Our country faces its most serious economic crisis since the great depression. Working families, who saw their incomes
decline by $2,000 in the economic "expansion" from 2000 to 2007, now face even deeper income losses. Retirement savings accounts
have lost $2 trillion. Markets have fallen 40% in less than a year. Millions of homeowners who played by the rules can't meet
their mortgage payments and face foreclosure as the value of their homes have plummeted. With credit markets nearly frozen,
businesses large and small cannot access the credit they need to meet payroll and create jobs.
Barack Obama and Joe Biden have a plan to revitalize the economy.
1. Immediate Action to Create Good Jobs in America
2. Immediate Relief for Struggling Families
3. Direct, Immediate Assistance for Homeowners, Not a Bailout for Irresponsible Mortgage Lenders
4. A Rapid, Aggressive Response to Our Financial Crisis, Using All the Tools We Have
1. IMMEDIATE ACTION TO CREATE GOOD JOBS IN AMERICA
The economy has lost 760,000 jobs this year -- and some forecasters expect the unemployment rate to exceed 8 percent
by the end of next year. Addressing the financial crisis will help prevent the most severe loss of jobs from the crisis. But
taking direct steps to create jobs will also strengthen the economy and help with the financial crisis. Barack Obama and Joe
Biden's overall economic agenda is pro-jobs, including their plans to eliminate America's dependence on foreign oil and bring
down healthcare costs. But Obama and Biden believe we must take additional aggressive steps to jump-start job creation right
now:
- A New American Jobs Tax Credit: Obama and Biden will provide a new temporary tax credit to companies
that add jobs here in the United States. During 2009 and 2010, existing businesses will receive a $3,000 refundable tax credit
for each additional full-time employee hired. For example, if a company that currently has 10 U.S. employees increases its
domestic full time employment to 20 employees, this company would get a $30,000 tax credit -- enough to offset the entire
added payroll tax costs to the company for the first $50,000 of income for the new employees. The tax credit will benefit
all companies creating net new jobs, even those struggling to make a profit.
- Raise the small business investment expensing limit to $250,000 through the end of 2009: Obama
and Biden will give small businesses an additional incentive to make investments and start creating jobs again by providing
temporary business tax incentives through 2009. The February 2008 stimulus bill increased maximum Section 179 expenses to
$250,000 but this expires in December 2008. This provision will encourage all firms to pursue investment in the coming months,
but will particularly benefit small firms which generally have smaller amounts of annual property purchases and so choose
to expense the cost of their acquired property.
- Zero capital gains rate for investment in small businesses: Barack Obama and Joe Biden believe
that we need to encourage investment in small businesses to help create jobs and turn our economy around. That's why they
will eliminate all capital gains taxes on investments made in small and start-up businesses. They also want to cut taxes for
the small businesses that create jobs but are struggling with restricted access to credit on top of skyrocketing health care
and energy costs.
- Save one million jobs through immediate investments to rebuild America's roads and bridges and repair our schools:
The Obama-Biden emergency plan would make $25 billion immediately available in a Jobs and Growth Fund to help ensure
that in-progress and fast-tracked infrastructure projects are not sidelined, and to ensure that schools can meet their energy
costs and undertake key repairs starting this fall. This increased investment is necessary to stem growing budget pressures
on infrastructure projects. In addition, in an environment where we may face elevated unemployment levels well into 2009,
making an aggressive investment in urgent, high-priority infrastructure will serve as a triple win: generating capital deployment
and job creation to boost our economy in the near-term, enhancing U.S. competitiveness in the longer term, and improving the
environment by adopting energy efficient school and infrastructure repairs. In total, Obama and Biden's $25 billion investment
will result in 1 million jobs created or saved, while helping to turn our economy around.
- Partner with America's automakers to help save jobs and ensure that the next generation of clean vehicles is
built in the United States: Senator Obama pushed for $50 billion in loan guarantees to help the auto industry
retool, develop new battery technologies and produce the next generation of fuel efficient cars here in America. Congress
passed only half of this amount -- it is critical that the administration speeds up the implementation of the first half and
that Congress move quickly to enact the second half. In addition, Obama and Biden believe that with the tremendous uncertainty
facing the auto industry, and the small and medium business suppliers who depend on them, it is critical that we keep all
options on the table for helping them weather the financial crisis.
2. IMMEDIATE RELIEF FOR STRUGGLING FAMILIES
Even when the overall economy was growing, most American families were not sharing in this growth. The typical non-elderly
household saw its income decline by more than $2,000 from 2000 to 2007 as expenses skyrocketed. Weekly wages, adjusted for
inflation, are now lower than they were a decade ago. Barack Obama and Joe Biden's overall economic plan will relieve the
squeeze on families and foster bottom-up growth. But they are proposing that we implement several measures immediately:
- A tax cut for 95 percent of workers and their families -- plus seniors: Barack Obama and Joe Biden
propose a permanent tax cut of $500 for workers and $1,000 for families. A first round of these tax credits could be mailed
out quickly by the IRS based on tax returns already filed for tax year 2007. In addition, Obama and Biden would extend these
expedited tax credits to senior citizens who are retired as a down payment on his plan to eliminate taxes for all seniors
making up to $50,000.
- Extend unemployment insurance benefits and temporarily suspend taxes on these benefits: Millions of
Americans are looking for work but unable to find it in the weak economy. Today, more than one in five unemployed workers
has been out of work for more than half a year -- the highest level since early 2005. Obama supported extending unemployment
insurance this summer, but already 800,000 jobless workers have exhausted those benefits and are being left without any unemployment
compensation. Obama and Biden believe Congress should immediately extend unemployment insurance for an additional 13 weeks
to help families that are being hit hardest by this downturn. In addition, they believe we should temporarily suspend taxes
on unemployment insurance benefits as a way of giving more relief to families.
- Penalty-free hardship withdrawals from IRAs and 401(k)s in 2008 and 2009: Many families are going
to be facing unique economic hardship over the coming year. To help these families pay their bills and their mortgages and
make it through these tough times, Obama and Biden are calling for legislation that would allow withdrawals of 15% up to $10,000
from retirement accounts without penalty (although subject to the normal taxes). This would apply to withdrawals in 2008 (including
retroactively) and 2009.
- Instruct the Treasury to allow seniors to delay required withdrawals from 401(k)s and IRAs: Currently
seniors are required to start withdrawing from their 401(k)s and IRAs at age 70 1/2 and every year thereafter over their lifetime.
But the explicit requirement that withdrawals continue on an annual basis -- and the related requirement that the amount withdrawn
be based on currently much higher year-end 2007 asset values -- is based on Treasury regulations, not the statute, which has
a less specific mandate. That means the Secretary of the Treasury has authority to change its regulations to protect seniors
from being forced, at this critical time, to sell their investments and "lock in" their losses just after market values have
plummeted in an almost unprecedented fashion. Obama and Biden are calling on Treasury to temporarily suspend the required
withdrawals for retirees over age 70 1/2. Because retirees often make these required withdrawals late in the year, there is
still time to help millions of affected seniors -- but only if done promptly. In addition, because lower-income seniors may
have no choice but to take withdrawals this year and in 2008, Obama and Biden will exempt any withdrawals made up to the required
minimum amount from taxation. This will give seniors the flexibility they deserve -- to forgo withdrawals if they choose or
to take those withdrawals tax free if they need those resources to pay their bills.
- Funds to counteract high heating costs this winter: Obama and Biden are calling for supplementing
the recently passed LIHEAP funding to ensure that cold-weather states can cushion the impact of high energy prices for their
residents this winter. The Energy Information Administration said that consumers will pay a projected $1,137 to heat their
homes from Oct. 1 to March 31 -- 15 percent more than last year's heating outlay during this time. Homeowners that use heating
oil rather than natural gas could see increases of 23 percent compared to last year. As part of his $25 billion state fiscal
relief package, Obama's plan will supplement existing LIHEAP funding to help state programs expand to cover more residents
while continuing to provide a meaningful benefit.
3. DIRECT, IMMEDIATE ASSISTANCE FOR HOMEOWNERS, NOT A BAILOUT FOR IRRESPONSIBLE MORTGAGE LENDERS
Over the past two years, Americans have lost 20 percent of the value of their homes. In some parts of the country home
values have fallen by twice that amount. In combination with a rapidly deteriorating economy, that means more and more families
are having a hard time meeting their monthly mortgage payments. At the same time, many states are considering property tax
hikes that will burden homeowners still further. And millions of families who have seen the value of their homes fall below
the cost of their mortgages need assistance in restructuring their mortgages to stay in their homes.
Barack Obama and Joe Biden's plan provides direct relief to help America's homeowners pay their mortgages, stay in their
homes, and avoid painful tax increases while protecting taxpayers and not rewarding the bad behavior and bad actors who got
us into this mess:
- Instruct the Secretaries of the Treasury and Housing and Urban Development (HUD) to use their existing authority
to more aggressively modify the terms of mortgages: Barack Obama was an early champion of the HOPE for Homeowners
Act that passed over the summer. In addition, Obama insisted that the financial rescue plan Congress recently passed include
authority for the Secretary to work with servicers to modify the terms of mortgages for homeowners who played by the rules.
Obama and Biden believe that both of these plans should be implemented aggressively and comprehensively. In addition, Obama
and Biden are calling on Treasury and HUD to develop a plan to work with state housing agencies to coordinate broad mortgage
restructurings. The Dodd-Frank legislation gives states broader authority to help struggling homeowners, and coordination
is essential to ensure that state and national efforts are working in concert to help as many homeowners as possible at the
minimum cost to taxpayers.
- Reform the bankruptcy code to assist homeowners and remove legal impediments to encouraging broader mortgage
restructuring: Obama and Biden are also calling for legislation to close the loophole in our bankruptcy code that
allows bankruptcy judges to modify the terms of mortgages on investment properties and vacation homes but not on primary residences.
He also believes we should clarify the legal liability of mortgage servicers so that servicers who work with struggling homeowners
to modify their mortgages will receive legal protections. And we should remove any tax- or legal-related impediments to encouraging
shared-equity mortgages within the HOPE for Homeownership process.
- Enact a 90-day foreclosure moratorium for homeowners who are acting in good faith: Financial institutions
that participate in the financial rescue plan should be required to adhere to a homeowner's code of conduct, including a 90-day
foreclosure moratorium for any homeowners living in their homes who are making good faith efforts to pay their mortgages.
This will help create stability until the more far-reaching solutions are implemented and give both sides a chance to work
out an agreement.
- Provide $25 Billion in state fiscal relief to help avoid painful property tax increases: Budget crunches
across the nation are putting our local governments in the untenable position of having to choose between raising property
taxes and cutting vital services. Obama has proposed $25 billion in state fiscal relief that, coupled with the new emergency
facility to address the state credit crunch, will help states and localities continue to provide essential services like health
care, police, fire and education without raising taxes or fees.
- Create a universal mortgage tax credit for homeowners: Barack Obama believes we should immediately enact
a 10 percent refundable tax credit on the mortgage interest paid by hardworking American families who do not itemize their
taxes. This credit will help offset the cost of mortgage payments for at least 10 million middle-class homeowners.
4. A RAPID, AGGRESSIVE RESPONSE TO THE FINANCIAL CRISIS -- USING ALL THE TOOLS WE HAVE
Barack Obama and Joe Biden believe that our deep systemic financial market crisis requires a systemic response. They
fought to ensure that the recently-passed financial rescue package gave the Treasury the tools to stabilize the financial
system, while protecting taxpayers and ensuring CEOs would not get rich in the process. However, this stabilization will only
occur if the Treasury, Federal Reserve, FDIC, and other government entities use their authority and move quickly and aggressively
to address the financial crisis.
It is now clear that our financial markets will not restart until financial institutions are lending again. Because of
the extensive losses many of these institutions have suffered, they need more capital so that they will have the money to
lend to families and businesses. Obama and Biden recognized this early, and were heartened by the Treasury's stated intention
to use its recently granted authority to inject capital into our financial institutions. However, Secretary Paulson must turn
this intention into action quickly and aggressively, in a manner that strengthens confidence in our banks, protects taxpayers,
does not reward CEOs, and is strictly temporary.
In addition, our financial authorities must stand ready to take additional, complementary actions -- consistent with the
systemic nature of this crisis -- to ensure this Treasury initiative is successful:
- Be prepared, if necessary, for broader assurances for credit to banks: First, we must be prepared to
provide additional, temporary assurances to achieve the effective functioning of financial markets. Depending on developing
circumstances, these steps could include additional measures by the Federal Reserve, extending insurance to all deposits,
or guaranteeing a broader range of liabilities of the banking system including overnight loans. Any such steps should be coordinated
internationally where appropriate and feasible. They should be accompanied by additional oversight to ensure appropriate use
of guaranteed funds and by the expectation that financial institutions taking advantage of these guarantees will raise more
capital.
- Extend asset purchases to unfreeze other critical sectors: Second, the Treasury should not limit itself
to purchasing mortgage-backed securities under the financial rescue plan recently passed by Congress. The Treasury should
use the authority it has under the new law to help unfreeze markets for individual mortgages, student loans, car loans, loans
for multi-family dwellings, and credit card loans.
- Make credit available to small businesses and state or local governments: Third, we should take immediate
steps to support non-financial institutions including small businesses and states and municipalities. The Federal Reserve
and Treasury have acted to preserve the availability of liquidity for financial institutions and, more recently, have created
a program to purchase commercial paper directly from the large corporate issuers. Small businesses and state and local governments,
however, are having serious difficulty obtaining necessary financing from debt markets.
- Address the credit crisis facing our states and localities: Barack Obama and Joe Biden propose that
the Federal Reserve and the Treasury work together to design a facility to provide a funding backstop to the state and municipal
government debt market similar to the recently announced program for the commercial paper market. The Federal Reserve should
determine whether it has sufficient legal authority to establish such a facility on its own -- if not, it should work with
Treasury and the Congress to achieve this goal. This new facility should be designed to protect taxpayer resources while ensuring
that state and local governments can continue to provide vital services to their residents.
- Address the credit crisis facing our small businesses: To address the massive credit crunch that is
threatening America's small businesses, Barack Obama and Joe Biden are proposing two immediate steps: (1) a nationwide emergency
lending facility for small businesses that could be run through the SBA's Disaster Loan Program, which helped thousands of
businesses in the wake of 9/11; and (2) temporarily eliminating fees on the SBA's 7(a) and 504 loan guarantee programs for
small businesses, to help increase private lending for small businesses.
