- Jun 6, 2007
- 852
- 483
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The President & Congress need to get on the job if the economy is to avoid a recession and fully recover, America's in crisis here! The answer is not "deficit increasing" federal stimulus spending which is economically dangerous, morally wrong to future generations and will lead to a national sales tax. It is Washington using common sense to solve some of the economy's problems in a good manner which is needed; it's listening to some of the good ideas being voiced by the American people and following through on them! Included would be the following.
First Area, what is the sector of the economy that historically is key to lifting America out of a recession which hasn't been there for the recovery of the 2007/2009 recession? Housing and it is in part because the housing price bubble burst with the recession, foreclosures are sky-high and it is tougher for home buyers to get loans. The 2010 Dodd-Frank legislation mandated that banks that make loans have to hold a portion of the loan (when they sell it so they can get money to make more loans) the idea is if the banks have to hold a portion of the loan they will be diligent in making sure the borrower is a good risk, banks can get around this hold requirement if the loan of very high quality like the borrower puts down twenty or more percent of the sale price, has a certain credit score, etc.. The bottom line is that this provision has had a stifling effect on the ability of home buyers to get loans. Further, this provision was put into Dodd-Frank because prior to the 2007/2009 recession mortgage lenders and banks did a terrible job in checking borrowers income representations and doing calculations on whether borrowers could afford to pay their mortgage payments when the loan interest rates reset; today, things have changed U.S. regulators are no longer asleep at the wheel they are insuring the industry does this due diligence, moreover, banks have been sued big-time over this by the buyers of the shotty loans made incurring many billions of dollars of liability, today no bank executive that is sane would allow such a problem to develop in his or her bank. The point here is that this provision of Dodd-Frank hurting buyers ability to get loans should be repealed; it is a solution looking for a problem which is harming the housing industry!
Another housing topic which the President and the Congress should jump on is that it has been reported in the media that federal and state regulators are close to a grand deal with the banks over the legal ramifications of their shotty paper work in foreclosure actions (e.g. robosigning) and in transferring loans from the original lender, apparently, the deal could result in many many homeowners in trouble with their home loans getting their home loan modified so they can afford to stay in their home thus reducing the foreclosure problem. Allegedly the sticking point is that the banks want protections from future liability over this issue; if adequate protections can't quickly be secured from Attorney Generals across the nation the President and Congress should just pass legislation giving the banks the needed liability protection - Isn't Federal law supreme to state law can't the Federal government fix this problem?
On the housing topic of foreclosures, the public frequently hears real estate agents say that foreclosure sales are driving down home sales and home sale prices and home builders say foreclosure sales are competing with new home sales and drying up the market for new homes (buyers don't want new homes when they can get such great deals on foreclosed homes). The country has eleven million unemployed and the economy is growing at an anemic rate meaning America will see continued high home loan default and foreclosure rates. The President and Congress need to become fully engaged on this foreclosure issue which means using common sense, twenty-five percent of outstanding home loans are underwater meaning loan principle owed exceeds market value of the home. This fact indicates that a very high percentage of home loans going into foreclosure are underwater, considering that lenders/loan owners on average only end up walking away with only about sixty percent of the market value of a foreclosed home when the property is sold considering their costs and that it is a distressed sale, "common sense" calls for the Congress/President to allow Bankruptcy Judges to cram down the principal on these underwater loans to be foreclosed on to the market value of the property it would result in borrowers being able to afford to stay in their homes, lenders making out better economically in the long run and society-at-large having less foreclosure sales and suffering less harm these sales bring. The President and Congress should pass some well-crafted bankruptcy legislation that allows cram downs on home loans that doesn't unduly encourage these bankruptcies but turns down the spigot on foreclosed properties coming into the home sales market. Put a five year expiration on the legislation, to qualify a debtor has to have home taxes and mortgage payments that exceed fifty-five percent of the debtors income, limit the value of loans to loans under $700,000.00, etc.. The Bank Lobby was responsible for derailing this legislation when it was tried in 2009, members of Congress and the President need to make it clear to this lobby and financial institution executives that their first duty is to the American people and the country has endured this foreclosure problem long enough and the harm it causes on the housing industry will be mitigated as much as it can by Washington going forward and this bankruptcy law change is one tool that will be used.
Another Area is Road & Bridge Infrastructure Spending, this spending (good for employment) is down since before the recession and the economy can't afford this employment loss. Democrats have been floating this idea of creating a National Infrastructure Bank and using as seed money tax income that comes from a one year tax holiday on repatriated income from U.S. corporations from these corporations foreign operations, the tax rate on such income is currently essentially 35% and the idea is to cut it to 5.25% for one year. The Republicans absolutely rightly say this is a bad idea because this Infrastructure Bank will end up borrowing tens if not hundreds of billions of dollars to loan to the states for building infrastructure projects and the states will eventually be in a real bind paying off these loans and they will eventually be proclaiming to Washington for relief saying this debt is obstructing them from do necessary road and bridge repairs that impacts safety release us from this debt and members of Congress will for political reasons and the Federal Government will be left paying off this infrastructure debt. However, there is a great idea here, have this one year tax holiday and then do what many people are calling for and permanently lower the tax rate on repatriated funds to let's say 10%. Ten percent not 5.25% because the latter is too low and the current 35% is too high; although many countries don't tax repatriated income the no tax option is not fair it is not fair to all the other businesses in a country paying taxes paying their fair share, the foreign income stems from a U.S. corporation that is created by U.S. law has all the benefits of U.S. law often has the products, services and or business plan that makes up the foreign business designed or created in the U.S. probably ideally from a fairness standpoint the tax on repatriated income should be 15% to 20%, but in light of the fact most other countries don't have such a tax and we as a country want this problem of U.S. corporations not repatriating foreign profits to permanently go away permanently at 10% makes sense, 10% is not so high it should deter repatriation for business executives of multinational corporations frequently deal with a lot of business variables that can fluctuate income up to 10%, e.g. currency issues, raw material costs, etc.. Moreover, besides the yearly economic stimulus of this continual increase in repatriated monies into the economy by this permanent tax change this change will provide the added economic benefit of incentivizing small and medium size U.S. businesses to open up foreign markets for they get to keep ninety percent of the profits from such markets. To get back to the transportation infrastructure issue, Congress should just distribute this additional repatriated tax income like it does federal gas tax income this extra distribution will make a difference; this one year tax holiday should generate at least twenty-five billion dollars a year one would have to think a permanent ten percent repatriated rate would have to bring in ten to twenty billion dollars a year - these billions would fund a lot of road and bridge projects. Reports in the media are that the new transportation bill set to replace the one expiring next month is at a log jam. Apparently, the Democrats want the yearly funding to remain at current levels around $52 billion per year and the bill to be a two year bill and the Republicans want the bill to match the income that comes from the federal petroleum tax which is $34 billion dollars a year and be a six year bill which will allow state and local officials to plan big and medium size projects because they can know how much federal dollars they will be getting. This log jam is ripe for an everybody give a little compromise. In light of the desperate need for stimulus in the economy and that it is not right to state officials to rapidly cut federal funding here and the fact that transportation bills should as a rule be done in six year increments so state officials can plan and if the Democrats win the White House and both chambers of Congress in 2012 they can always come back in 2013 and do a supplemental transportation bill, the Congress should do the following in the 2011 six year transportation bill keep the current level of funding for the first year, fund the second year at the mid-point between the current level and $34 billion and for the three to six years make the funding $34 billion. If Congress were to reduce the tax rate on repatriated corporate income as suggested, yearly federal funding in the transportation bill could be increased accordingly with the additional federal income.
First Area, what is the sector of the economy that historically is key to lifting America out of a recession which hasn't been there for the recovery of the 2007/2009 recession? Housing and it is in part because the housing price bubble burst with the recession, foreclosures are sky-high and it is tougher for home buyers to get loans. The 2010 Dodd-Frank legislation mandated that banks that make loans have to hold a portion of the loan (when they sell it so they can get money to make more loans) the idea is if the banks have to hold a portion of the loan they will be diligent in making sure the borrower is a good risk, banks can get around this hold requirement if the loan of very high quality like the borrower puts down twenty or more percent of the sale price, has a certain credit score, etc.. The bottom line is that this provision has had a stifling effect on the ability of home buyers to get loans. Further, this provision was put into Dodd-Frank because prior to the 2007/2009 recession mortgage lenders and banks did a terrible job in checking borrowers income representations and doing calculations on whether borrowers could afford to pay their mortgage payments when the loan interest rates reset; today, things have changed U.S. regulators are no longer asleep at the wheel they are insuring the industry does this due diligence, moreover, banks have been sued big-time over this by the buyers of the shotty loans made incurring many billions of dollars of liability, today no bank executive that is sane would allow such a problem to develop in his or her bank. The point here is that this provision of Dodd-Frank hurting buyers ability to get loans should be repealed; it is a solution looking for a problem which is harming the housing industry!
Another housing topic which the President and the Congress should jump on is that it has been reported in the media that federal and state regulators are close to a grand deal with the banks over the legal ramifications of their shotty paper work in foreclosure actions (e.g. robosigning) and in transferring loans from the original lender, apparently, the deal could result in many many homeowners in trouble with their home loans getting their home loan modified so they can afford to stay in their home thus reducing the foreclosure problem. Allegedly the sticking point is that the banks want protections from future liability over this issue; if adequate protections can't quickly be secured from Attorney Generals across the nation the President and Congress should just pass legislation giving the banks the needed liability protection - Isn't Federal law supreme to state law can't the Federal government fix this problem?
On the housing topic of foreclosures, the public frequently hears real estate agents say that foreclosure sales are driving down home sales and home sale prices and home builders say foreclosure sales are competing with new home sales and drying up the market for new homes (buyers don't want new homes when they can get such great deals on foreclosed homes). The country has eleven million unemployed and the economy is growing at an anemic rate meaning America will see continued high home loan default and foreclosure rates. The President and Congress need to become fully engaged on this foreclosure issue which means using common sense, twenty-five percent of outstanding home loans are underwater meaning loan principle owed exceeds market value of the home. This fact indicates that a very high percentage of home loans going into foreclosure are underwater, considering that lenders/loan owners on average only end up walking away with only about sixty percent of the market value of a foreclosed home when the property is sold considering their costs and that it is a distressed sale, "common sense" calls for the Congress/President to allow Bankruptcy Judges to cram down the principal on these underwater loans to be foreclosed on to the market value of the property it would result in borrowers being able to afford to stay in their homes, lenders making out better economically in the long run and society-at-large having less foreclosure sales and suffering less harm these sales bring. The President and Congress should pass some well-crafted bankruptcy legislation that allows cram downs on home loans that doesn't unduly encourage these bankruptcies but turns down the spigot on foreclosed properties coming into the home sales market. Put a five year expiration on the legislation, to qualify a debtor has to have home taxes and mortgage payments that exceed fifty-five percent of the debtors income, limit the value of loans to loans under $700,000.00, etc.. The Bank Lobby was responsible for derailing this legislation when it was tried in 2009, members of Congress and the President need to make it clear to this lobby and financial institution executives that their first duty is to the American people and the country has endured this foreclosure problem long enough and the harm it causes on the housing industry will be mitigated as much as it can by Washington going forward and this bankruptcy law change is one tool that will be used.
Another Area is Road & Bridge Infrastructure Spending, this spending (good for employment) is down since before the recession and the economy can't afford this employment loss. Democrats have been floating this idea of creating a National Infrastructure Bank and using as seed money tax income that comes from a one year tax holiday on repatriated income from U.S. corporations from these corporations foreign operations, the tax rate on such income is currently essentially 35% and the idea is to cut it to 5.25% for one year. The Republicans absolutely rightly say this is a bad idea because this Infrastructure Bank will end up borrowing tens if not hundreds of billions of dollars to loan to the states for building infrastructure projects and the states will eventually be in a real bind paying off these loans and they will eventually be proclaiming to Washington for relief saying this debt is obstructing them from do necessary road and bridge repairs that impacts safety release us from this debt and members of Congress will for political reasons and the Federal Government will be left paying off this infrastructure debt. However, there is a great idea here, have this one year tax holiday and then do what many people are calling for and permanently lower the tax rate on repatriated funds to let's say 10%. Ten percent not 5.25% because the latter is too low and the current 35% is too high; although many countries don't tax repatriated income the no tax option is not fair it is not fair to all the other businesses in a country paying taxes paying their fair share, the foreign income stems from a U.S. corporation that is created by U.S. law has all the benefits of U.S. law often has the products, services and or business plan that makes up the foreign business designed or created in the U.S. probably ideally from a fairness standpoint the tax on repatriated income should be 15% to 20%, but in light of the fact most other countries don't have such a tax and we as a country want this problem of U.S. corporations not repatriating foreign profits to permanently go away permanently at 10% makes sense, 10% is not so high it should deter repatriation for business executives of multinational corporations frequently deal with a lot of business variables that can fluctuate income up to 10%, e.g. currency issues, raw material costs, etc.. Moreover, besides the yearly economic stimulus of this continual increase in repatriated monies into the economy by this permanent tax change this change will provide the added economic benefit of incentivizing small and medium size U.S. businesses to open up foreign markets for they get to keep ninety percent of the profits from such markets. To get back to the transportation infrastructure issue, Congress should just distribute this additional repatriated tax income like it does federal gas tax income this extra distribution will make a difference; this one year tax holiday should generate at least twenty-five billion dollars a year one would have to think a permanent ten percent repatriated rate would have to bring in ten to twenty billion dollars a year - these billions would fund a lot of road and bridge projects. Reports in the media are that the new transportation bill set to replace the one expiring next month is at a log jam. Apparently, the Democrats want the yearly funding to remain at current levels around $52 billion per year and the bill to be a two year bill and the Republicans want the bill to match the income that comes from the federal petroleum tax which is $34 billion dollars a year and be a six year bill which will allow state and local officials to plan big and medium size projects because they can know how much federal dollars they will be getting. This log jam is ripe for an everybody give a little compromise. In light of the desperate need for stimulus in the economy and that it is not right to state officials to rapidly cut federal funding here and the fact that transportation bills should as a rule be done in six year increments so state officials can plan and if the Democrats win the White House and both chambers of Congress in 2012 they can always come back in 2013 and do a supplemental transportation bill, the Congress should do the following in the 2011 six year transportation bill keep the current level of funding for the first year, fund the second year at the mid-point between the current level and $34 billion and for the three to six years make the funding $34 billion. If Congress were to reduce the tax rate on repatriated corporate income as suggested, yearly federal funding in the transportation bill could be increased accordingly with the additional federal income.
