Vegas - I agree with you to a extent. But something does need to be done quickly. You have people like myself, who do live within our means, who are feeling the brunt of this weakened economy (not a recession according to the government). I don't know what the solution is, but the people who over-extended themselves should NOT be receiving any aid. People who did this and the money hungry lenders are the reason we are having the problems we are having.
As to the answer to the question, I vote NO. The people who are causing this probably do NOT 401's in place, thereby it would be enabling them to make even more bad decisions, as the stable people would be the ones trying to fix the economy. I shouldn't have to take from my 401k to fix what someone else caused. Sorry, but I already pay enough for those who don't want to work.

Besides, most people won't 'pay down debt, catch up behind payments, do home repair or to make targeted purchases'. They will just buy more junk, go to more casinos, take on more debt. In a month they will have used up all the 'new' money and be even worse off later. (Anything you can write into law, you can re-write. If it suits some politician, there'll be a 'national emergency' every 6 months.)