The stimuls bill passed seven months ago contained an $8,000 tax credit limited to first time home buyers. At the time many believed it would have the impact of taking a knife to a gun fight. They were wrong. The tax credit combined with historically low interest rates turned out to be the driving force to stem decline within the housing market.
What happens when the tax credit expires on December 1? What happens when inflation takes hold and interest rates are hiked?
Seniors are screaming today because they won’t see any increase in their social security for the first time in decades. Who can blame them? The truth is we are now in a period of stagflation with wages flat or falling while inflation is barely noticeable. Hence no increase is triggered under federal statute. Stagflation historically precedes inflation.
When the Stimulus was passed in the dark of night without any congressmen having read the bill, no one knew what was in the bill. Now we know.
Approximately 9% of the $787 billion has been spent, mostly sent to states for medicaid and unemployment payments. Other than increasing the number of state employees to process Medicaid and Unemployment applications, what other jobs have been created? None to not many. That’s why it was patently deceitful for the president to call this a stimulus bill, over two million jobs have been lost since this stimulus was passed!
The need to rush according to Obama was that he wouldn’t be able to keep unemployment from passing 8% without this bill. Eight months later unemployment stands at 9.7% and 1.3 million will lose their benefits at years end. At least the unemployment rate will seem lower after these people fall off the books!
In my opinion the most important part of the stimulus plan was for infrastructure. This was to put contractors back to work creating jobs, while rebuilding our aged infrastructure to accommodate future economic growth. The problem with the infrastructure portion of the current Stimulus is two fold, it was back loaded to be spent in 2010 in time for congressmen running for re-election to pose for ribbon cuttings (which did nothing for job creation in 2009), and the dollar amount committed was woefully short.
The clock is ticking on the economy as inflation is sure to come, and when it does it will be a long and painful battle to get under control. Anyone remember the 1980’s? Twenty-one percent prime rate? Thirteen percent annual inflation rate? Eleven percent unemployment? With the fiscal irresponsible quadrupling of the annual deficit, the monetizing of the debt by the Fed holding interest rates artificially low, the national deficit to double by 2012, and nearly triple by 2019; this round of inflation could make the Carter years look good. The time to act is now before interest rates go up.
In my opinion there is time to avoid or at least blunt the impact of inflation. How do you do this? By actually stimulating the economy with new jobs and capital, of which the current Stimulus plan does neither. A growing economy will increase revenues to the government, lessening the need to print or borrow more money.
This is what should be done. Instead of wasting the remaining 80% of the $787 billion ($630 billion), eliminate it from being used as directed in the Stimulus bill for every liberal pet project ever conceived, from Pelosi’s millions to save a marsh mouse, to Florida’s millions to build a turtle tunnel under a highway, all the skate parks, and reallocate that money as follows; (1) double the infrastructure funding and immediately get projects off the ground creating jobs now instead of waiting for when it is politically favorable, and (2) implement a $10,000 tax credit for all home buyers, and a $15,000 tax credit for all buyers of new home construction. Both to run now through 2011.
One in every four jobs in this country are tied to the housing market. Housing started the financial meltdown, and housing can lead us to recovery. Implement this plan immediately and watch the housing market boom, along with all related industries. The number of jobs that would be created throughout the economy would stop unemployment in its tracks, get people back to work, and increase government revenues.
Perhaps this simplistic plan makes too much sense for the out of touch representatives in Washington D.C., however they know the Stimulus plan on the books is a proven loser. The Stimulus plan is only stimulating larger government, which in and of itself creates additional costs, does nothing to increase revenues, or to create jobs in the private sector.
A common sense and simple plan. Any bets that less than half the remaining $630 billion would be necessary to jump start an economic recovery? Let’s refund the balance to taxpayers, by that I mean those who actually pay taxes, when the plan succeeds!
Of course this plan can only succeed if the proposed Cap and Trade legislation, and proposed Health Care Reform legislation is defeated. Cap and Trade will cost an estimated two million jobs above any green jobs created, and tax every man, woman, and child in this country with increased costs of living, regardless your position on climate change. Like wise regardless your position on health care reform, the proposed reform is simply unaffordable at $1.2 trillion.
Defeat these two job killing, budget busting pieces of legislation, implement the proposed plan, and then come back at a later date, and implement climate change legislation, and health care reform that actually accomplishes something other than increasing the size of government, and granting government more control over your life.
Fritz Pfister was voted ‘Best Realtor’ by Readers of The State Journal Register in 2007 and 2008. Fritz hosts Let’s Talk Real Estate streaming live Saturday’s at 10am central on WMAY.com. With over 2000 real estate sales, Fritz is recognized as a housing market expert.
Fritz’s website is
SpringfieldHome.com
