Thank You, Captain Obvious

In a conversation with George Stephanopoulos (video here: http://blogs.abcnews.com/george/2009/07/biden-we-misread-the-economy-.html), Joe Biden was quoted as saying, “The truth is, we and everyone else misread the economy. “ Biden goes on to clarify, “The truth is, there was a misreading of just how bad an economy we inherited. It’s now our responsibility. So the second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstance we’re in? And we believe it is the right package given the circumstance we’re in.”

Just in case you’ve recently awoken from a twenty-year coma, the above statement is proof positive that politicians neither understand nor represent the interests of middle class America. As one of the 9.5% unemployed, the stimulus package has done precious little for me. It has increased my unemployment payment by $25 per week and has extended the duration of time that I’m eligible for unemployment benefits. Which has absolutely no bearing on my current financial situation.

It’s like this: unemployment does not pay nearly enough to fund my monthly bills. Each month I must tap into savings, of which I have a finite amount. At some point in the very near future comes the decision – do I cash out a 401k and take the penalties or do I put the house on the market (knowing full well that it will appraise at about 75% of our purchase price)? Twenty-five dollars per week, or an extension of unemployment benefits, has no bearing on this situation whatsoever.

Instead of a second pork-laden stimulus bill we can’t afford and don’t need, here’s what I’d like to see:

1) Tax incentives or low cost government loans for start up small businesses (or small business expansion). As workers get re-hired, spending on non-essentials will also increase, further boosting the economic recovery.

2) Tax penalties for companies that downsize while continuing to pay huge executive bonuses. How many jobs could be saved if CEOs were willing to waive bonuses for themselves and senior staff, at least until business improves? And why, exactly, are we paying bonuses to senior management when business is down? It’s like incentivizing surgeons whose patients have a high mortality rate – it just doesn’t make sense.

3) Government “guidance” for financial institutions and mortgage companies. As an unemployed homeowner, your sole option today is to request a loan modification from your lender, which can potentially save you a fraction of your monthly payment. Banks are more willing to discuss options once you miss a few mortgage payments, but who wants to destroy their credit rating to open a dialogue? Instead, mortgages for primary residences, assuming the borrower has good credit, should be reduced to a nominal amount until the borrower is re-employed. Monies not paid would be added to the backside of the loan (which would ultimately net more for the bank once the additional interest is tacked on).

Sorry, Joe, I’m not drinking the Kool-Aid. The current stimulus bill has had no positive impact on our economy, as people won’t spend money when they fear unemployment (or are unemployed themselves). Unless the administration does something to address the growing unemployment numbers, any package will be too little, too late.