Bank Leaders: Obama Plan May Help
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On Tuesday, President-elect Barack Obama and congressional Democrats began formulating a two-year economic rescue package. The Associated Press reported that the plan, with an estimated cost of between $400 billion and $500 billion, aims to create 2.5 million jobs and give tax cuts to the lower and middle class, while making government investments in energy-saving and other technologies.
Area bank presidents think some parts of the plan will benefit the national and regional economy, but other aspects aren't really needed.
Freedom Bank President Mike Hudnall believes the plan will work if the money goes toward developing infrastructure.
"If most of the money goes to infrastructure, I really think that will help even more than direct payments to shareholders simply because it will create some jobs and generate excitement," Hudnall said. "Whether that will help our local economy strictly depends on our congressional representatives and how successful they are at getting funding for needed infrastructure work from the stimulus package. Usually the bigger cities and states get a bigger chunk of the money due to political influence.
"As for direct tax payments to the people, I do think it is needed. However, I don't think it works as well as the Wall Street crowd likes due to the fact that many of the recipients will use the money to either pay down debt or save it," Hudnall said. "That is exactly what they should do, in my opinion. However, the big boys on Wall Street are only interested in the stock market and want all of us out there again spending over our heads and going back into debt."
Huntington Bank Branch Manager Brad Schumacher agrees that infrastructure could give the local economy a boost. The construction of new roads and bridges normally creates well paying jobs, but he doesn't know if it will be a quick fix.
"Overall the government is trying to find ways to create new jobs and get people to starting spending money again," Schumacher said. "During difficult economic times, people have a tendency to be very conservative on their spending. The government is trying to encourage people to start spending money again to get the economy to grow. They are also trying to encourage people to borrow money to buy homes, cars, etc. so that the overall economy and businesses in general will continue to be strong and viable."
"The tax cut will put more money in everyone's pocket, which will give each individual more money to spend on purchases, which will hopefully stimulate the economy."
Mountain Valley Bank President and CEO Richard Harvey has mixed opinions about Obama's developing plans.
"A well-planned stimulus package to mitigate the serious economic downturn should be effective in the short term," Harvey said. "However, this will add significantly to the federal government's deficit spending, which is an issue that must ultimately be addressed also."
