Obama Wants Foreclosure Moratorium, Tax Credits

Democratic presidential nominee Sen. Barack Obama on Monday proposed four steps to create jobs and to cushion Americans against the effects of the economic downturn as he campaigned in an area hit hard by the slowdown.

AP Barack Obama

The proposals, costing $60 billion over two years, include tax credits for firms that create new jobs, penalty-free withdrawals from retirement accounts and temporarily barring banks from foreclosing on people trying to pay their mortgages.

Obama also called on the Federal Reserve and the Treasury Department to set up a facility to lend to state and municipal governments, similar to the steps recently taken by the Federal Reserve to inject liquidity into the commercial debt market.

The Illinois senator outlined his ideas in Ohio, a battleground state that has suffered from the U.S. economic downturn and that is central to his campaign against Republican candidate Sen. John McCain of Arizona.

Recent national opinion polls show Obama extending his lead over McCain, in some cases to double digits. In Ohio, however, polls show a statistical dead heat with Obama slightly ahead.

Analysts view voters' anxieties about the global financial turmoil as one factor behind Obama's rise in the polls just over three weeks before the Nov. 4 U.S. presidential election.

"I'm proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities and help struggling homeowners. It's a plan that begins with one word that's on everyone's mind, and it's spelled J-O-B-S," Obama said in remarks prepared for delivery at a Toledo rally.

Obama's proposals include:

• A temporary $3,000 tax credit to companies for each new job created in the
  United States over the next two years.
• Penalty free withdrawals from 401(k) and IRA retirement accounts up to a
  maximum of $10,000 this year and next.
• A 90-day moratorium on foreclosures for homeowners who are living in their
  homes and making good-faith efforts to make their mortgage payments.
• A call for the Treasury to help unfreeze markets for individual mortgages,
  student loans, car loans, loans for multifamily dwellings and credit card loans.

The plan also calls for temporarily eliminating taxes on unemployment insurance benefits and having the Fed and Treasury prepare for guaranteeing a broader range of liabilities of the banking system.

Jason Furman, a key economic aide to Obama, estimated that the proposals would cost an additional $60 billion to the federal treasury over two years. This is beyond the $115 billion estimated cost of a plan that Obama outlined this summer to jump-start the economy.

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