March 2008

Taking Action to Help American Families Through a Bad Economy

Dear Friend,

Congress is not quite 90 days into the new session, and we’ve been busy finding ways to help hard working American families through the Bush Economy: soaring prices for gas, groceries and healthcare, and a home mortgage meltdown in many parts of the country that’s being felt in Hawaii.

The Problem: Making Ends Meet
Families are facing a real struggle in the slowing economy. The price of a gallon of gas, a gallon of milk or a getting a prescription filled at the pharmacy is off the charts. We’ve seen the biggest drop in American jobs in five years, and consumer confidence is very low. Oil prices hit record highs at the end of 2007, and we thought they couldn’t go any higher. We were wrong. Mortgage foreclosures across the country hit record high levels in the fourth quarter of last year, and mortgage delinquencies hit a 23-year high. For the first time in the United States since 1945, many homeowners’ debt on their house exceeded their equity, and home prices suffered a steep decline toward the end of the year.

Congressional Action
Congress has already passed tax rebates as part of an economic stimulus package to help jump start the slowing economy by putting money directly into people’s pockets. Later this spring, recovery rebates will put hundreds of dollars (up to $600 per individual and $1200 per married couple, plus $300 per child) into the hands of more than 130-million Americans. We’re expanding financing opportunities for people in danger of losing their homes and promoting small business investment in plants and equipment.

The Problem: Record High Energy Prices
Families are paying an average of $3.24 a gallon for gas—75 cents more than last year’s average and bumping up against the record high last spring. That’s no surprise for us in Hawaii, where we’re paying $3.55 a gallon or more. Some experts are predicting that prices will hit $4.00 a gallon by June. In early March, oil prices hit a new high of $106 per barrel—up more than $25 since last August and four times the price in 2001. Is it any wonder that the five big oil companies reported record profits in 2007? Exxon-Mobil earned $40.6 billion — the largest corporate profit in American history.

Congressional Action
It’s hard to believe that big oil companies are still getting tax subsidies—at the same time that they’re making record profits. The House has passed legislation to redirect subsidies and shift the incentives to the development of clean, renewable energy. The legislation is paid for by repealing the nearly $18 billion in unnecessary tax subsidies for big oil. In 2005, President Bush said, “I will tell you, with $55 [a barrel] oil, we don’t need incentives for oil and gas companies to explore. There are plenty of incentives.” He was right.

We’re trying to make Americans less dependent on foreign oil, strengthen our national security and lower energy prices in the long-term. Congress’ new Energy Bill will save more than 100,000 jobs in the renewable energy sector, and it’s vital to creating hundreds of thousands of new jobs.

The Mortgage Crisis
The effects of the Subprime Mortgage Crisis are being felt both directly and indirectly. Nearly three million Americans could lose their homes in the next five years. And it doesn’t just affect distressed homeowners themselves; it’s reducing U.S. home values and undermining whole neighborhoods. Millions of homeowners are seeing their largest, most important investment lose value. According to the University of Hawaii Economic Research Organization, Oahu’s median prices will drop by 5% over the next two years; not good news if it’s your house. It’s gotten so bad nationally that one in every ten homeowners now owes more on their home than it’s worth.

Congressional Action
Congress has already enacted measures to expand affordable mortgage loan opportunities for families in danger of losing their homes by increasing Federal Housing Administration (FHA) loan limits up to $729,750, very important in expensive housing markets like Hawaii. We want to keep homeowners who are facing foreclosure from having to pay a big tax bill at the same time. And, we're expanding financial counseling for people who are at risk of losing their homes through forclosure.

The House has also passed measures to strengthen consumer protections against risky housing loans in the future, to raise the Fannie Mae and Freddie Mac loan limits to increase liquidity in the mortgage market, and to increase the supply of affordable housing across the country.

The Senate is working on legislation to keep families facing foreclosure in their homes, help others avoid foreclosure, and help communities harmed by foreclosure to recover. The measure will provide tax-exempt bonds to buy up subprime loans and offer financially-troubled families a way to refinance their high-interest mortgages.

These are steps already taken to help hard working American families make ends meet. And Congress will continue to seek opportunities to help people get through these tough economic times.

 

Aloha,

Neil Abercrombie

Member of Congress