The Next Economic Stimulus Should Help Those Who Need it Most

First the banks were bailed out. Then it was the insurance companies. The auto industry will be next.

When will the those who really need it get their bailout?

There will be another economic stimulus package in the next few months. President-elect Obama made it clear at his first press conference last week: "If it does not get done in a lame-duck session, it will be the first thing I do as president of the United States." A glance at headlines from the past few days drives the seriousness of the situation home:

L.A. Times: Unemployment rate hits 6.5%, a 14-year high

Postal Service Looks To Cut 40,000 Jobs In First Layoff In History

Working Poor and Young Hit Hard in Downturn

McDonald's same-store sales rise 8.2 percent

If the Coalition on Human Needs gets their way the answer to the question above will be sooner than you might think. The Coalition's new report, Towards Shared Recovery (pdf), makes the case for an economic stimulus package for boosting the economy by providing assistance to those who need it most.

Here are the specifics of what the report proposes:

The report:

presents Congress with key items that should be part of an effective stimulus package, including an increase in nutrition assistance, an expansion of unemployment insurance, investments in infrastructure and job creation, additional aid for states, help for victims of home foreclosure, and increased funding for Head Start, child care and child support programs.

Deborah Weinstein, Executive Director of CHN, explains: "Economists tell us that providing aid to low- and moderate-income people is the most effective way to boost the economy." The need for an additional economic stimulus package is well understood. Others are calling for it from throughout the political spectrum...

Federal Reserve Chair Ben Bernanke:

"with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate."

Brian Bethune, chief U.S. financial economist for the research firm Global Insight:

"Effectively, the Fed chairman is giving Congress a green light to go ahead with an additional fiscal stimulus package"

Douglas W. Elmendorf, former Treasury and Federal Reserve Board economist and fellow at the Brookings Institution:

"We need fiscal stimulus. The outlook is much darker than it was even a few months ago."

Plenty of great work is being done in the private sector, but it is not enough.

A foundation driven effort called Spotlight on Poverty and Opportunity is pushing President-elect Obama to make poverty reduction a hallmark of his administration. The Open Society Institute (Baltimore Chapter) has just awarded $450,000 in fellowships to eight creative individuals who are working to support underserved communities in Baltimore. These types of programs are extremely valuable, and I applaud them.

But the fact remains that the private sector alone can not provide the types of supports and investments the American people right now. Only a broad economic stimulus, targeted to help lower-income Americans, can get our country back on the right track. Towards Shared Prosperity provides an excellent framework for such a stimulus program.

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Comments

[JohnSmithson]

The Coming Boom

At some point over the next 6 - 18 months the feds are going to wake up and realize that printing all that money (hundreds of billions) comes at a cost, along with the severe reduction in tax revenue due to a falling economy. You cannot simply expand the size and scope of the federal government massively overnight without any effect.

The result?

Get ready for massive tax hikes. How high? Perhaps to record levels never seen before in the United States. It's coming to a nation near you.

[ljeff18]

The gov't is already helping average Americans--
Look at this article: http://www.greenfaucet.com/canada/what-matters-more-the-good-or-the-bad/48566

The mortgage servicers will help borrowers who are more than 90 days delinquent bring their monthly payments down to 38% of their gross income, which is now considered the threshold of affordability and

There is no way that the govt is going to let the big automakers go bankrupt.

[BigBagel]

Everybody has an idea on how to spend the taxpayers money. It's great.

[RightWingMarine]

since the government has no money of its own and can only spend a dollar by first taking that dollar away from someone else, who exactly will this help the economy? What about what President Madison (father of the Constitution) said so long ago: "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on the objects of benevolence, the money of their constituents." Could someone here please show me where in the Constitution the government has the authority to spend my money on acts of benevolence?

If you reach into your pocket to help your fellow man that is a good and commendable thing. If someone else reaches into your pocket and spends that money on your fellow man it is theft. When the government does it it is government sponsored theft.

Vote Libertarian for real change.

[DuganS1]

If the government does undertake an additional stimulus package, the amount of tax revenue lost because of lower economic growth and unemployment would likely exceed the cost of the stimulus.

[john456]

Unfortunately for your (and Republican supply side) theory about taxes, No one creates supply unless there is demand. We need to create demand.

[DuganS1]

Ooops, I meant to say ... If the government does "not" undertake an .....

[LRM216]

It is "we," the people that need the help! Enough with the corporations that have caused all these problems getting all the help. Who is going to be left to purchase/or use the services of these corporations and businesses if we can't keep our heads above water??? So many of us are losing jobs, investments, retirement funds and no one is compensating any of us. Foreclosure rates are high now, caused by all the idiot buyers and lenders that should never have made those loans to begin with, but what about the houses that will be lost shortly by all of the hardworking people that have lost their jobs? Why are our interests rates on credit cards, even if our credit reports are good, going up to the 20+% range. I overdrew my account by $3 (my error, I realize) but got charged a $32 fee for it and have banked with my bank for over 15 years! Where is the justice for us, the backbone of America. I am sick of all the bailouts for the big boys while we flounder along. It's not all about Obama or McCain - it's just government as a whole, no matter which party is running it - it stinks and I'm sick and tired of it. (Whew! I feel better already!).

[RightWingMarine]

next time vote Libertarian and stop the bailouts and wasteful government spending.

[DuganS1]

Without the financial system bailout, the economy would have entered a downward spiral that would have cost the economy trillions over the next few years in lost revenues, and that would far exceed the cost of the bailout.

[PATina]

While I agree that the above proposals will eventually positively affect the economy... I'm of the mind set that unless a large number of dollars gets put DIRECTLY into the hands of a majority of citizens... it will be too little, too late. I'm all for extending unemployment... but it has to go through the states... then to those who are unemployed. And while that number is growing... it still is only a small percentage of the population and will only replace the money they were putting into the system while working. We need ADDITIONAL money going into the system.

We are the fuel that drives the economy. The automakers aren't having financial problems because they aren't getting a big enough tax break... they are in trouble because people can no longer afford to buy their cars. Same w/ the housing industries... retail industries... etc. If we want to get this economy going again... distribute that $700 Billion to the people. We will spend (boosting the automakers, housing and retail industries)... save (giving the banks more liquidity)... and invest (providing capital to businesses).

[fatherof4]

Sounds great. The question is....Where is this money going to come from, seeing we as a nation are already approaching half a trillion in debt. Oh yeah, lets borrow more money from the Chinese government and be more indebted to them. Makes perfect sense.

[eltopo]

Half a trillion? More like six trillion.

Direct and bold action is needed, though, or we as a nation will continue upon our current downward course. There will have to be some amount of even greater deficit spending for while, or our recovery will take much, much longer. We need to get back on our feet, and then we'll work on paying off our debt.

There are, however, several things that can be done to increase revenue and minimize the increase in spending. Two immediate examples: 1) roll back Bush's tax cuts for the wealthy and tax the top 1% of the population at Clinton-era levels, and 2) slash defense spending--we're pumping trillions of dollars into weapons designed for a bygone era.

[DuganS1]

This "debt" will be significantly marginalized over time with GDP growth and inflation. $11 trillion won't seem like much in 20 years.