Today’s passage of an economic stimulus package marks an important first step toward addressing the nation’s faltering economy. Congress’ bipartisan, timely action will jumpstart consumer spending and bolster the economy in the short term, but Congress’ work has just begun. In the absence of presidential leadership, Congress must now develop a broad, multipronged Economic Recovery Strategy that includes important and effective proposals that were left out of today’s package and a program to stem the vicious downward spiral in the housing market. Furthermore, an Economic Recovery Strategy should begin the long overdue job of spurring investment in clean energy, innovation, infrastructure, and human capital to put America back on a course for long-term progressive growth.
To boost the effect of short-term economic stimulus, Congress should insist that the president agree to expand unemployment benefits, increase home heating assistance, and raise the federal match for state Medicaid expenses. If, as we fear, economic conditions worsen, it will become harder and harder for the president and his followers to turn a blind eye to these basic needs of our most vulnerable families.
In addition, it is most critical that Congress address the elephant in the room – the widening home mortgage crisis. Chairmen Dodd and Frank are focused on finding the best solutions to this problem and they need the support of each and every member of Congress in this critical task.
The best remedy, in our view, is a two-pronged strategy: stem the rising tide of new foreclosures, while also addressing the glut of existing foreclosed properties. CAP’s proposal would have government facilitate the private sector restructuring of hundreds of thousands of home mortgages to keep more homeowners in their homes and to break the out-of-control downward spiral in home prices. This will restore confidence and liquidity to America’s financial markets and provide a needed boost to the economy. We also offer a proposal to establish a Neighborhood Stabilization Fund to provide money quickly and efficiently to local non-profit organizations to purchase foreclosed properties and offer them for sale to qualified workforce families on affordable terms. Taken together, these two programs will work to reduce housing inventories and help local housing markets begin to function normally.
Finally, Congress cannot wait a year to begin the process of making long-deferred investment to spur economic growth. Some pieces of this agenda can also prime the economic pump in the short term, helping to lessen the depths of the economic downturn. For example, while not all infrastructure spending can be done quickly, it may be possible to speed the rate of spending on existing priority projects. Congress also can increase funding immediately for authorized programs through the Corporation for National Service, Youthbuild, and Green Jobs to create and train young people for the environment-friendly jobs of the future.
We applaud Congress for taking this first step toward healing our economy. More action is needed, however, to ensure our long-term economic health. Congress can step into the leadership vacuum with a smart responsible plan for economic recovery and long-term progressive growth.
For more information on the Center for Americna Progress Action Fund’s stance on the stimulus, see: