Weekly Audit: Why the Current Stimulus Plan Isn't Enough
by The Media Consortium, Tue Apr 07, 2009 at 05:40:56 AM EDT
by Zach Carter, TMC MediaWire Blogger
The U.S. economy just keeps getting worse. Given the absolute pummeling the job market has taken over the past five months, we're going to need some much stronger medicine than policymakers are currently proposing. It's increasingly clear that President Obama's stimulus plan was devised for a far milder downturn, and this week we received further evidence of the recession's high human cost.
The U.S. lost another 663,000 jobs in March, according to a report released by the the Labor Department last Friday. Most of us are getting used to seeing big numbers associated with this recession, but those massive layoffs are perhaps the most distressing statistics of all. Jobs matter most to ordinary people right now, as John Nichols notes for The Nation, and the primary measure of success for any economic policy is whether it will get people back to work. Nichol's argument stands in sharp contrast to what much of the news media is using as its metric of success: the Dow Jones Industrial Average.
Speculators on Wall Street have pointed to the Dow's recent upward trend as evidence that things are getting better. We'll see if that uptick continues after the next round of quarterly banking losses comes in, but even if they do, Nichols emphasizes, happy speculators are not the same thing as a happy economy.
The national unemployment rate currently stands at 8.5% and, without a dramatic increase in government support, will likely be mired in double digits for years to come. Nobel-Prize-winning economist Joseph Stiglitz puts it succinctly in an interview at Salon: "This model no longer works. The Americans are completely over-indebted. They can't increase their consumption, instead they have to save."
The recession's growing severity underscores a host of long-brewing economic problems, not the least of which is access to a college education. The cost of tuition has been steadily soaring for decades, but with the life savings of many families decimated by the housing bust, even relatively inexpensive state schools are out of financial reach, as Andy Kroll illustrates for Mother Jones.
"Simply to ensure that a child attends a four-year public university, a family in the country's lowest-income bracket now has to pay, on average, 55% of [their] total income," Kroll writes. That's not 55% of disposable income, that's 55% of what the family is taking in, period. President Obama has proposed some solid remedies for this issue—increasing federal grants for low-income students and replacing overpriced private-sector student loans with cheaper government loans, to name a few. But Kroll notes that it's also important to divert more federal stimulus funds to states to increase the flow of need-based financial aid at public universities.
For many younger students, attending college takes a backseat to making sure they have a roof over their heads. One out of every 50 children in the United States is homeless. This problem will not go away on its own, Randy Jurado Ertll writes for The Progressive. Ending homelessness for children would cost just a fraction of what we're paying to bailout the nation's largest banks—there is no excuse for ignoring the issue in the next round of recovery funding.
The housing collapse continues to deepen, but some policies designed to help families keep their homes are quietly expiring. In a story for The Colorado Independent, Mary Kane points out that the moratorium on foreclosures imposed by mortgage giants Fannie Mae and Freddie Mac expired at the end of March. Foreclosure-related evictions are set to resume. Just as depressing: none of the mainstream media seems to have noticed.
As foreclosures escalate, one policy option that would keep families with a roof over their heads is being generally ignored by both the government and the banking world: renting. If, Kane notes, banks rented foreclosed properties to the borrowers who can no longer afford them, the most devastating impact of the foreclosure crisis could be averted.
But instead of dealing with actual problems, some Senators remain more focused on throwing money at rich people. The estate tax has actually surfaced in the recent haggling over the federal budget, Steven Benen notes for The Washington Monthly, a tax that only applies to the richest 0.2% of American families.
We've seen enough giveaways to wealthy people in the recent bank bailouts, and we know that they have extremely limited economic benefits. Steering the economy toward recovery will require a much more aggressive investment in the livelihood of ordinary Americans.
This post features links to the best independent, progressive reporting about the economy.
Tags: bank bailouts, college education cost, Dow Jones, Economy NewsLadder, Estate Tax, foreclosure, homelessness, housing collapse, job loss, job market, Joseph Stiglitz, Labor Department, Newsladder, Recession, stimulus plan funds, unemployment rate, Wall Street (all tags)