Congress Passes Economic Stimulus Package
President Bush is expected to sign the economic stimulus package passed by Congress at the end of last week. The portion of the economic stimulus package that is getting the most interest is that tax rebate for many Americans. However, there are other provisions in the economic stimulus package:
- Mortgage loans can be bought by Fannie Mae and Freddie Mac in amounts that exceed $700,000 in certain high-priced markets.
- Business tax incentives.
- Additional measures for military veterans.
- Help for the elderly.
The Senate version of the economic stimulus package added additional tax incentives for other groups of people, and the House met with the Senate in order to reconcile the differences and get a version passed.
Whether or not this economic stimulus package will do enough is a current subject of debate. While there are changes to mortgage financing in the bill, problems are likely to continue plaguing the mortgage industry, the International Herald Tribune reports:
Many economists believe the government will have to do more to address the mortgage crisis. Defaults are soaring as millions of borrowers with spotty credit histories who got loans find themselves unable to make monthly payments once the mortgages reset to higher interest rates.
And it is important to note that this is a “quick fix” for the economy, doing nothing to address the underlying problems of the economy. Instead, the measure encourages more debt, placing burdens on an already strained national treasury. Plus, the amount given is unlikely to be enough to help mitigage pressure on American household expenses.
Additionally, though polls show that most Americans plan to use the tax rebate to pay down debt (especially credit cards), practical experience shows that it usually gets spent on consumer goods.
While this might help shorten a US recession, it is not the best option in the long term, since we will likely be in a similar place in a few years (remember the tax rebate offered by the Bush Administration and Congress a few years ago?). And it won’t help most people on an individual personal finance basis.
Tags: economic stimulus, Congress economic stimulus package, home mortgage loan, mortgage blog,
Bush Administration, tax rebate, personal finance
