Outlines Visions For Tackling America’s Immediate And Long-Term Economic Challenges

Just days before the State of the Union Address, Hillary Clinton urged the current administration to take immediate action to jumpstart the ailing economy. She outlined the solutions that can be taken now to fix the mortgage crisis and get more money in the pockets of Americans who need it the most. She also provided a vision of how she would lead the country to robust economic growth as President.

“Our economic problems are complex. But there is one thing we know for sure: the problem with our economy is not the American people. Instead, the problem is – in part – the bankrupt ideas of President Bush and the Republicans that rewarded the few and left so many people to fend for themselves in a time of great change,” said Clinton. “I’ve been listening to the voices of the American people as I’ve traveled this country. The voices of people who work hard all day – then on the night shift – but it’s still not enough. They’re simply overwhelmed.”

In her remarks, Clinton criticized the Bush administration for ignoring and neglecting the growing signs that the economy was in trouble. She noted that typical family incomes have dropped nearly $1,000 over the past seven years, while health care premiums nearly doubled and gas prices more than doubled. The economic anxiety of Americans has been compounded by the mortgage crisis and is one of the main drivers of the economic downturn that has had ripple effects across the world. Yet President Bush has presented a stimulus plan with tax breaks for corporations but next to nothing for families at risk of losing their homes.

“It’s time for a President who believes that leading an economic comeback is a fulltime, hands-on job. Who renews our commitment to the middle class and brings business, labor and government together to restore America’s competitiveness in a fast changing world,” said Clinton. “We need a President who has a vision for a twenty-first century economy based on shared prosperity – where we measure our success not by the wealth at the very top – but by how broadly wealth is shared and where hard work is rewarded and the American Dream is within everyone’s reach. We need an economy based on the foundation of investments that allow each of us to live up to our God-given potential.”

Hillary Clinton is the only presidential candidate with a comprehensive plan to end the foreclosure crisis and ensure that it never recurs. Since last March – at a time when the Administration was assuring Americans that the housing problem was “contained” – she has warned about the economic consequences of rising foreclosures and she announced policies to address the problem before it became a crisis. On December 5, 2007, Hillary became the first presidential candidate to say that it was time to consider an economic stimulus plan and on January 11, 2008, she was the first leading Democratic candidate, to offer a fiscal stimulus package, which included $110 billion in measures to jumpstart our economy.

Her Economic Action Plan is below:

As the Housing Crisis Deepens, the Economy may be slipping into recession.

• Foreclosures are hurting home prices and erasing household wealth. According to the most recent figures, approximately 770,000 homes are in some stage of foreclosure, an increase of approximately 70% from the prior year. [Mortgage Bankers Association, 3Q 2007 National Delinquency Survey] The rising tide of foreclosures is hurting working families and ultimately hurting the economy as well. Home prices have already fallen 6% and experts expect further weakness. This is the first nationwide decline in prices since the Great Depression. The price decline has already erased an estimated $1.3 trillion in household wealth. Home equity is shrinking, the source of 60% of the typical family’s wealth. With real income declining, homeowners had turned to their equity to finance everything from college tuition to the family car. But that source of cash is disappearing, and families have no choice but to cut back. This trend is sending ripples through the economy because consumer spending accounts for two-thirds of GDP.
• The housing crisis is costing American jobs. As the inventory of unsold and vacated properties climb, there is decreasing demand for newly built homes. At the current sales pace, it would take more than 10 months to eliminate the backlog of unsold houses. In 2007, housing starts fell 25%, the steepest decline since the recession year of 1980. And over the course of last year, 61,800 residential construction jobs were lost. [Bureau of Labor Statistics]
• Unemployment reached 5 percent in December, a two-year high. The 0.3% increase in the unemployment rate in December was the biggest one-month jump since August 2001, when America was in recession. The unemployment rate for African Americans and Hispanics jumped by twice as much as the overall unemployment rate in December – to 9.0 percent for African Americans and 6.3 percent for Hispanics. And the economy actually lost private sector jobs in December for the first time in over four years. [BLS, 01/04/08]
• Consumers are losing confidence in our economy and are beginning to cut spending. The share of consumers who believe now is a good time to make purchases fell to a 14-year low this week. And only 5% of people now say they believe the economy is getting better – the lowest level since the 1991 recession. [ABC News 01/22/08] In addition, retail sales fell by a more-than-expected 0.4% in December and were revised downward for November as well. [U.S. Census 01/15/08]
• Manufacturing activity declined for the sixth consecutive month in December. The Institute for Supply Management reported that its index of US manufacturing activity fell to 47.7 in December – its sixth consecutive month of decline. This is the first time that the ISM index has fallen below 50 – which signals a contraction. [ISM 01/02/08]
• High energy prices are squeezing hardworking families. Oil prices recently hit $100 a barrel, and consumers are feeling the increased costs at the pump and in their energy bills. Gas is over $3.00 a barrel, and heating costs are expected to jump by as much as 26% this winter. The typical American family is paying $2000 per year for energy than they were in 2000. [EIA 2008; Minsk 2007]

Jumpstarting Our Ailing Economy

• $40 billion in tax rebates for working and middle-class families. The rebates should meet Hillary’s principles of being fast-acting, temporary and targeted to working and middle-class families who need help the most. The rebates should not be partially or completely denied to the 50-70 millions of workers who would be left out under the plan that President Bush is considering.
• A $30 billion Emergency Housing Crisis Fund to assist states and cities mitigate the effects of mounting foreclosures. The fund would provide immediate, time-limited resources to states, cities and community organizations to help prevent unnecessary foreclosures. States and communities could also use the funds to offset the costs associated with vacant properties by supporting efforts like community-level anti-blight programs and helping local housing authorities buy up vacant properties and rent them to working families. The availability of $30 billion in federal assistance will ensure that states and cities have the resources they need to fight foreclosures, prevent a downward housing cycle impacting large numbers of homeowners and to weather the crisis without unnecessary fiscal contraction.
• Bold action to end the housing crisis, with a 90-day moratorium on foreclosures and a 5 year freeze on interest rates on subprime mortgages. In addition, Senator Clinton proposed to temporarily empower state housing financing agencies to help families refinance unworkable mortgages and temporarily increasing the portfolio caps at Fannie Mae and Freddie Mac, and enabling them to purchase larger loans in high-cost areas. These steps would immediately increase the availability of mortgages for responsible borrowers.
• $25 billion in emergency energy assistance for families facing skyrocketing heating bills. Rising home heating prices are imposing a serious and immediate financial burden on working families. Senator Clinton’s emergency initiative would get immediate help to these families by empowering states to use existing income eligibility rules to distribute energy rebates or direct energy assistance without requiring time-intensive application processes. Her plan would provide an average of $650 in energy rebates to tens of millions of families. Economist Paul Krugman called Senator Clinton’s plan “a clever way to put cash in the hands of people likely to spend it.” [New York Times 01/14/08].
• $5 billion in accelerated energy efficiency and alternative energy investments to jumpstart green collar job growth: Senator Clinton believes that by immediately implementing components of her comprehensive plan to transition to a green, clean economy, we can both jumpstart green collar jobs and jumpstart our long-term transition to energy independence as well.
• $10 billion in extending and broadening unemployment insurance for those who are struggling to find work: Senator Clinton is calling for stepped up assistance for those who have lost their jobs and are searching for work while trying to provide for their families.

A Bold, Aggressive Plan To End The Foreclosure Crisis. In addition to the $30 billion Community Support Fund, Hillary has called for bold measures to address the foreclosure crisis. She has called on Wall Street and the mortgage industry to agree to the following:

• A foreclosure moratorium of at least 90 days on subprime, owner-occupied homes. The moratorium will stop foreclosures until lenders and servicers have an opportunity to implement the freeze in mortgage rates. The moratorium will also give state and city organizations as well as community groups the necessary time to provide financial counseling to at-risk homeowners.
• A freeze in the rates on subprime adjustable rate mortgages. The freeze must last at least 5 years or until the mortgages have been converted into affordable, fixed-rate loans. After the moratorium, there should be a long freeze in rates on adjustable rate mortgages. The overwhelming majority of subprime mortgages have adjustable rates. The long rate freeze will give the housing market time to stabilize. It will give families an opportunity to rebuild equity in their homes. It also gives the mortgage industry time, and incentive, to convert mortgages that were designed to fail into loans that are actually affordable. The rate freeze and loan modification must be extended not only to borrowers who are current but to some who have fallen behind. After all, it is indisputable that brokers and mortgage companies lured families into mortgages that were designed to end in foreclosure. This was only possible because regulators were asleep at the switch. A rate freeze is critical. An average of $30 billion in loans will reset monthly next year. One study indicates that the average reset increases monthly payments by 40%. It is no surprise that rate-resets are the major driver of the foreclosure crisis.
• More accountability for mortgages. Resolution of the foreclosure crisis will require that large numbers of unworkable mortgages be converted to stable loans. To date, however, despite pressure from Congress and the press, lenders and servicers have modified only about 1% of subprime mortgages. This obviously has to change. We cannot take the industry at its words that it will follow through on an agreement to convert loans expeditiously. Accordingly, the agreement must impose on lenders and servicers an obligation to regularly report their loan modifications.

Hillary Has a Long-Term Economic Strategy to Restore Shared Prosperity for the Middle Class:

• Creating at least 5 million new green collar jobs by transitioning from a carbon-based economy to a green, energy efficient economy. Hillary believes that by investing in clean energy and energy efficiency we can unleash a wave of private sector innovation and create at least 5 million new green collar jobs over the next decade. She has laid out a bold, long-term strategy to catalyze clean energy industries here in the U.S. and invest in making our homes, schools and buildings energy efficient. To read more about her plan, click here.
• Investing in infrastructure to ensure our safety, enhance our economic competitiveness, and create good jobs. New Orleans, the Minnesota bridge collapse, and the recent levee break in Nevada are all reminders that we have failed to invest sufficiently in our infrastructure. Hillary has presented a plan that calls for more than $10 billion in funding to help states review and repair their critical infrastructure; modernizing seaports; expanding funding for public transit and intercity rail; incentivizing environmentally sensitive land use policies; and a greater focus on reducing congestion. To read more about her plan, click here.
• Investing in Innovation to create the jobs of the future, stimulate economic growth, and ensure American leadership in new industries. Hillary’s plan calls for establishing a national broadband strategy; creating a $50 billion Strategic Energy Fund; doubling the research budgets at the major federal agencies; strengthening education from pre-K to post-graduate study; making the R&D tax credit permanent; and restoring integrity to science by ending the Bush Administration’s war on science. To read more about her plan, click here.
• Providing quality, affordable health care to every single American. Senator Clinton recognizes that healthcare is the biggest economic burden facing many American families and businesses. Her American Health Choices Plan will help lower the burden on middle class families and ensure our ongoing economic competitiveness by aggressively cutting healthcare costs and finally covering every single American – no one will be left out. For those with healthcare, Hillary’s plan will lower costs and improve quality. For those without, it will offer new choices from the same menu of private plans currently available to members of Congress. Her plan will provide generous tax credits to ensure healthcare is affordable for everyone, and will ban insurance company discrimination, so no one will ever again be denied coverage because of a pre-existing condition. Small businesses would get a new tax credit to help small businesses afford health care for their employees under Senator Clinton’s plan. To read more about her plan, click here.
• A Generous Matching 401(k) Plan for All Americans. Hillary understands that saving and building wealth can be the key to the American dream -the difference between just getting by and getting ahead. Yet today, more than half of America’s workers don’t have an employer-sponsored retirement account, and millions of Americans are not saving or investing anything at all. Hillary has a plan to take on our national savings crisis by giving all Americans an opportunity to save and build wealth for retirement that is as easy, secure and generous as is offered by good employer-sponsored 401(k)s. Under the plan, working and middle class families who currently have the hardest time saving will get up to $1000 in matching tax cuts as an incentive to save. And all middle class Americans will get to open new American Retirement Accounts that will be designed to provide no-hassle, portable savings throughout their careers. To read more about her plan, click here.
• Making College Affordable for All. In our 21st century economy, a college education is more important than ever. That is why Hillary has outlined a comprehensive plan to make college more affordable and accessible so that every American has the chance to get a college degree. Her plan includes a new $3,500 college tax credit that will cover more than 50% of the typical cost of public colleges and universities, or the full cost of tuition and fees for community colleges. She would increases the size of Pell Grants, strengthen our community colleges, and invest $500 million to support innovative, on-the-job training and apprenticeship programs for those who don’t attend college. To read more about her plan click here.

Source http://www.hillaryclinton.com/news/release/view/?id=5460

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