Monday, October 13, 2008

New Economic Plans: Obama and McShame

WE'VE MOVED! Democratic Convention Watch is now at

I posted earlier today that McCain was set to come out with new economic plans. It appears that has proven an untrue rumour:

Presented with 30 options for new economic measures, Sen. John McCain (R-Ariz.) has – at least for now – chosen none of them.

His campaign had been planning to roll out new proposals this week that would be aimed at restoring confidence in financial markets and encouraging investors to return.

On Sunday, hours before attending a big strategy meeting at McCain campaign headquarters, Sen. Lindsey Graham (R-S.C.) told Bob Schieffer on CBS’ “Face the Nation” that McCain was planning “a very comprehensive approach to jump-start the economy, by allowing capital to be formed easier in America by lowering taxes."

But when the meeting ended, so did plans for a new economy push. The campaign now says no new policy announcements are planned. Participants in the meeting refused to say what happened.
However, the Obama team does have some new initiatives. This information will be presented at Obama's major economic speech he will be making at a rally in Toledo this afternoon:

1. JOB CREATION: A New American Jobs Tax Credit. Obama is calling for a temporary tax credit for firms that create new jobs in the United States over the next two years.

2. RELIEF TO FAMILIES: Penalty-Free Withdrawals from IRAs and 401(k)s in 2008 and 2009. Obama is calling for new legislation to allow families to withdraw 15% of their retirement savings – up to a maximum of $10,000 – without facing a tax-penalty this year (including retroactively) and next year.

3. RELIEF TO HOMEOWNERS: 90 day foreclosure moratorium for homeowners that are acting in good faith. Financial institutions that participate in the Treasury’s financial rescue plan should be required to adhere to a homeowners code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes that are making good faith efforts pay their mortgages.

4. RESPONDING TO THE FINANCIAL CRISIS: A Lending Facility to Address the Credit Crisis for States and Localities. Obama is calling on the Federal Reserve and the Treasury to work to establish a facility to lend to state and municipal governments, similar to the steps the Fed recently took to provide liquidity to the commercial paper market.

Live Blogging From the Noon Conference Call:

All of the above, plus:

All of the policies and procedures mentioned in the new comprehensive plan can be implemented NOW, even in a lame-duck Congress, with the exception of some of the small business proposals, which would require new legislation.

For every net new job created, small businesses get a $3,000 credit per job.

Changes to 401(k)s includes not only allowing people to withdraw tax penalty free this year, but also doing away with the requirements that people MUST withdraw at 70 1/2.

Corollary: Unemployment benefits should be tax-free for the duration of the economic crisis.

Homeowner relief does NOT include speculators.

Extend a lending facility to states and local governments, similar to the one already implemented for corporate lenders. This would back, for example, student loans.

Keep options on the table for domestic auto makers, potentially including an additional infusion of funds beyond the recent $25B loan.

Broader guarantees may be necessary. We are NOT there yet, but we should be prepared with contingency plans if this becomes necessary.

Obama is still committed to a windfall profits tax on oil companies, but that will be delayed due to the recent cost drop in oil prices.

Biggest priority for '09 is to avoid a deepening recession.