The great failure of economic stimulus measures implemented by Barack Obama and George W. Bush

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

In a previous article we explained how the current economic crisis in the U.S. was originated mainly when millions of mortgage borrowers were unable to pay the debts they had with the banks, due to the greatly increased interest rates.

That left many banks and large companies on the verge of bankruptcy and caused the economy to collapse. So, since last year, the Bush administration implemented several measures to counter the situation, which includes multi-million dollar bailout plans for several banks and automakers in trouble.

Then, when Obama assumes the presidency, he offers an economic stimulus package of 787 billion dollars. Money that will go mainly to public spending, tax cuts and assistance for some companies.

However, both leaders have committed the same error, they have invested many millions in major corporations and public spending, but since the recession began they have used very little to minimize the cause of the crisis, this is, to solve the inability that millions of middle-class families have to pay their mortgages. According to government figures, an estimated of 4 million home owners are at high risk of losing their homes, and nearly 9 million families are struggling to cope with their mortgage payments.

Despite this, the only thing that Bush's government and Congress did was pass a law that protected an estimated 400 thousand debtors -we refer to the “Housing and Economic Recovery Act"- and create the "Hope Now Alliance” plan, which has been calculated only help less than 15% of borrowers at risk.

For his part, it was only on February 18 when President Obama introduced a plan to help these families, the "Homeowner Affordability and Stability Plan," which is a program of $75 billion that is just in draft and has not been discussed. Indeed, in his last speech -presidential address to Congress February 24- the plan was barely mentioned.

Meanwhile, the U.S. economic crisis has several months causing problems in families that have not been sufficiently supported by the government -neglecting the real cause of the problem- with the American politicians focusing the debate on giving more money to large corporations or tax cuts.

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