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A Times Editorial

More help needed

It doesn't matter that the Great Recession may technically be over. For millions of American families facing foreclosure and unemployment, the figures showing nascent GDP growth are of little comfort. Florida is worse off than most states, with an 11 percent unemployment rate that translates into more than a million people out of a job. The state also ranks fourth in the nation in the proportion of households in foreclosure. It may be getting brighter elsewhere, but it's still pretty gloomy in the Sunshine State.

More help may be on the way from Washington. Congress appears poised to approve some sensible ideas that could nudge the recovery along, although the Senate was still arguing over the details late Wednesday. But some other proposals are gimmicky and based more on politics than sound policy.

One idea that should not go anywhere is President Barack Obama's plan to give all recipients of Social Security a $250 lump-sum payment. Obama justifies this $13 billion bribe to seniors on the grounds that there will not be a Social Security cost of living adjustment next year. The bonus would go to wealthy and comfortable seniors, as well as to those who are not well off, meaning that a big chunk of the money would be saved or used to pay off old debt. That won't stimulate the economy any more than the stimulus checks that were passed out like candy to all taxpayers.

The millions of jobless Americans are more likely to spend every dime of added unemployment benefits. Despite extensions that have expanded benefits from the typical 26 weeks to 79 weeks in some states, including Florida, 2 million people would run out of unemployment benefits by the end of the year without an extension. An extension passed in the House and moving along in the Senate would grant 14 weeks of extra aid, plus another six weeks in high-unemployment states such as Florida. The measure has been stalled for weeks by Republicans who want to offer unrelated amendments.

Another important provision of the same bill would make it easier for businesses losing money to write off losses against profits they earned in better times. Already, businesses that qualify can obtain refunds by applying current losses to two prior years of taxable profits. The Senate bill would reasonably extend the retroactive period another two or three years, although the details were still being debated late Wednesday. Such a change in tax policy would give businesses more capital to invest now and a bit more breathing room until the economy recovers.

Ultimately, one of the biggest keys to reviving the economy, particularly in Florida, will be stabilizing the housing market and lowering the number of mortgage foreclosures. The Obama administration has established creative programs to encourage banks and loan servicers to modify mortgages for homeowners on the brink. The Making Home Affordable program recently reached the goal of 500,000 trial mortgage modifications. But with 4.5 million homeowners in foreclosure or headed there, more is needed.

The experience of too many homeowners seeking modifications is of lost paperwork, arbitrary denials and frustrating telephone encounters with overwhelmed lenders. One way to give homeowners a bit of bargaining power is to allow bankruptcy judges to modify mortgages, as they can all other loans. Banks and Republican lawmakers have been vigorously opposed to this change. Maybe that's a clue that it would be highly effective in getting banks to negotiate.

A recovery that includes job creation won't happen any time soon without more immediate government intervention. While the administration and Congress should consider more ways to lessen the pain for families and businesses, they should also take care in distinguishing good policy from simply good politics.

More help needed 10/28/09 [Last modified: Wednesday, October 28, 2009 7:02pm]
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