Stimulus Savings

President Barack Obama is proposing a stimulus program that’s designed to combat the high unemployment rate plaguing the nation. But will the new stimulus program help the average American avoid foreclosure and bankruptcy?

Obama proposed new spending for highway and bridge construction, for small-business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extend economic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters.

President Obama is also proposing eliminating fees on loans to small businesses and offering federal guarantees of those loans through the end of 2010. And finally he wants to offer new tax breaks for energy-efficient retrofits in homes (a.k.a Cash for Caulkers). But I’m not sure if these programs will be enough to reduce the number of foreclosures and bankruptcies we’re seeing.  First of all, while extending the time limits on unemployment insurance is an effective strategy in helping families who have suffered a job loss, we still haven’t dealt with the large number of Americans who don’t qualify for unemployment insurance.

Millions of Americans working part-time or as independent contractors do not have access to unemployment insurance. What about them?  They are also vulnerable to foreclosure and bankruptcy.  It may be a wise decision to loosen the eligibility rules for unemployment insurance if we want to really offer a solid safety net for those facing job losses. Also, the types of jobs provided by this stimulus package need to be long-term and preferably permanent if we plan to make a real impact on this recession.