Middle Class Plan for Economy

My family and I are considered middle class, and it is no secret what is happening to the middle class right now. We are all feeling the pressure from the mortgage meltdown. Gas prices are soaring, as well as the price of groceries. It used to be when I went to the store my grocery bill was around $150.00 and that would last us for 1.5 weeks. Now it is around $300.00, I spend $75.00 a month on milk and eggs. Our insurance co-pays have gone up, and now the middle class must try to figure out how to pay for Dr. visits and medications on top of all other bills, or even if they can afford to get to the Dr’s office. I know that no mater what party you are from, we can all agree this is no way to live.

The government has been lowering interest rates for banks and giving them billions of dollars in hopes the banks would lend to the American People. We all know this has not happened, and now you have the tough job to vote on whether to give them $700 Billion more, and pass that bill off to the tax payers. However Mr. Paulson has stated he hopes this effect will trickle down to main street, but that not every homeowner will be saved. So won’t this mess continue if after the $700 Billion bailout of Wall Street we are still facing foreclosures? The housing market has no floor right now and I think what we need to do is create that floor.

So here is my plan. Let’s find out how much money Middle America has in mortgages, whether they be good or bad mortgages, and tell the banks that they must take this as payment in full for all of them. Middle America now has no mortgages. People who have lost their homes, as long as it has not been sold already get there house back. This will allow the market to reset, bringing housing prices back down to where they should be, instead of their over inflated prices.

The first thing that Middle America will do is head straight to the bank and consolidate other bills, i.e. credit cards, cars they are upside down in because of gas prices, and invest in home improvements using their home equity. Banks will now be giving loans again, Middle America will be spending again, yet they will also be putting money back into there savings accounts, and investing in the stock market. This will strengthen the dollar and gas prices may start to decline.

How do we pay for this? Simple. It took two parties to make this mess, the banks in the mortgages they provided, and the American Consumer who agreed to these loans. The banks will agree to pay a certain amount of their profits each year back to the government, and since the government has paid off the mortgages of Middle America we can not file a tax deduction for the interest we paid on our mortgage before this bill went into effect, and if we choose to refinance the house, we can not file a tax deduction later on down the line. We will also raise taxes on the Middle Americans who‘s mortgages were paid off, not to God Awful much, but enough to help payback this money, and hold their Federal Tax Return. Also with more discretionary spending going on the government will be recouping some of the money from other taxes. After this amount is recovered, everything will go back as usual. Also during this time the government and financial industry will work together to form an oversight committee, and bring in new regulations to make sure this never happens again.

If you will think of this problem as a ladder. The bottom rungs are middle class, the middle rungs are our economy, and the top rungs are banks and Wall Street. When the middle rungs broke (the economy) it made the lower and top rungs weaker (the middle class and the financial district). So instead of trying to fix the top and hope the ladder holds on, why not fix the base of the ladder and let the higher levels enjoy a better foundation? It was Main Street who helped build Wall Street, given the opportunity it can save it too.

As always let me know what you think