Obama Stimulus Package

Here are the components of Obama's proposal:

1.Cut $250 checks for some 150 million low and middle income workers and send them out. If needed, send out an additional $250 per worker, totaling $500 for these workers

2.Likewise, send $250 to seniors earning under $50,000 as a Social Security supplement, and and prepared to send out a second $250 payment

3.Establish a $10 billion fund to help “responsible” families avoid foreclosure. The money would be given to homeowners who did not lie about their incomes and were “mindful of personal responsibility.”

4.Provides money to state and local governments hardest hit by housing crisis to prevent them from slashing infrastructure and other important state spending

5. Expand unemployment insurance

Can you say Keynesian economics? The problem with this is that the money has to come from someplace else. Obama doesn't want to pay for this with taxes, but then you have to borrow the money. Borrowing takes it away from other uses as much as taxes.

The subprime problem was due to government regulation and point 3 will encourage home buyers to take more risks because they will believe that the government will bail them out.

Point 5 is political and will be pushed to increase the unemployment rate before the election. Never have the Democrats before asked for an extension in benefits with an unemployment rate as low as 5 percent.