Credit crisis is far from over, but rescue package has short-term relief for Main Street

While Washington's financial rescue program may not cure the credit crunch or the foreclosure crisis, there are numerous palliatives for Main Street savers, taxpayers, and homeowners.

Short-term relief is at hand, even if the stock market continues to be roiled and the possibility of a recession looms.

The housing market won't rebound overnight. Private mortgages for investment properties, student loans, and auto and other installment borrowing will be harder to get until the credit crisis is resolved. Credit card fees and rates will continue to climb, while spending limits drop. All of this will compel Americans and other Western consumers to borrow less, which will contract the global economy.

There's a bright side: Cash will be king in a time of pinched credit and increased government deposit insurance. If you haven't done it already, it's an ideal time to review your "safe money" strategies.

By raising the limit of Federal Deposit Insurance Corp. coverage to $250,000 from $100,000 per account - good only through next year - the new law may spur more saving.

Taxpayers hounded by the alternative minimum tax will get immediate respite. The first $46,200 of an individual's income, and the first $69,950 of a married couple's earnings, will be exempt from the levy, compared with $33,750 and $45,000 without the new law.

While those breaks sound modest, they will spare some 24 million families from paying the hated tax. Unfortunately, the boosted exemptions are good only through the end of the year. Congress will have to revisit the perennially thorny subject in 2009.

The law also extends write-offs for state and local sales taxes, as well as for contributions of individual retirement account assets to charity. It also extends a maximum $1,000 break on property taxes for those who don't itemize.

Parents facing college bills get some help. The Hope Scholarship, a tax credit that applies to the first two years of post-secondary education, was doubled to a maximum $3,000. The companion Lifetime Learning Credit also was doubled, to as much as $4,000.

A tuition deduction that ranges from $2,000 to $4,000 also was extended to the end of 2009. But you can only gain the write-off if you have an adjusted gross income of $65,000 or less ($130,000 for joint filers).

Want to add solar appliances, windmills, or geothermal heat pumps to your properties? Congress will give you tax credits starting at $2,000 per unit.

Plug-in vehicles that allow you to recharge batteries from your home outlets are eligible for limited breaks ranging from $2,500 to $7,500.

Don't be dazed by the headlines. It's always a good time to pay down debt and save. In times of tight credit, as Wall Street has amply demonstrated, excessive debt can be deadly.

John F. Wasik is a Bloomberg News columnist.