Domestic+Issues

Hurricane Katrina devastated New Orleans on August 29, 2005. It displaced thousands of families and killed 1,600 people. The aftermath of the storm, however, exposed problems within the government. The Federal Emergency Management Agency (FEMA) in particular was criticized for its handling of the situation. FEMA was not prepared for such a large natural disaster, and many were left stranded in New Orleans without fresh food or water. Hurricane Katrina also had a significant economic impact. The federal government spent $100 billion in aid to help with the situation. In addition to destroying New Orleans, the hurricane also significantly disrupted oil production in the Gulf of Mexico.
 * [[image:katrina.jpg width="314" height="216" align="right"]]Domestic Issues **
 * Hurricane Katrina **

Because real estate was a rapidly increasing investment, banks were giving out subprime mortgages, or risky loans. Many of these loans failed when the housing market failed in 2007. On September 19, 2008, Treasury Secretary Henry Paulson announced a plan to save the numerous troubled financial institutions. His plan was to use federal money to buy these “troubled assets.” The plan was called the Troubled Assets Relief Program (TARP), and represented the largest government step into the financial market since Franklin D. Roosevelt, giving $700 billion to the banks to help keep them running.
 * [[image:hi-res-henry-paulson.jpg width="204" height="247" align="left"]]TARP **



Recession ** Rapid declines in the real estate market caused other markets to decline with it. In 2007, America fell into a recession. Jobless claims went on the rise, and reached the highest levels since 1967. Car manufacturers went into bankruptcy as people could no longer could afford to buy cars. The government bailed out GM and Chrysler, giving them billions of dollars. Stories of the effects of the recession could be heard everywhere, while people with once stable jobs were now finding themselves jobless. In response to the increase in unemployment, Obama pased a trilliion dollar stimulus bill. Although the stimulus bill passed, unemployment continued to rise above 10%. Obama and his administration, however, claim that the bill saved and created hundreds of thousands of jobs.