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Rolling Meadows, Ill. – With American employers cutting 63,000 jobs in February and deepening fears of a recession, Congressman Mark Kirk announced two pieces of legislation today aimed at boosting the economy and expanding health insurance for millions of Americans.
- To end the mortgage crisis, Congressman Kirk proposed restarting the Home Owners’ Loan Corporation (HOLC) that helped millions of Americans keep their family homes during the Great Depression.
- To expand health insurance, Kirk also pushed for the passage of the Tax Equity and Affordability Act to give individuals the same tax breaks that employers get when buying health insurance.
Action to End the Mortgage Crisis
“Many Americans have more debt in their homes than equity, with approximately 10 percent of all homeowners expected to be ‘under water’ by month’s end,” Congressman Kirk said. “As the housing slump continues, the Congress should act aggressively to protect the more than 1.8 million families who risk losing their homes this year. Keeping Americans in their homes keeps families together, prevents abandoned properties from harming neighborhoods and keeps local taxpayers in place to support schools.”
Following the recommendations of American Enterprise Institute scholar and former President of the Federal Home Loan Bank Board of Chicago, Alex Pollack, Kirk urged the Congress to restart the federal Home Owners’ Loan Corporation. The Corporation was a temporary institution that stopped a crisis, kept Americans in their homes and then closed, repaying the taxpayer with a profit. “We should build on the successful precedent of the HOLC to repeat one of our nation’s most effective ways to restart the economy and keep families in their homes.”
All homes in America total $20 trillion in value. Of the more than $10 trillion in outstanding mortgages, $1.3 trillion are “subprime,” with half including adjustable interest rates. Approximately 20 percent of those adjustable rate mortgages are now past due.
In 1934, the mortgage crisis was seven times worse than today, with nearly 50 percent of all depression mortgages in default. The Congress established the Home Owners’ Loan Corporation with the following goals: (1) Protect homeowners from foreclosure; (2) Relieve homeowners of the higher interest and principal payments incurred during periods of higher property values and higher earning power; (3) Declare that it was a national policy to protect home ownership; (4) Impose the least possible cost on the federal treasury; and (5) Avoid injustice to the investor.
HOLC, established in 1933, was a temporary corporation which restored stability to uncertain mortgage markets. HOLC acquired and refinanced over one million troubled mortgage loans—about 20 percent of all mortgage loans in the country. HOLC only rescued current mortgages for three years, 1934-37, stopping a panic among banks and other financial institutions. HOLC purchased troubled mortgages from lenders at a substantial discount (on average 20 percent below their pre-depression value), then offering reasonable refinancing options to homeowners. This prevented a total collapse of banks and allowed families to remain in their homes. States and local communities appreciated keeping local taxpayers in their homes rather than turning whole neighborhoods into rat-infested ghost towns. After fulfilling its mission, HOLC was liquidated in 1951, returning a $14 million profit to the taxpayer.
Action to Expand Health Insurance
Congressman Kirk also called on Congress to pass legislation to give individuals the same tax breaks employers have when buying health insurance. The Tax Equity and Affordability Act (H.R. 914) give individuals the same tax breaks that employers get, making health insurance significantly less expensive for millions of self-employed Americans or people who work for small businesses that do not provide health insurance.
“Our tax code unfairly punishes small businesses and families who do not have access to employer-provided health insurance,” Congressman Kirk said. “According to the National Coalition for Health Care, the total number of people with employer-based health care dropped from 70 percent in 1986 to 59 percent in 2006. Approximately 80 percent of the uninsured are working families who are not covered by employers. The Tax Equity and Affordability Act provides tax credits for individuals and families who purchase their own health insurance, creating lower cost and more flexible health insurance for millions of Americans. This legislation will help prevent the loss of $100 billion in health care services for the uninsured each year – most of which could be prevented with more access to insurance and early treatment.”
Under the Act, lower-income individuals would be eligible for a credit worth up to $2,000 annually. Lower-income families would be eligible for a credit worth up to $4,000 annually. Individuals earning above $30,000 would receive an annual tax credit worth $1,250; families earning above $60,000 would receive an annual tax credit worth $2,500.
The legislation is endorsed by the American Medical Association, Council for Affordable Health Insurance, Medical Savings Insurance Company and E-Health Insurance.
Today’s announcements took place at the annual “Biz 6” business luncheon, comprised of eight area chambers of commerce from the following communities Arlington Heights, Buffalo Grove, Hoffman Estates, Mt. Prospect, Palatine, Rolling Meadows, Wheeling and Prospect Heights. Congressman Kirk was joined at the luncheon by Congressman Peter Roskam.
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