Economic Stimulus
In February, President Obama signed a $787 billion economic stimulus package made up of about 60% government spending and 40% tax cuts.  The spending provisions of the stimulus included $90 billion for education (including state aid, Pell Grants, and low-income school aid), $90 billion for Medicaid, $51 billion for energy (including electricity grid upgrades, and energy efficiency projects), $48 billion for transportation and infrastructure, and $22 billion for health research and technology.  The tax cuts were mainly aimed at lower- and middle-income individuals, including a $400 credit for any working individual earning less than $75,000 a year.  For more details on exactly what's in the stimulus, click here.

TARP, The Banking Industry, & Credit Markets
The Obama administration is still developing its plans for the second $350 billion of Troubled Asset Relief Program (TARP) money authorized by Congress last year.  Reportedly, the most recent version of the plan would have the government use some of the money to set up a public-private investment partnership to buy troubled assets.  Details of the plan are still being developed.

Regarding the largest U.S. banks, 19 of them will be given "stress tests," or what Treasury Secretary Tim Geithner calls a "forward-looking capital assessment."  The tests will determine how much capital each bank needs to remain solvent.    Each bank will then have six months to attempt to raise this amount of capital through private investment.  If a bank cannot do so, the government would provide the capital by purchasing preferred shares from the bank.

Also, on March 5 President Obama launched the "Consumer and Business Lending Initiative" a program which he says will finance up to $1 trillion in lending and help unfreeze the credit markets.

Housing & Mortgage Relief
In February, President Obama announced a mortgage relief plan with two major provisions.  First, the loan modification provision will aid homeowners who are now unable to make payments and in danger of foreclosure.  The government would subsidize modifications of their loans to reduce monthly payments to 31% of pretax monthly income.  This provision only applies to homeowners that use the home as a primary residence, and who have an unpaid principal balance of less than $729,250.

Second, the loan refinancing provision will aid homeowners who are able to make payments but unable to refinance due to dropping home prices. The government will allow these homeowners to refinance to take advantage of lower interest rates without offering the customary 20% down payment.  This provision only applies to homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac, and whose mortgage balances are less than 105% of their homes' current value,

Automobile Companies
The administration is still deciding whether or not to provide aid to the struggling Detroit car companies GM and Chrysler.  The president asked the companies to return in March with a plan for long-term solvency that his economic team will review.

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