OBAMA STIMULUS PROGRAM Could Be Approved By Senate This Week - Help Ahead for U.S. Housing Market?
DEM/GOP COMPROMISE COULD COST TAXPAYERS UPWARDS OF $780 BILLION! BUT . . . WILL IT TURN HOUSING AROUND?
President Barack Obama has not had the easiest first three weeks of his term! The man who promised a bi-partisan spirit in government during the 2008 Presidential Campaign has failed to sway many Republicans to his side.
As of last Friday, however, he persuaded several moderate Republican Senators to consider supporting his massive Economic Recovery Package. The plan has been stripped of some the originally-proposed expensive social support programs. But the bulk of the program - including a package of tax cuts to the middle class, as well as tantalizing credits of up to $15,000 for homebuyers and tax relief to some small business owners, appear to be important survivors of the pending legislation.
The key provisions of the Economic Recovery Plan have been thoroughly chronicled over the last few days, as have the President's pleas - and stern warnings - that the U.S. Economy hangs in the balance pending passage. Read Greg Hitt and Jonathan Weisman's story in yesterday's online Wall Street Journal for details on the political wrangling and compromises.
The package would also include billions of dollars in financial help to state governments, many of which are under intense pressure. It would boost spending on food for poor Americans, ramp up infrastructure spending to rebuild obsolete and crumbling roads and bridges across the U.S. Additional money to bolster state unemployment benefits are also likely - according to the Bureau of Labor Statistics (summary chart on Wikipedia.com), U.S. Unemployment in January increased to 7.6% nationally, and the same 7.6% figure in Illinois, and nearly 600,000 workers lost their jobs nationwide during the month.
A separate program involving the purchase of Mortgage Backed Securities would have as its goal driving down fixed-rate mortgage interest rates for the most qualified prospective home buyers to around 4.5% - a historic low!
But the key question remains, in light of this new Recovery Plan, as well as the troubled Financial Bailout Plan, or Troubled Assets Recovery Plan (TARP), which has so far funneled nearly $300 Billion worth of Fed money into troubled banks late last year. That plan's success has been questioned by many - loan funds are still tight - if not frozen, and many lenders receiving the Fed money have not increased lending.
Will these grand initiatives revive the Housing Market - locally, here in Chicago, or across the nation?
Some feel the prospects for improving the business environment, and reducing unemployment, is the key! If someone on Friday fears he won't have a job come Monday, he won't be writing an earnest money check to buy a new home on the intervening Saturday.
Time will tell - but this week in Washington will be a compelling one to follow!
DEAN MOSS & DEAN'S TEAM CHICAGO
