Economic stimulus

Unemployment Compensation Extension Act of 2009 - House Version

hmoroz — Wed, 23 Sep 2009 15:27:49 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of Americans unemployed for six months or more: 5 million

Percentage of unemployed workers who cannot find jobs within receiving their first six months of unemployment benefits: 50.7

Number of unemployed workers who will exhaust their unemployment insurance benefits by the end of 2009: 1.3 million

Percentage of these who will be eligible for the extended benefits provided by the legislation: 81.3

Number of jobless workers for every job opening in the United States at the beginning of the recession: 1.7

Number of jobless workers for every job opening in the United States at present: 6

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. While economists see signs of economic recovery, 14.9 million unemployed Americans still cannot find work. The unemployment rate continues to rise and now stands at 9.7%, keeping middle-class Americans at risk of being thrown out of work as a result of the economic downturn. According to the National Employment Law Project, 5 million Americans have been unemployed for six months or longer and half of the unemployed cannot find jobs within the first six months of receiving unemployment insurance benefits. There are 6 jobless workers for every job opening. Recent extensions of the duration of unemployment benefits have been necessary but insufficient: 400,000 unemployed workers will have exhausted their benefits by the end of September, a number that will increase to a devastating 1.3 million by the end of the year.

The Unemployment Compensation Extension Act would ease the financial pain associated with long-term unemployment. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit during the economic downturn, people who want to work but have lost their means of support through no fault of their own. The legislation would ensure that the jobless in the worst-hit states – places like Michigan that has an unemployment rate of 15.2 percent – would avoid losing unemployment insurance at a time when finding a job is extremely difficult. The bill would prevent approximately 300,000 unemployed Americans in 27 states from losing their unemployment benefits. Though workers in all states are exhausting their benefits and more comprehensive legislation would assist them all, more than 80 percent of workers who will exhaust their benefits by the end of the year will be eligible for the extended benefit.

In addition to the benefit to individual households, unemployment insurance provides significant economic stimulus. The unemployed tend to spend all of their benefits and quickly, providing an important economic jolt. Allowing unemployment benefits to expire for hundreds of thousands of families would undermine the successes of the American Recovery and Reinvestment Act and slow recovery.

Quotes from Experts

Beyond this Bill

Additional Resources

“Unemployment Insurance Benefits: Where Do We Go From Here?” from the Senate Finance Committee

“Unemployment Insurance,” from the National Employment Law Project

“Harsh Labor Market Conditions Justify Extending Unemployment Benefits In Hard-Hit States,” from the Center on Budget and Policy Priorities

American Recovery and Reinvestment Act of 2009 - Conference Report

hmoroz — Tue, 17 Feb 2009 19:06:44 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Unemployment rate in early 2010, if current laws and policies governing federal spending and taxes do not change, according to the Congressional Budget Office: 9.2%

Reduction in unemployment rate in 2010 if the American Recovery and Reinvestment Act is enacted, according to the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers, respectively: 1.9%, 2.1%, 1.8%

Increase in GDP from spending $1 on extended unemployment insurance benefits, in dollars: 1.63

Increase in GDP from spending $1 on accelerated depreciation, which provides businesses a tax break for new investment, in dollars: 0.25

Percentage of spending and tax cuts that will take effect by the end of 2010, according to the Congressional Budget Office: 74%

Percentage reduction in aid to states made by the conference report of the American Recovery and Reinvestment Act compared to the House version: 32%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports.Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.

The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 46 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.

Beyond the decidedly dire short-term outlook, economic improvement is probably quite far off. Douglas Elmendorf, director of the Congressional Budget Office, has testified that “economic recovery is likely to be slow and protracted.” Thus, programs that address longer-term concerns – investment in infrastructure and green technology are two primary examples – are as important as an immediate, stimulative jolt to the economy.

The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.

While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck” in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.3 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.

Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 74% of spending would occur between 2009 and 2010. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The funding for infrastructure projects included in the legislation is a first step in addressing this deficiency and funds devoted to high-speed rail are particularly welcome. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.

Limitations on executive compensation and bonuses are a first step in establishing the accountability that has been missing from the financial bailout. Still, the bill does not set forth a comprehensive plan to address the foreclosure crisis that includes a moratorium on foreclosures, a mechanism to require modification of mortgages, and a change to the bankruptcy code to permit modification of mortgages on primary residences. Funds for the Neighborhood Stabilization Program are a necessary, but insufficient, step in mitigating the widespread negative effects that foreclosures can have on entire neighborhoods and communities.

Quotes from Experts

Beyond this Bill

Additional Resources

Recovery.gov, the official website of the American Recovery and Reinvestment Act

“Recession and Recovery,” from the Center on Budget and Policy Priorities

“Impact of Economic Turmoil on Health Coverage and State Medicaid Programs,” from the Kaiser Commission on Medicaid and the Uninsured

American Recovery and Reinvestment Act of 2009 - Senate Version

hmoroz — Tue, 10 Feb 2009 16:24:04 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Unemployment rate in early 2010, if current laws and policies governing federal spending and taxes do not change, according to the Congressional Budget Office: 9.2%

Increase in GDP from spending $1 on extended unemployment insurance benefits, in dollars: 1.63

Increase in GDP from spending $1 on accelerated depreciation, which provides businesses a tax break for new investment, in dollars: 0.25

Percentage reduction in aid to states made by the Senate version of the American Recovery and Reinvestment Act: 50.1%

Percentage reduction in Head Start and Early Head Start funds made by the Senate version of the American Recovery and Reinvestment Act: 50%

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.

The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 45 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.

The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office , Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.

While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck” in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.1 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.

Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 78% of spending would occur between 2009 and 2010. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The funding for infrastructure projects included in the legislation is a first step in addressing this deficiency. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.

Requirements for application of TARP funds to foreclosure prevention and for limitations on executive compensation and bonuses are first steps in establishing the accountability that has been missing from the financial bailout. Still, the bill does not set forth a comprehensive plan to address the foreclosure crisis that includes a moratorium on foreclosures, a mechanism to require modification of mortgages, and a change to the bankruptcy code to permit modification of mortgages on primary residences.

Quotes from Experts

Beyond this Bill

Additional Resources

“Recession and Recovery,” from the Center on Budget and Policy Priorities

“The State of the Economy and Issues in Developing an Effective Policy Response,” Statement of Douglas W. Elmendorf before the House Committee on the Budget

“Impact of Economic Turmoil on Health Coverage and State Medicaid Programs,” from the Kaiser Commission on Medicaid and the Uninsured

American Recovery and Reinvestment Act of 2009 - House Version

hmoroz — Thu, 29 Jan 2009 11:59:07 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Unemployment rate in early 2010, if current laws and policies governing federal spending and taxes do not change, according to the Congressional Budget Office: 9.2%

Number of individuals that expanded health insurance benefits included in the legislation will keep from losing health insurance: 8.5 million

Increase in GDP from spending $1 on extended unemployment insurance benefits, in dollars: 1.63

Increase in GDP from spending $1 on accelerated depreciation, which provides businesses a tax break for new investment, in dollars: 0.25

Number of dollars spent on highways for every four dollars spent on transit: 10

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.

The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 45 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.

The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Expanded COBRA and Medicaid insurance programs will keep 8.5 million individuals from losing insurance. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.

While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck" in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.5 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.

Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 85% of the spending will occur between 2009 and 2011. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The $160 billion for infrastructure projects included in the legislation is a first step in addressing this deficiency. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.

Quotes from Experts

Beyond this Bill

Additional Resources

“Recession and Recovery,” from the Center on Budget and Policy Priorities

“The State of the Economy and Issues in Developing an Effective Policy Response,” Statement of Douglas W. Elmendorf before the House Committee on the Budget

“Impact of Economic Turmoil on Health Coverage and State Medicaid Programs,” from the Kaiser Commission on Medicaid and the Uninsured

Neighborhood Stabilization Act of 2008

hmoroz — Fri, 09 May 2008 14:46:16 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Estimated economic activity generated by the Neighborhood Reinvestment Act, in dollars: 38 billion

Estimated number of jobs generated by the act: 120,000

Estimated real estate tax collections that will result from the act, in dollars: 225 million

Cost of the Neighborhood Stabilization Act between 2009 and 2013, as estimated by the Congressional Budget Office, in dollars: 8.4 billion

Estimated total decline in house values and tax base from foreclosures originated in 2005 and 2006 on nearby properties, in dollars: 202 billion

Number of rental homes that are available and affordable for every 100 extremely low-income families: 38

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The Neighborhood Stabilization Act addresses two important problems plaguing aspiring middle-class Americans: the community breakdown that can result from vacant foreclosed homes in neighborhoods across the country and the lack of affordable housing. Middle-class Americans who are current on their mortgages and face no personal risk of foreclosure are nevertheless harmed when a foreclosed home down the street brings down property values, erodes the local tax base, and threatens to become a magnet for crime. The Center for Responsible Lending has shown that approximately 40.6 million homes will experience devaluation because of nearby subprime foreclosures and that homeowners living near foreclosed properties will lose approximately $5,000 on the value of their homes. At the same time, one of the causes of the foreclosure crisis was a lack of affordable housing and the targeting of low-income neighborhoods by subprime lenders. By funneling federal money to local agencies to serve lower- and extremely low-income individuals, the Neighborhood Stabilization Act will help neighborhoods recover from the harm done to their communities by foreclosures while helping to ensure that neighborhoods can accommodate aspiring middle-class Americans. The bill’s allocation of funds to metro areas and urban counties further ensures that the communities hardest hit by the foreclosure crisis receive much needed relief. Providing funds for rental properties, along with protections for renters of foreclosed properties, recognizes that the foreclosure crisis affects aspiring middle-class and middle-class renters as well as homeowners.

Quotes from Experts

Beyond this Bill

Additional Resources

“Subprime Spillover”, from the Center for Responsible Lending

“Out of Reach”, a guide to rents and the lack of affordable housing from the National Low Income Housing Coalition

Center for American Progress on Neighborhood Stabilization

Foreclosure Prevention Act of 2008

hmoroz — Thu, 06 Mar 2008 10:53:38 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percentage of securitized subprime loans from the fourth quarter of 2006 that are projected to end in foreclosure: 50

Percentage increase of foreclosure filings from January 2007 to January 2008: 57

Estimated number of foreclosures that the mortgage restructuring provision in the Foreclosure Prevention Act would prevent: 600,000

Number of homes that will experience devaluation because of subprime foreclosures that take place nearby: 40.6 million

Average decline in property values for homeowners living near foreclosed properties, in dollars: 5,000

Amount of wealth saved by the Foreclosure Prevention Act that would otherwise be lost because of foreclosures of neighboring properties, in dollars: 72.5 billion

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. The federal government and the mortgage industry’s failure to address the subprime mortgage and foreclosure crisis adequately could result in as many as 1.9 million Americans losing their homes in 2008 and 2009. Despite national awareness of the dire situation throughout 2007, foreclosure filings increased 57% from January 2007 to January 2008. Extending the same bankruptcy protections to primary residences that currently apply to luxury yachts and vacation homes is not only fair, but would prevent approximately 600,000 families from losing their homes to foreclosure. Strengthened bankruptcy protection is also beneficial to families who are not themselves facing foreclosure: protecting these 600,000 families from foreclosure would save neighbors of foreclosed properties $72.5 billion in wealth that would otherwise be lost to reduced property values. Because the Foreclosure Prevention Act restricts eligibility for bankruptcy mortgage restructuring to homeowners who are unable to afford their current mortgages, mortgage interest rates should not increase: only homes in danger of foreclosure will qualify and the risk of foreclosure is already calculated into current interest rates. Funds for counseling services would further reduce the potential for foreclosure, while resources for redevelopment of abandoned and foreclosed homes would mitigate the decline of property value that weakens the financial stability of homeowners and shrinks the revenues of state and local governments. The Foreclosure Prevention Act is an important next step to assist cash-strapped middle-class Americans after the economic stimulus package signed into law in February of 2008.

Quotes from Experts

Beyond this Bill

Additional Resources

Testimony of Mark Zandi, Chief Economist of Moody’s Economy.com, before the Senate Judiciary Committee

Center for Responsible Lending on the Foreclosure Prevention Act of 2008

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Economic Stimulus Act of 2008

hmoroz — Thu, 07 Feb 2008 17:35:58 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of senior citizens who would receive tax rebates under this bill but not the House stimulus bill, according to the Senate Majority Leader: 21.5 million

Approximate number of workers nationwide projected to run out of unemployment benefits before finding work in the first six months of 2008 unless benefits are extended: 1.3 million

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.64

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Number of different stimulus policies implemented under President Bush that were more effective per public dollar than business investment incentives, according to an Economy.com study: 7

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. This Senate bill provides even more effective stimulus than the House legislation because the tax rebates are even more closely targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. The inclusion of seniors living on Social Security and veterans living on disability benefits is important for the same reason: not only is it an issue of basic fairness to include these groups but, because they are likely to spend the money quickly, their inclusion compounds the stimulative impact.

The extension of unemployment benefits and the expansion of funding for low-income heating assistance are extremely positive additions to the bill. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit by an economic downturn while also providing the most cost-effective boost to the economy. Unemployment is already on the rise and it takes longer to find work during an economic downturn when jobs are scarce. People who are out of work tend to spend nearly all of the money they receive in government benefits very quickly, so unemployment benefits provide the quick jolt to consumer spending that the economy needs. What’s more, extending unemployment benefits is one of the most effective stimulus measures yet conceived, providing $1.64 in stimulus for every dollar spent. Meanwhile home heating assistance eases the burden on current and aspiring middle-class families trying to pay high energy bills, freeing up cash that can be spent on other necessities.

The renewable energy tax incentives in the bill are not likely to be effective as short-term economic stimulus, but do represent an important investment in the nation’s energy future. Meanwhile, the business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little stimulative effect but deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective, economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Senate Finance Committee Measure More Effective As Stimulus Than House Bill, Despite Some Problems,” from the Center for Budget and Policy Priorities

“Strategy for Economic Rebound: Smart Stimulus to Counteract the Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

Recovery Rebates and Economic Stimulus for the American People Act of 2008

atraub — Wed, 30 Jan 2008 16:06:08 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.73

Amount of stimulus produced for every $1 spent on state government aid: $1.24

Minimum amount of revenue states are projected to lose as a result of the investment incentives, according to the Center for Budget and Policy Priorities: $4 billion

Percentage of businesses in a 2006 survey that said that bonus depreciation, a type of investment incentive implemented in the past, was an important factor in their decisions about investment level or timing: 10

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. For this reason, the household tax rebates are likely to be effective, if the checks can be sent quickly. It is particularly significant that the rebates are targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. It is also important that Americans relying on Social Security or disability benefits be included, both as an issue of basic fairness and because these groups are likely to spend their rebates quickly.

The increases in FHA, Freddie Mac, and Fannie Mae mortgage limits are also helpful because they help these entities keep up with the current housing market. By buying and insuring loans, the FHA, Freddie Mac and Fannie Mae create viable refinance options for middle-class Americans who have been targeted by predatory loan practices and would otherwise be trapped in unaffordable adjustable rate mortgages and other abusive loan products.

The business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little simulative effect but would deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they already planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, they cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Strategy for Economic Rebound: Smart Stimulus to Counteract and Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

“Assessing President Bush’s Fiscal Policies,” from Economy.com

Economic stimulus

Unemployment Compensation Extension Act of 2009 - House Version

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

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American Recovery and Reinvestment Act of 2009 - Conference Report

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

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Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

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American Recovery and Reinvestment Act of 2009 - Senate Version

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

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American Recovery and Reinvestment Act of 2009 - House Version

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

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Neighborhood Stabilization Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

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Beyond this Bill

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Foreclosure Prevention Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Economic Stimulus Act of 2008