Bailout, Stimulus $$$$$$$$$$$$

I heard in several places yesterday that if we were to take all the money the government is putting into TARP 1, TARP 2, the Porkulus package, and all the rest, the government could pay off 90 percent of the mortgages in the United States. If we have to spend this much money (which, much like this list of economists, I still think we don't), mortgage payoff is not a bad idea, but I have a modification to satisfy my friend who pointed out it wasn't fair to people who rent.

So, here's the theory...

You take the money and pay off 50 percent of every mortgage in America. If you want, I'll even use President Obama's income breakpoint of $250,000. Pay off 50 percent of every mortgage on a primary residence for everyone making under $250,000, and take their interest rate down to 4 percent.

Consider what that would do:

Using an online mortgage calculator, I figured, assuming a $100,000 house for which $90,000 is financed on a 6.25 percent 30-year fixed loan, the monthly payment would be $554.15 before my buyout plan.
After my buyout plan, that same person would be financing $45,000 at 4 percent on a 30 year fixed, making his monthly payment $214.84. That would be an additional $339.31 per month in the pocket of the homeowner, which will most likely get spent, causing a demand for goods and services, which would mean we would need to put people back to work to provide them.
In addition, there would be an influx of money into the banking industry, at least part of which would be made available for lending again, which should unfreeze the credit market.
Now, because my friend says that would be unfair to the renters, my plan is that each renter can apply for a one-time payment of half their annual rent.
Now, I know that there are those who are going to say that it isn't fair because some people get a bigger payment than others, etc. etc. etc. My answer is simple, no plan, no matter how well thought out it may be, is going to be absolutely fair to everyone. I wish it could, but it can't. This will put the most money in the pockets of the people who we are told need it most in the shortest amount of time.

Some renters, with a large lump of cash in their pocket, may even choose to use the money as a down payment on a house, thereby starting the housing market again.

This plan should also mitigate a fair amount of the inflation that should come with a flood of money in the market, because there won't be a giant influx. With the exception of the renters who would receive a large lump-sum payment, homeowners will see a few hundred dollars of extra cash each month, which should hold demand down to an extent.

Truth be told, though, I really think that we could do this and restart everything for significantly less. Buy down the interest rate on all the mortgages to 4 percent, and pay half the payments for each mortgage in the above plan for a year, maybe two. For one or two years, they will have a significant amount of extra money each month, and at the end of that two years, they would still have a lower payment than when they went in. Renters would, once again, get a payment for 1/2 their rent for the same number of years that homeowners. It should start the economy just like before, but it would cost significantly less.

It's just a suggestion, although I doubt that Congress would ever go for it. If they passed this as it stands, it would only be stimulating the economy, helping the housing market and creating jobs. However would they implement their socialist agenda?