Understanding the Obama housing stimulus and some other random thoughts.

Everything sounds better when the spin is in. That is the case with President Obama’s housing stimulus tax credit. This very short article will cut through the hype and reveal the facts.

Just like the old $7,500 tax credit wasn’t as most people believed, after careful scrutiny, you’ll see that the new one isn’t all its cracked up to be either. However, the new $8,000 deal is better than the old program, but you should still understand the rules. Here they are as currently constituted:
1. The program is only for those who have not owned a home for the last three years.
2. The program is only available for homes purchased in 2009.
3. The credit is reduced when buyer(s) income is over $75,000 for singles or $150,000 for couples.
4. The credit is paid as a refund on 2008 or 2009 taxes.

Nobody is going to come to your neighborhood handing out $8,000 checks to people who want to buy a new, bigger or different house. So don’t stay up late looking for them. All in all, it is still a much better deal for those that qualify. Unfortunately not as many will qualify as most of the pundits think. However, by people continuing to hype it, it will serve to build consumer confidence which is the most important thing that can happen right now.

People need to keep buying, investing (intelligently), spending and consuming. That is what our economy does best. I mean really, give it some thought. Even if unemployment gets as high as some prognosticators are predicting, it will only get to about 10%. It is usually about 5%, and that includes, and is a reflection of, the surprising number of people who choose not to work. We’re not as bad off as the talking head new anchors like to portray. I learned in college (my degree is in Mass Communication and Journalism) that the first rule of news is “If it bleeds it leads.” You should expect the media to concentrate on and emphasize the negative. For some reason they believe that nobody cares about the huge turn around at Countrywide or the increasing profits of a number of Fortune 500 companies. Another real problem is the welfare system. It seems to work too well for a significant number of multi-generational assistance recipients. In a lot of cases the benefits are so high that they have effectively removed the incentive for some people to work. So they collect their benefits, spend their food stamps and seem too often contented with their chosen lifestyle. Now, before anybody has a hissy fit (I admit that I’m not really sure what a “hissy fit” is, I learned the term from my Mom), let me state very emphatically that I know that there are a large number of people who for a thousand good reasons cannot work. They deserve our help and we have an obligation to provide it. It is those who choose not to work who irritate me.

Even at 10% unemployment, 90% of the working populous will continue to be employed. None the less, there are still too many people who want to work who cannot find employment. The fact is that they will never find work unless there is continuing and growing demand for products and services. It is just that simple. That’s why we need to continue to live and spend as we have in the past. If we act with confidence, things will improve much faster and to a higher level. If we crawl under our beds and sink into a pit of self pity and depression, we hurt everybody. Not only will we personally not make headway, neither will our nation and economy. So go out and buy something. Its the American thing to do. I for example am going to lunch, do some grocery shopping and I may just splurge on dinner and a movie later. Who knows I just may go crazy and put a little money into some mutual funds or government securities. I am 100% confident that things are getting better. Don’t thank me, I’m just doing my part. I am consumer, hear me roar!