Hey Chairman Obey, The Recession's Over Here

As the economy worsens, more and more key players are getting on board with the idea of a second economic recovery package. But not everyone's where we need them to be to get something done in time to matter. For example Rep. David Obey (D-WI), powerful chairman of the Appropriations Committee free associated to Congress Daily (subscription only) and revealed that he doesn't quite get how urgent doing something to stave off this recession is:

"People use a kinds of terminology; I don't care if you call it a second supplemental or a second economic [stimulus] package -- to me there are all kinds of things that we need domestically -- but we need finish this job [war supplemental] before we can start thinking about the next one"

This pains me. Not only are House Democrats punting on telecom immunity, they're putting war spending ahead of domestic spending.

Bush's first economic stimulus package just didn't work. We didn't get the big sweeping surge of economic growth we were promised. Even what good news we've gotten was drowned out by a chorus of  story after story of bad economic news. The costs of living are growing rapidly as employment becomes harder to find. Food is getting more expensive as food bank lines grow longer. The longer Congress waits to act, the worse things will get.

And the states can't wait for the aid that Democratic leaders say must be included in a second stimulus package either. State spending is the last prop holding up the economy and is at a tipping point. More than half of the states are facing crippling budget shortfalls that total $48 billion for the upcoming fiscal year. In the absence of aid from the federal government, states have been forced to cut vital services for many of our most vulnerable citiznes. The Center on Budget and Policy Prioritiesgives outlines the chopping block:

At least 12 states have implemented or are considering cuts that will affect low-income children's or families' eligibility for health insurance or reduce their access to health care services.

At least 10 states are cutting or proposing to cut K-12 education; three of them are proposing cuts that would affect access to child care.

At least 11 states have proposed or implemented reductions their state workforce. Workforce reductions often result in reduced access to services residents need.

And when states are forced to do things like cut their state workforce, the economy suffers even more. According to CNN/Money:

With falling revenue from sales and income taxes, and property-tax declines looming, states, cities and towns have already laid off tens of thousands of government employees. Many expect more job cuts ahead as public officials struggle to balance their budgets.

Economists say that cutbacks in jobs and spending by local governments could be a major drag on the overall economy.

It's cool that Obey recognizes the need for a  second stimulus package. But he also needs to understand that each day he lets pass without doing something means the economic hole we're in is that much deeper and is going to require that much more federal spending to help us get out of.

There's more...

House on the Verge of Addressing the Recession?

On Thursday the Labor-Health and Human Services-Education Appropriations Subcommittee is considering a funding bill for key domestic programs and services under those federal departments.

Hopefully, the Subcommittee will approve a $781 million increase in the Employment Service -- basically the people who connect those needing work with those who need work done. This is exactly the kind of stuff that's critical in a recession.

Unsurprisingly, the Bush Administration is seeking to gut employment services. This bit of wanton stupidity is a nice bookend to the White House's unwillingness to extend unemployment benefits.

Progressive groups are also seeking an $874 million increase for Child Care and Development Block Grant, funding which the Bush administration wants to freeze for a 7th consecutive year. Of course, this will have consequences for real kids:

Years of flat funding have already resulted in 150,000 fewer children receiving assistance." At this rate, it is projected that 300,000 fewer children will receive child care assistance by 2010. The harsh reality is that parents "may have been forced to go into debt; return to welfare; choose lower-quality, less stable child care; or face untenable choices in their household budgets."

Finally the Subcommittee will hopefully approve a $350 million allocation for emergency preparedness in the event of a pandemic flu outbreak. If there's anything we know about a potential pandemic flu outbreak it's that we are not adequately prepared for it. As DemforCT has warned us at dKos.

Numerous groups are mobilizing supporters to encourage the Labor-Health and Human Services-Education Subcommittee to support the $781 million increase to the Employment Service, the $874 million increase in Child Care Development Block Grants, and the $350 million allocation for emergency preparedness.

AFSCME is collecting signatures for a petition in support of a $781 million increase to Employment Services, an $874 million increase in Child Care Development Block Grants, and a $350 million allocation for emergency preparedness.

Sign it. The country's in recession and the federal government needs to get the safety net unfurled before we all go splat.

There's more...

Congressional Democrats Forgetting Key Part of Obama's Relief Package?

CQ Politics is reporting on the Democratic leadership's desire for a second package to strengthen the economy that largely lines up with Barack Obama's plans. But are Congressional Dems omitting aid to state governments, one of the key planks of Obama's plan?

Democrats have been contemplating a second effort to inject money this year into the faltering economy. The idea appears to have gained traction, particularly among congressional leaders, since Monday when presumptive Democratic presidential nominee Sen. Barack Obama of Illinois outlined a $50 billion stimulus proposal that will serve as the centerpiece of a two-week economic tour of battleground states.

Though the prospects for a second stimulus package are slim, the debate gives congressional Democrats an opportunity to rally around Obama.

The massive economic stimulus package enacted in February focused on tax breaks for businesses and rebates for individuals and families.

Obama has proposed a second round of rebate checks, an extension of unemployment insurance, aid to state governments and a new $10 billion fund to help stem the tide of home foreclosures.

He also proposed increasing investment in infrastructure such as roads, schools and bridges.

"There's a need for additional targeted stimulus," said Senate Budget Chairman Kent Conrad , D-N.D.

Schumer said infrastructure investment and a second round of rebate checks could be part of the new package, which Democrats are likely to unveil after the July Fourth recess.

State government spending is a key prop holding up the economy during a recession. Dem leaders might want to check out the NYT, which pointed out earlier this week:

At $1.8 trillion annually in a $14 trillion economy, the states and municipalities spend almost twice as much as the federal government, including the cost of the Iraq war. When librarians, lifeguards, teachers, transit workers, road repair crews and health care workers disappear, or airport and school construction is halted, the economy trembles.

There's more...

Historic Rise in Unemployment Highlights the Need for Federal Action

I wrote earlier this week about a potential crisis involving unemployment benefits. The post demonstrated the need for the federal government to inject money into state unemployment trust funds whose coffers are close to empty because of the terrible state of the economy.

If further evidence was needed,today's Washington Post brings it with news that the unemployment rate jumped to 5.5% in May, a .5% increase over April. According to the story:

The jobless rate was 5.5 percent in May, the Labor Department said, up from 5 percent in April. That is the largest climb in a single month since 1986. Employers also slashed 49,000 jobs from their payrolls, the fifth straight month of losses.


The spike in joblessness was so large as to suggest something more fundamental is going on. In addition to young people, the jobless rate rose among almost every other group -- men, women, blacks and whites. The rate was unchanged among Latinos.

All signs point to the situation continuing to trend downward:

"Today's events are a combination of really nasty news for American consumers," said Andrew Tilton, a senior economist at Goldman Sachs.

"This is very startling," said John Silvia, chief economist of Wachovia Corp. "This is not going to be a quick situation where, we passed the [stimulus bill], now the economy is back to normal. We have a subpar economy."

"This spike in unemployment is entirely consistent with a large spate of other indicators having to do with the job market and the economy," said Jared Bernstein, a senior economist at the Economic Policy Institute..."It's crystal clear that the economy is not generating the job and income growth people need to maintain their living standards," said Bernstein.

There's more...


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