The economic stimulus package passed in February gave the economy a helpful prod and staved off an economic contraction over the summer. The Treasury Department and Federal Reserve are now intervening in financial markets on a massive scale to hold off a complete collapse wrought by their own and other agencies’ incompetent supervision of Wall Street business practices. But other stimulus measures are needed as well.
The various options Congress is considering should address the short-term crisis in the labor market and the eight years of stagnant incomes and weak job growth. Steps that begin to address our fundamental problems include:
- Creating jobs by jump-starting our transformation to a low-carbon economy. The Center for American Progress Green Recovery proposal would create 2 million jobs over two years by investing in six green infrastructure investment areas.
- Investing in infrastructure. The nation’s highways and roads are in abysmal condition. The Congressional Budget Office points to a shortfall of $20 billion just to maintain current levels of transportation service. Investments in mass transit would also provide a robust source of jobs and help reduce our dependence on foreign oil.
- Expanding Unemployment Insurance. Congress should temporarily increase unemployment insurance and extend coverage for those who will not get it otherwise.
- Increasing Energy Assistance. Congress should provide new funding to the Low-Income Home Energy Assistance Program, or LIHEAP, in the amount of $5.1 billion for the fiscal year, which is the amount that Congress is authorized (or able) to spend on the program
- Expanding Medicaid aid to the states. Expanding Medicaid to states will keep the program open to those in need. This proactive Medicaid policy would help preserve health coverage, jobs, and state financial stability—all of which are key to a quick economic recovery.
- Boosting food stamp support. The CBO recently noted that “the vast majority of Food Stamp benefits are spent extremely rapidly,” which would provide a needed spur to the economy.
A new stimulus package cannot address all of our country’s major economic challenges. We will still need to reform our costly and inadequate health care system and fix the root causes of the housing market collapse, policies for which the Center for American Progress has long advocated. But a new stimulus package is a needed step toward ensuring that our economy doesn’t go further off course and good start toward creating the kinds of good jobs that will drive the economy of the future.
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