Stimulus Plan

Although everything sounds good with the current stimulus plan, just how long will the long-term effects catch back up to us. This plan could be prolonging the future economic pain.
According to the Washington Post, the Obama administration is seeking ways to reduce the number of foreclosures and spur demand as the housing recession enters its fourth year. Part of the plan calls for the federal government to match reductions that lenders would make in interest rates aimed at lowering borrowers' payments to 31 percent of their monthly income.
Last week, Obama also signed a stimulus package including an $8,000 tax-credit for first-time homebuyers. If this plan is aimed at primarily at graduating college students, then it might not be as effective due to the current job market. People might also see this tax credit as a way to get a bigger house than they had originally planned. Then if they cannot afford the payment then the whole housing crisis will start all over again.
Also since there is so much uncertainty in the job market people are shying away from buying houses and cars. Without job security they may not be able to make future payments.

We are relying too heavily on the government to get us out of this financial crisis. By trying to stimulate the economy, they could incur greater costs than they had expected. They could also hurt unintended markets and cause serious long-term damage. The government is absorbing too much cost, and won’t have an immediate way to finance them. The costs outweigh the benefits, and will cause the US to slip as being a major world power. Just how can we survive, when the government cannot operate without incurring a loss.

As of Feb. 22, 2009 the current outstanding public debt is $10.8 trillion. The estimated population is 305.7 million, which gives each citizen $35,370.19 in national debt that they haven’t directly caused. Since September 28, 2007 the national debt has increased an average of $3.52 billion per day. So you could say that the stimulus is just pennies compared to our current national debt.


Links:
http://www.washingtonpost.com/wp-dyn/content/story/2009/02/20/ST2009022002635.html

http://www.brillig.com/debt_clock/