Today’s agreement in principle between President Bush and congressional leaders from both sides of the aisle on a roughly $140 billion economic stimulus package is sorely needed as our economy teeters on the edge of recession. Too bad the president blocked inclusion in this stimulus package of proven strategies to get money into the hands of low- and lower middle-income Americans who are best positioned to spend the money needed to help our economy regain its footing.
By excluding from the stimulus package a range of steps that would get money to those who would spend it quickly and effectively—specifically unemployment benefits and food stamps—the president ensures the government will not get as much bang for the buck to stave off a recession. And by then limiting the amount of money that will flow to the states as part of the package—specifically by not temporarily boosting federal aid to the states’ health care programs—he compounds his error.
The need for swift action is clear from the bipartisan consensus that produced today’s agreement. And certainly key components of the package fit the bill, especially progressive demands that the package include tax cuts for individual citizens earning between $3,000 and $75,000 a year—despite initial objections from the president.
But surely a deeper and more multifaceted Economic Recovery Plan can still be crafted. Many of the proposals left on the cutting room floor—expanded unemployment benefits, expanded food stamp programs, temporary federal aid for states’ health insurance programs—are among the best ways to pump money quickly into the economy.
What’s more, targeted programs to tackle the root cause of today’s economic travails—the widening home mortgage crisis—are clearly needed as part of any stimulus package. Expanding loan limits for Fannie Mae and Freddie Mac will help some borrowers in high cost regions of the country, but nothing in the package provides succor to the growing number of homeowners who now have negative equity in their homes as a result of declining real estate markets. Trying to boost consumer spending without providing a way for neighborhoods to feel secure in their homes is simply misguided.
There are other ways, too, to help pump prime a faltering economy—measures that would help boost job growth, address our crumbling infrastructure, foster energy independence, and fight global warming. A complementary package of green infrastructure spending, for example, would ensure that temporary pump-priming measures through tax rebates and other fiscal measures are matched to short- to medium-term job creation programs that help our country embark on a sustained and sustainable economic recovery.