As Wall Street seemed to get some much needed energy Monday, Barack Obama visited this Rust Belt city and proposes new mortgage plan to help homeowners who are struggling to meet their monthly payments.  The Democratic presidential nominee challenged Congress and the Bush administration to help soften the fall for Americans after the economic financial melt-down continued to take its toll.  

The government approved measures to help businesses create new job opportunity that enables families to use their retirement savings in an effort to stop home foreclosures and stabilize state and local government budgets.  “We need to pass an economic rescue plan for the middle class, and we need to do it not five years from now, not next year — we need to do it right now,” he told 3,000 supporters in a convention center in this northwest Ohio city.

In a recent Los Angeles Times articles skeptics said the plan had popular short-term appeal but would have little impact on the underlying sources of anxiety and instability in the world economy.  “I would hope that both candidates would focus on making sure we have good long-term policies in place, rather than fine-tuning day-to-day concerns,” said Lee Ohanian, a professor of economics at UCLA.  Advisors to GOP presidential nominee John McCain said that Obama’s broader economic policy is flawed because he is proposing to raise federal taxes on upper-income people. McCain says such a tax hike would kill jobs because it would hit some of the economy’s most productive small businesses. Independent analysts have disputed this claim, and Obama has said that his plan would raise taxes on families making more than $250,000 per year.

McCain plans to unveil new economic proposals of his own today in Pennsylvania. Aides did not reveal any details about the scope of those plans.  Obama’s campaign said the new recovery package would cost $60 billion over two years, adding to an economic plan he unveiled in August that would cost $115 billion over two years. The new package included these major elements 

* Companies that added jobs this year and next would receive a $3,000 tax credit per new worker.

* Families would be able to withdraw up to 15% from their IRA or 401(k) retirement accounts, up to $10,000, without penalty.

* Families facing foreclosure would get a 90-day reprieve if they were working with finance firms taking part in the $700-billion rescue package Congress passed last month, and if they were making a good-faith effort to pay their mortgages.

* The Federal Reserve and Treasury would create an agency to lend money to states and cities caught in the credit crunch, such as California.

Some of these proposals, such as the foreclosure moratorium, could be put into effect under existing law. Others, such as allowing people to dip into their retirement accounts, would require legislative action.  Douglas Holtz-Eakin, one of McCain’s top economic advisors, said Obama’s new policies offered “nothing substantive” to help the American economy and called them hypocritical: “At the very time he’s threatening to weaken the American economy with tax increases, explosive spending proposals, expensive health mandates . . . he pretends to offer a ‘rescue package to Americans.’ ”   A McCain supporter, former Rep. Rob Portman (R-Ohio), said he was skeptical of Obama’s proposal to allow families to withdraw up to $10,000 from their retirement accounts without penalty. “I’m not sure what impact that would actually have, except that it would be taking out of retirement-savings assets at a time when those assets are likely to be at a very low value, ” Portman said on a conference call set up by the McCain campaign.

Economists, investment advisors and real estate experts interviewed Monday said they approved of parts of Obama’s plan.  In general, they tended to favor some sort of moratorium on foreclosures, in large part because it has an expiration date and would give lenders and borrowers some breathing room until the panic subsides on Wall Street and at bank teller windows across the country.  “Ordinarily, I’m not in favor of moratoriums of any sort, but these are not ordinary circumstances,” said Kerry Vandell, the director of the Center for Real Estate at UC Irvine. 

However, some economists warned that the home foreclosure moratorium would just delay the resolution of rooted problems in the housing sector and mortgage market.  McCain recently proposedf proposed a $300-billion plan for the government to buy up bad home mortgage loans. Obama argued that this plan would force the Treasury to overpay for delinquent mortgages while rewarding “irresponsible” mortgage lenders.  The on;ly problem with Obama’s proposal is that Americans could be cashing in their 401k’s and pension plan at a time when their portfolio value was damaged.  Ironically, one could say his plan could have similiar affects as McCain’s plan to buy up bad mortgages.