
San Francisco Chronicle Editorial Page ---letters@sfchronicle.com
Los Angeles Times Editorial Page submission form --- http://www.latimes.com/services/site/la-comment-oped-cf,0,86410.customform
The Office of the President of the United States or America
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Switchboard: 202-456-1414
FAX: 202-456-2461
Office of the Public Liaison
http://www.whitehouse.gov/administration/eop/opl/
Congress
Honorable Nancy Pelosi - Speaker of the House
Office of the Speaker
H-232, US Capitol
Washington, DC 20515
(202) 225-0100
http://speaker.house.gov/contact/
John Boehner, House Minority Leader
1011 Longworth H.O.B.
Washington, DC 20515
(202) 225-6205
(202) 225-0704 fax
http://republicanleader.house.gov/Contact/
The Republican National Committee
Office of the Chairman
Phone: 202-863-8700
Fax: 202-863-8820
Email: Chairman@gop.com
The Democratic National Committee
Democratic National Committee
430 S. Capitol St. SE
Washington, DC 20003
http://www.democrats.org/page/s/contactissues
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