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December 15th, 2008

A Ready-to-Go Stimulus Plan

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The Federal government has allocated billions of dollars to shoring up our economy, and has also offered up a side order of economic stimulus that, frankly, didn’t do a lot. Word is that the incoming Administration is planning on another stimulus package that could cost as much as $1 trillion over the next two years:

Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years “a very low-end estimate,” the newspaper said, citing an unidentified person familiar with the matter.

The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy. …

Obama has promised he will launch a massive public works program to help lift the U.S. economy out of recession.

While details are scant, this “massive public works program” seems to be counting on a lot of infrastructure repairs — highways, bridges, etc. — that Federal and state governments have been putting off for decades.

But Investors Business Daily has what could well be an even better idea — put a lot of people to work while lessening our dependence on foreign oil:

It seems funny to talk about a $1 trillion taxpayer- and debt-funded “stimulus” plan when there’s something we could do right away to boost the economy, create hundreds of thousands of jobs, shrink our trade gap and secure our energy independence: Drill for oil here, and drill for it now.

October’s trade data tell why. Despite a record plunge in oil prices from the late summer and into fall, the actual volume of oil we imported went up. Oil still accounts for nearly half our trade deficit (see chart) compared with less than 30% two years ago.

We still spend hundreds of billions each year to buy oil from abroad because we produce less and less of our own energy with each passing day. That leaves us vulnerable to petrotyrants — including Russia’s Vladimir Putin, Iran’s Mahmoud Ahmadinejad and Venezuela’s Hugo Chavez — who would do us ill, using their oil wealth as a weapon against the U.S. and the West.

IBD reviews the numbers and puts several oil-supply myths to rest:

According to U.S. government estimates, 86 billion barrels of oil lie undeveloped in the outer-continental shelf alone. Another 36 billion or so can be found offshore Alaska and in ANWR. Add to that 30 billion barrels or so in the lower 48. And even that understates the total.

The Green River basin, which straddles a wide swath of the West stretching from Colorado to Idaho, contains 1 to 2 trillion barrels of oil trapped in rock shale deposits. Yes, trillion.

OPEC meets next week, and by all indications will announce — and enforce — real cuts in oil production. World oil prices are already stabilizing, and if OPEC gets its act together, it won’t be long before we bid farewell to the $1.50-or-so gas we’ve been enjoying.

We say: To heck with OPEC. Drill here. Drill now. What do you think?

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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