CHN: The Need Grows for More Federal Help to Curb the Recession; President’s Opposition Complicates Congressional Plans to Increase Aid

Over the past 12 months, 1.1 million more people became unemployed, with 80,000 losing jobs last month alone.  Each week, 20,000 families lose their homes.  They will not disagree with former Federal Reserve Chair Alan Greenspan, who said last week that “we are in the throes of recession.”
House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) sent a letter to President Bush the day before their April 9 meeting urging him to work with them to enact additional measures to boost the economy, “…to bring relief to families struggling to make ends meet.”  The President continues to oppose economic stimulus beyond the tax cuts enacted earlier this year.

Nevertheless, Congressional leaders have concluded that economic conditions warrant further action and are weighing both what to include in a new package and how to maximize its chance of passage.  Among the policies under consideration are extending unemployment benefits, temporarily increasing Food Stamps, and providing more aid to states.   These policies were among those considered but ultimately rejected as Congress gave in to Administration demands to limit the first package to tax cuts.  In return, the Administration went along with providing tax rebates to very low-income families and retirees.  Although the rebates to low-income people are important, advocates have been very disappointed that in the first stimulus package and the home mortgage bill now before Congress (see article this issue), aid to corporations and people with higher incomes has seemingly been a higher priority than the targeted assistance to those with low and moderate incomes economists have favored as most effective.

There is speculation that a new stimulus package will be attached to a must-pass supplemental spending bill.  The President has requested an additional $108 billion in war spending.  The House reportedly might split the request into two separate bills, one for Iraq and the other for Afghanistan, with domestic stimulus spending attached to the more popular Afghanistan bill.  Or, the House could take up the domestic provisions separately from the war spending, only to see them combined in some fashion after Senate action.  Many Iraq war opponents in the House will not want to see stimulus measures combined with increased funding for Iraq.  Because of the President’s opposition to extended Unemployment Insurance or other provisions that directly benefit people hurt by the recession, it is expected that Congressional leaders will attach the new stimulus proposals to legislation that the President wants, making war or trade bills the likeliest contenders.  The timetable is uncertain, but if the stimulus initiatives are attached to war spending, Congress prefers action to be completed before they leave for the Memorial Day recess in late May.

The Coalition on Human Needs in concert with the Emergency Campaign for America’s Priorities (ECAP) is calling for a set of proposals to boost the economy by placing more money in the hands of low- and moderate-income people who will spend it quickly and to prevent cuts in state or local programs that would worsen the recession.  Outlined in a document called Towards Shared Recovery:  Congress Must Do More to Reverse the Recession, the package features extended and improved unemployment benefits; increased funding for Food Stamps, WIC, and The Emergency Food Assistance Program (TEFAP); aid to state and local governments through increased federal support for Medicaid, preventing restrictive federal administrative actions that shift Medicaid and children’s health insurance costs to states, and other forms of state/local aid such as funds for school repair and restored funding for child support enforcement; expanded home energy assistance (LIHEAP); preventing cuts in Head Start; and a program of summer jobs for low-income youth. Advocates are promoting this package in meetings with Congressional staff.

The Shared Recovery package serves two essential ends:  it provides the kind of economic boost economists say works best and relieves growing hardships.  Unemployment, nutrition, and home energy aid, child support enforcement, and summer jobs all provide quick infusions of income to people who badly need it.  Increased federal Medicaid funding and other forms of aid to states and localities respond to the growing number of states facing budget shortfalls, and is intended to prevent service cuts and staff lay-offs that will hurt low-income people and further slow down the economy.


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