President Barack Obama recently promised that he has a plan to create jobs, which will be disclosed in September, after he takes 10 days off in Martha’s Vineyard. I certainly hope he comes up with a good plan. If he needs one, how about the one that Carl Goldsmith and I proposed at the beginning of August? [1] I met with my congressman, Gary Ackerman, last Tuesday to pitch the plan. He liked it well enough to issue a press release on Wednesday of this week endorsing it and promising to introduce the “Homestead: Act 2” when Congress returns from its August recess.[2]
The Act aims to reduce the huge overhang of unsold homes by offering a matching down payment subsidy of up to $20,000 for homebuyers, who do not currently own a home, and exempting newly acquired rental properties from taxation for 10 years. The cost of these incentives would be offset by the tax revenues collected by lowering the corporate tax rate on repatriated earnings to 10%.
Congressman Gary Ackerman is presently serving his fifteenth term in the US House of Representatives. He represents the Fifth Congressional District of New York, which encompasses parts of the New York City Borough of Queens and the North Shore of Long Island, including west and northeast Queens and northern Nassau County. Ackerman serves on the powerful Financial Services Committee, where he sits on two Subcommittees: Financial Institutions and Consumer Credit as well as Capital Markets and Government-Sponsored Enterprises (of which he is the former Vice Chairman). The stock market rose sharply after March 12, 2009, when Mr. Ackerman, during a congressional hearing, leaned on Robert Herz, the head of FASB, to suspend the mark-to-market rule. FASB did so on April 2. I had brought this issue to the congressman’s attention in a meeting we had during November 2008.
Dr. Ed’s Blog
http://blog.yardeni.com/
Related articles
- New bill offers $20,000 subsidy to foreclosure buyers (kentuckyfirsttimehomebuyer.com)
- Ackerman intervenes on behalf of former intern, Grapel (jta.org)
- Time for More Housing Stimulus? (blogs.wsj.com)
- Bipartisan bill backs high ‘conforming’ loan limit (marketwatch.com)
- Rep. Frank: Hope Still Alive for Mortgage-Cap Extension (blogs.wsj.com)
You know, I’m not sure what the answer is. I just know that history has shown the same approach to tax breaks on repatriated earnings didn’t do what they said it would. No new jobs were created from the tax breaks. If anything it rewarded companies for doing business overseas.
Maybe giving companies who keep jobs in the U.S. tax breaks while taxing heavier those that send them overseas? Give U.S. companies an incentive to keep the jobs here. Unless there are those in the U.S. making good, liveable wages, all industries including our own are at even more peril than the present.
Do you have any ideas? Looks like we have a chick before the egg situation. Do you have any ideas as to how we can get the economy moving?
I like the idea of the up to $20,000 down payments assistance, but I don’t think offsetting it with break on repatriated earnings won’t stimulate job creation. It sure didn’t when we tried the same in 2004. It just created a windfall for stockholders. The only real job creation is going to come from increased demand for product which creates production pressure on factories which creates the jobs needed to meet that demand. You can throw all the extra money you want at the corporations, but if there is no need for increased production there will be no need to create jobs. The real question is how are we going to get more money into the hands of the 97% of the U.S. which buys 97% of the stuff.