Not to be out done by John McCain's stupid recovery plans, Barack Obama has come out with a couple doozies of his own:

The presidential candidate says banks that participate in the federal bailout should temporarily postpone foreclosures for families making good-faith efforts to pay their mortgage.

He also called for a $3,000 tax credit for each additional full-time job a business creates. The tax break would end after 2010.

Obama also is proposing letting people withdraw up to $10,000 from their retirement accounts without any penalty this year and next.

The Obama campaign emphasizes that these ideas can be done quickly, either through executive order or legislation.

The first gesture is the costly one.  $3,000 tax break for "creating a job"?  This is the exact sort of thing we don't need.  I've talked before about the fallacy that job creation is a moral obligation of business.  Obviously there are no details here (there never are), but the reality is that in our economy, jobs rarely are created out of the ether.  One type of business shrinks for various reasons, and another one grows as a result of redirected capital towards a better performing econcomic industry.  Alternative energy won't "create jobs" as the candidates keep telling us.  Rahter, they'll simply redirect jobs away from oil, and put them some place else.  So what is likely to happen with Obama's plan, if anything, is that we'll be subsidizing the movements of jobs from one industry to another, even though no net job creation will take place.  And of course, that job movement would generally happen anyway.

And where did $3,000 come from anyway?  Depending on the job, the cost of a full time employee can be very significant once you add up not just salary, but also benefits, and other non-reimbursement expenses (workstation, training, etc.) for an employee.  There is no evidence that $3,000 is enough to convince a company to hire on an extra individual that they wouldn't have hired without the incentive, except in some marginal cases.  It will, however, be extremely expensive, and riddle our government with even more debt that we can't afford.

The more pointless gesture presented here is that of a foreclosure moratorium for families making "good faith efforts to pay their mortgage".  How do you define "good faith effort" in this case?  The definition here is important because it will attempt to codify into law something that mortgage companies already do!  Unlike the image of the cold hearted banker stealing a home out from underneath a poor family scraping together their last dime, while raking in extra doe, which the Democrats have carefully crafted, foreclosures are actually very long, costly procedures, which almost always generate a loss of revenue for the bank.

The only reason that a bank chooses foreclosure over modified repayment schedules is because the owner isn't making a good faith effort to pay, not in spite of their good faith effort.  This is especially true today with the housing market on a down cycle.  Banks would get even less money in a foreclosure sale, if they could get any money at all.  In fact, one of the symptoms of the housing crisis that Democrats talk about is the issue with unsold foreclosed homes rotting in neighborhoods.  So banks have extra incentive to get money out of the current owner, rather than risk having a home sitting unsold on the market bringing in no money.  The only reason they have to not do this, is if the current owner is not making any effort to pay.

However, by codifying this pre-existing practice into law, it brings extra risk to bankers in that there will be extra fear about whether they can foreclose on a house without breaking the law.  Unfortunately, the only people who will benefit from this fear are those who don't deserve it, not those making good faith efforts.  And those are exactly the ones we don't want to encourage.

But of course, all these stupid ideas sure do inspire the populace, just as they sink us into more and more trouble.