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The economic recovery and reinvestment plan released this week by Chairmen Dave Obey (D-WI) and Charles Rangel (D-NY) is of the scale and breadth necessary to begin tackling the economic chaos that President-elect Barack Obama will inherit from President George W. Bush. The plan proposes important investments that can start to overcome the nation’s damaging loss of jobs and put the United States back onto a sustainable long-term growth path with rising living standards for all.
The plan offers a notable change from what we’ve seen over the last year in addressing our nation’s economic weakness. The focus has shifted from the bailout of financial sector players to getting the economy back on track for all Americans. The attention paid to accountability and ensuring that the funds are spent wisely is a welcome shift from the Bush administration’s disregard, in drafting its financial recovery legislation, for both the public’s right to know how its tax dollars are being used and the need for careful supervision of the use for such substantial sums. The allocation of spending based on true need and potential return on taxpayer investment, as opposed to earmarking, is also welcome.
The Center for American Progress published a report last year setting out “How to Spend $350 Billion in a First Year of Stimulus and Recovery.” Almost all of our proposals were included in the House plan—and many of these with increased funds to sustain spending for two years. These measures are of critical importance for a sustained recovery.
Much of the change offered in the House plan will serve the American economy for years to come:
- Investments in energy will form a solid foundation upon which to build a 21st-century low-carbon economy; one that reduces oil dependence while boosting private-sector innovation, lowering the costs of addressing the climate crisis, enhancing American competitiveness, and expanding the global market for clean technology.
- The science component, including improvements to government labs and funding for researchers to tackle our energy and health challenges, will help equip the United States with the innovation infrastructure necessary for it to better compete on the global stage, drive up productivity, and remain on the technological frontier.
- Increased funding for education offers support for a key to long-term economic growth.
- Investments to bring down health care costs are a starting point for relieving a burden on firms and people that have long hurt American competitiveness.
- Our competitiveness will also be helped by long overdue improvements to broadband capacity, roads, bridges, transit, and waterways.
Long-term investments in education and lower health care costs also begin the process of tackling two of America’s greatest inequities. And because the economy lost 2.6 million jobs last year, the extension of unemployment insurance to a wider group, and enhanced health care support for those who have lost their jobs, is critical. These are also some of the most cost-efficient ways of putting government money into the economy.
The recovery plan also recognizes that states will be forced to raise taxes or cut back key services, including education, if they are not given fiscal relief.
Work will clearly be done in the coming days to refine the final package and make the best use of the funds to get the economy back on track and make sure that the jobs created are all quality jobs. The provisions cutting taxes for businesses should, in particular, be subject to careful scrutiny to ensure that they are genuinely tied to the creation of good jobs and economic growth.
The main task now is for both houses of Congress to pass legislation quickly. We are losing over 10,000 jobs per day. Thanks to the damage already done through inaction and failed measures, the road to recovery will be long and steep—our economic problems are likely to last a year or more under any circumstances. The sooner we stop the bleeding and get on that road, the better. This economic recovery bill is a powerful step in the right direction.
For more on this topic, see Recovering Innovation, Innovating to Recover (Science Progress) and the Economy page of our website.