THE SYSTOCRAT PAPERS

Fellow Systocrats:

Senator Obama, leading in the latest nationwide Washington Post/ABC News poll by 10 points, unveiled his four point "Economic Rescue Plan for the Middle Class" while on the campaign trail in Toledo, Ohio today.  Systocrat-minded folks should be very pleased with the "Main Street" orientation of the plan, in contrast to the 700 billion dollar "Wall Street" plan that so far has done little to stabilize our flagging markets. 

Here's a brief summary of the four main points of the Obama "Main Street" plan:

Point 1: A self-described "aggressive" proposal to create jobs, which includes a $3,000 tax credit to businesses for each new full time employee hired, no capital gains tax on small business investments, and the preservation/creation of jobs by making 25 billion dollars available for infrastructure projects, such as repairing our deteriorating roads, bridges and schools.

Point 2: This provision provides immediate relief to "Main Street" by providing expedited tax cuts/rebates - $500 for workers and $1000 for families, by extending unemployment benefits, by allowing people to withdraw up to $10,000 from retirement accounts in 2008 (retroactively and going forward) and in 2009 without penalty, and by supplementing the recently passed federal Low Income Home Energy Assistance Program ("LIHEAP") to ensure that additional funding is available to residents of cold-weather states to help meet rising heating costs.

Point 3: Entitled "Direct, Immediate Assistance for Homeowners, not a Bailout for Irresponsible Mortgage Lenders," (my emphasis), this provision includes a mandate to allow the Treasury Department, HUD and bankruptcy judges to aggressively restructure the terms of mortgages in favor of homeowners.  Point 3 also calls for 25 billion in relief to state governments to meet expenses and therefore keep property taxes down, and a 90 day moratorium on foreclosures for homeowners living in their homes who are making "good faith" efforts to pay their mortgages. 

Point 4: This is somewhat of a catchall provision calling for additional "rapid, aggressive" action as needed to unfreeze the credit markets, ensure the continued functioning of non-financial institutions such as state/local governments and small businesses by making funding available as necessary, and additional measures to get our stalled economy moving again.  

In general, I think this plan represents a thoughtful attempt to chart a course out of this economic crisis.  I'll be very interested in the reception Senator Obama's proposal receives on Capitol Hill this week.  

I do have a couple of comments.  In any proposed financial rescue-type bill like this one, I would like to see a provision imposing formidable civil and criminal penalties for flagrant abuses of bailout money, such as AIG's wasteful expenditure of $440,000 to attend a sales conference a few days after we gave them $85 billion dollars of our money.  This behavior is a direct affront to every American taxpayer and should not be tolerated or encouraged.

Also, with respect to Point 3, I think that the "good faith" provision will be difficult to interpret and/or enforce unless this bill contains an explicit definition of "good faith" and perhaps some commentary, with examples, on the types of homeowner actions that will be considered "good faith."  For example, one phone call in thirty days to your rich Aunt Louise to ask for mortgage money while you are unemployed, capable of working yet not actively seeking a job, does not constitute good faith.  Working two jobs, cutting expenses to the bone and still not being able to make the mortgage (like lots of people I know these days) - go ahead and claim your 90 day foreclosure moratorium.

Click here to see Obama discussing the main points of his Main Street Plan.