Economic stimulus

Neighborhood Stabilization Act of 2008

hmoroz — Fri, 09 May 2008 14:46:16 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Estimated economic activity generated by the Neighborhood Reinvestment Act, in dollars: 38 billion

Estimated employment generated by the act, in dollars: 120,000

Estimated real estate tax collections that will result from the act, in dollars: 225 million

Cost of the Neighborhood Stabilization Act between 2009 and 2013, as estimated by the Congressional Budget Office, in dollars: 8.4 billion

Estimated total decline in house values and tax base from foreclosures originated in 2005 and 2006 on nearby properties, in dollars: 202 billion

Number of rental homes that are available and affordable for every 100 extremely low-income families: 38

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The Neighborhood Stabilization Act addresses two important problems plaguing aspiring middle-class Americans: the community breakdown that can result from vacant foreclosed homes in neighborhoods across the country and the lack of affordable housing. Middle-class Americans who are current on their mortgages and face no personal risk of foreclosure are nevertheless harmed when a foreclosed home down the street brings down property values, erodes the local tax base, and threatens to become a magnet for crime. The Center for Responsible Lending has shown that approximately 40.6 million homes will experience devaluation because of nearby subprime foreclosures and that homeowners living near foreclosed properties will lose approximately $5,000 on the value of their homes. At the same time, one of the causes of the foreclosure crisis was a lack of affordable housing and the targeting of low-income neighborhoods by subprime lenders. By funneling federal money to local agencies to serve lower- and extremely low-income individuals, the Neighborhood Stabilization Act will help neighborhoods recover from the harm done to their communities by foreclosures while helping to ensure that neighborhoods can accommodate aspiring middle-class Americans. The bill’s allocation of funds to metro areas and urban counties further ensures that the communities hardest hit by the foreclosure crisis receive much needed relief. Providing funds for rental properties, along with protections for renters of foreclosed properties, recognizes that the foreclosure crisis affects aspiring middle-class and middle-class renters as well as homeowners.

Quotes from Experts

Beyond this Bill

Additional Resources

“Subprime Spillover”, from the Center for Responsible Lending

“Out of Reach”, a guide to rents and the lack of affordable housing from the National Low Income Housing Coalition

Center for American Progress on Neighborhood Stabilization

Foreclosure Prevention Act of 2008

hmoroz — Thu, 06 Mar 2008 10:53:38 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of securitized subprime loans from the fourth quarter of 2006 that are projected to end in foreclosure: 50

Percentage increase of foreclosure filings from January 2007 to January 2008: 57

Estimated number of foreclosures that the mortgage restructuring provision in the Foreclosure Prevention Act would prevent: 600,000

Number of homes that will experience devaluation because of subprime foreclosures that take place nearby: 40.6 million

Average decline in property values for homeowners living near foreclosed properties, in dollars: 5,000

Amount of wealth saved by the Foreclosure Prevention Act that would otherwise be lost because of foreclosures of neighboring properties, in dollars: 72.5 billion

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The federal government and the mortgage industry’s failure to address the subprime mortgage and foreclosure crisis adequately could result in as many as 1.9 million Americans losing their homes in 2008 and 2009. Despite national awareness of the dire situation throughout 2007, foreclosure filings increased 57% from January 2007 to January 2008. Extending the same bankruptcy protections to primary residences that currently apply to luxury yachts and vacation homes is not only fair, but would prevent approximately 600,000 families from losing their homes to foreclosure. Strengthened bankruptcy protection is also beneficial to families who are not themselves facing foreclosure: protecting these 600,000 families from foreclosure would save neighbors of foreclosed properties $72.5 billion in wealth that would otherwise be lost to reduced property values. Because the Foreclosure Prevention Act restricts eligibility for bankruptcy mortgage restructuring to homeowners who are unable to afford their current mortgages, mortgage interest rates should not increase: only homes in danger of foreclosure will qualify and the risk of foreclosure is already calculated into current interest rates. Funds for counseling services would further reduce the potential for foreclosure, while resources for redevelopment of abandoned and foreclosed homes would mitigate the decline of property value that weakens the financial stability of homeowners and shrinks the revenues of state and local governments. The Foreclosure Prevention Act is an important next step to assist cash-strapped middle-class Americans after the economic stimulus package signed into law in February of 2008.

Quotes from Experts

Beyond this Bill

Additional Resources

Testimony of Mark Zandi, Chief Economist of Moody’s Economy.com, before the Senate Judiciary Committee

Center for Responsible Lending on the Foreclosure Prevention Act of 2008

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Economic Stimulus Act of 2008

hmoroz — Thu, 07 Feb 2008 17:35:58 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of senior citizens who would receive tax rebates under this bill but not the House stimulus bill, according to the Senate Majority Leader: 21.5 million

Approximate number of workers nationwide projected to run out of unemployment benefits before finding work in the first six months of 2008 unless benefits are extended: 1.3 million

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.64

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Number of different stimulus policies implemented under President Bush that were more effective per public dollar than business investment incentives, according to an Economy.com study: 7

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. This Senate bill provides even more effective stimulus than the House legislation because the tax rebates are even more closely targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. The inclusion of seniors living on Social Security and veterans living on disability benefits is important for the same reason: not only is it an issue of basic fairness to include these groups but, because they are likely to spend the money quickly, their inclusion compounds the stimulative impact.

The extension of unemployment benefits and the expansion of funding for low-income heating assistance are extremely positive additions to the bill. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit by an economic downturn while also providing the most cost-effective boost to the economy. Unemployment is already on the rise and it takes longer to find work during an economic downturn when jobs are scarce. People who are out of work tend to spend nearly all of the money they receive in government benefits very quickly, so unemployment benefits provide the quick jolt to consumer spending that the economy needs. What’s more, extending unemployment benefits is one of the most effective stimulus measures yet conceived, providing $1.64 in stimulus for every dollar spent. Meanwhile home heating assistance eases the burden on current and aspiring middle-class families trying to pay high energy bills, freeing up cash that can be spent on other necessities.

The renewable energy tax incentives in the bill are not likely to be effective as short-term economic stimulus, but do represent an important investment in the nation’s energy future. Meanwhile, the business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little stimulative effect but deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective, economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Senate Finance Committee Measure More Effective As Stimulus Than House Bill, Despite Some Problems,” from the Center for Budget and Policy Priorities

“Strategy for Economic Rebound: Smart Stimulus to Counteract the Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

Recovery Rebates and Economic Stimulus for the American People Act of 2008

atraub — Wed, 30 Jan 2008 16:06:08 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.73

Amount of stimulus produced for every $1 spent on state government aid: $1.24

Minimum amount of revenue states are projected to lose as a result of the investment incentives, according to the Center for Budget and Policy Priorities: $4 billion

Percentage of businesses in a 2006 survey that said that bonus depreciation, a type of investment incentive implemented in the past, was an important factor in their decisions about investment level or timing: 10

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. For this reason, the household tax rebates are likely to be effective, if the checks can be sent quickly. It is particularly significant that the rebates are targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. It is also important that Americans relying on Social Security or disability benefits be included, both as an issue of basic fairness and because these groups are likely to spend their rebates quickly.

The increases in FHA, Freddie Mac, and Fannie Mae mortgage limits are also helpful because they help these entities keep up with the current housing market. By buying and insuring loans, the FHA, Freddie Mac and Fannie Mae create viable refinance options for middle-class Americans who have been targeted by predatory loan practices and would otherwise be trapped in unaffordable adjustable rate mortgages and other abusive loan products.

The business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little simulative effect but would deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they already planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, they cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Strategy for Economic Rebound: Smart Stimulus to Counteract and Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

“Assessing President Bush’s Fiscal Policies,” from Economy.com

Economic stimulus

Neighborhood Stabilization Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Foreclosure Prevention Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Economic Stimulus Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Recovery Rebates and Economic Stimulus for the American People Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources