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"Consumption vs. Consumer Confidence""Email conversations about changing conditions causing hunger in Ohio and around the world"
Answer: Somewhere between really strange and totally bizarre! Question: How to describe what's going on in Washington lately? This past week the President and congress hatched a plan to give away loads of loot. More than "pennies from heaven," income tax rebates of $100 billion may soon be divvied up and mailed to over 117 households across the country. Individuals could receive up to $600 and $1,200+ for families. This curious spurt comes on the heels of some recent decisions to withhold much less spending for critically significant programs for especially deprived populations:
This "economic stimulus" is intended to be an antidote to a pattern of anemic spending by the general public. Assuming that the economy is otherwise solid and will eventually correct itself, these tax rebates are intended to promote immediate consumption and appeal to instant gratification. In other words, this is hot money meant to be burned quickly on literally any and everything. So what's wrong with this short-term effort to spur people to spend? Depends upon your economic-and political-bent. Some say there is little assurance that short-term benefits will not be reversed by long-termed detriment. They point to that fundamental tenet of any prescribed health cure--whether medical or economic-to "do no harm!" Even though we may feel anxious for a quick fix, economists on either side of the usual conservative-liberal divide warn of the hazards of such a reflex. They contend that this blatant decision to further accelerate a teetering national debt merits much more conscientious thought and thorough debate (which could occur if the Senate is not intimidated simply to fall in line). Finer differences emerge from other more ideological critics who, supporting the overall notion, believe it could benefit from lots of fine-tuning. One set of strident advocates encourages underwriting unemployment claims for the "working wounded" and increasing food stamp benefits. This camp questions, in our hurry to trigger a trend to spend which is at risk of being indiscriminate its generosity, should we not first consider who most needs a handout? For dissidents on the other end of the spectrum, additional financial incentives are in order for businesses, as are making permanent earlier time-limited tax cuts which primarily benefit those with greater wealth-and hypothetical capabilities to generate jobs, products, and money. SHORT CUT: For those who insist," JUST TELL ME WHAT TO DO!"BY EARLY NEXT WEEK ASK PRESIDENT BUSH (202-456-1111), SENATORS SHERROD BROWN (888-896-6446) AND GEORGE VOINOVICH (202-224-3353) AND YOUR CONGRESSIONAL REPRESENTATIVE (*) TO DEVELOP A SMARTER ECONOMIC STRATEGY THAT BETTER TAKES INTO ACCOUNT LONG-TERM CONSEQUENCES AND FOCUSES ON THE MOST ECONOMICALLY DEPRIVED CITIZENS. SUGGEST THAT THE POOREST AMERICANS WOULD MOST BENEFIT AND, HAVING GREATER FINANCIAL NEED, WOULD MEET SHORT-TERM GOALS BY IMMEDIATELY SPENDING THEIR ALLOTMENTS ON ESSENTIALS. POINT TO THE UNEMPLOYED (AND THOSE OUT OF WORK AND WITHOUT BENEFITS), THOSE FORCED TO DEPEND UPON FOOD STAMPS, AND MORE THAN 15 MILLION OF THE LEAST AND LOWEST EARNERS EXCLUDED FROM FREEBIES. AND WHILE THE PRESIDENT AND CONGRESS ARE IN A GENEROUS AND COOPERATIVE MOOD, ENCOURAGE THEM TO RESUME NEGOTIATIONS ON TWO DELAYED REFORMS--CHILDREN'S HEALTH INSURANCE AND FARM BILLS-WHICH ADDRESS MANY OF THE SAME CONCERNS. LONG SUIT: For those who plead "GIVE ME MORE DETAILS"These are scary times. Unemployment and inflation are up and housing prices are down. Most economists agree that the mortgage, credit card, and auto loan industries are all in trouble. Gas prices are increasing, home foreclosures skyrocketing, and on top of all that, we're hemorrhaging $2 billion a week in Iraq. Deluged with debt and uncertainty, many families have slowed other than necessary spending and, as a result, the economy seems to be sliding into recession. In response, it seems everyone inside the beltway has suddenly awoken to the possibility of a looming economic disaster and agrees that a national commitment will be required to kick-start the economy. In a flash this week, House leaders and the Bush administration reached a deal on how to deliver an economic stimulus package to help jump-start the sluggish U.S. economy. The agreement includes tax rebates for individuals, tax cuts for businesses and help for American homeowners. After being pulled, pushed, and twisted into contortion unrecognizable in its current form, the stimulus plan now moves to the Senate where it could undergo more changes. What amounts will be given?Tax rebates worth $100 billion for individuals and families:
Who would be eligible for a rebate?Under the current deal, taxpayers earning less than $75,000 and couples earning less than $150,000 in adjusted gross income for the year would receive a rebate check. To be eligible for the income tax rebate, taxpayers would had to have earned at least $3,000 in 2007. When are checks expected?It's unclear when a final deal will be reached. If the bill is enacted by mid-February, as many lawmakers hope, then the process could begin in May and be wrapped up by mid-summer. What kind of tax cuts would businesses get?The package includes tens of billions in tax cuts for corporations. It would allow all businesses to immediately write off 50 percent of the purchase cost of new plants and other equipment. In addition, small businesses would be permitted to write off other equipment purchases. What happens next?Though the deal was a major political breakthrough between House Democrats and Republicans and the White House, it has yet to win approval from the Senate. Some areas of contention will likely be negotiated before final approval:
And, with skyrocketing oil prices driving the crisis, some legislators will push for public infrastructure investments that create jobs in the short-term such as energy efficiency, mass transit, bridges and roads, a Clean Energy Corps, and WPA-like tandem efforts to put people to work and restore the economy. State of NegotiationsPolitics, as the art of compromise, is hot and heavy at this very moment in Washington and the final outcome remains uncertain. So this may be a good time to throw back into the mix two other unresolved and volatile issues which, while directly applicable to a healthy economy, have been placed on hold: SCHIP (State Children's Health Insurance Program)This week the House of Representatives failed for the second time in nearly four months Wednesday to override President Bush's veto of a proposed $35 billion expansion of the State Children's Health Insurance Program. The 260-152 vote left backers of the legislation about 15 votes short of the two-thirds majority of lawmakers voting necessary to override the president's Dec. 12 veto. The vetoed bills would have expanded the $5 billion-a-year program by an average of $7 billion a year over the next five years, for total funding of $60 billion over the period. That would have boosted enrollment to 10 million children, up from 6.6 million, and substantially reduced the ranks of the nation's 9 million uninsured children. The Administration's rejection was based on apprehensions that coverage with be extended to middle-class children and encourage some families to drop private insurance. But, given the gravity of impact of the current economic crisis on such families-and, otherwise, the deferral of SCHIP until 2009-this unfinished business rightfully deserves consideration. The Farm BillThe House passed its farm bill in July; the Senate did the same in December. Members of each chamber will shortly begin conferencing to reconcile the two different versions and prepare a conference report that sets out the terms of the final bill. Many conflicts remain among the Administration, House, and Senate versions which will require substantial concessions by all parties to move forward. One major contradiction in the current debate would mislead millions of vulnerable Americans who would see their food stamp benefits expand in 2008, only to have the increase taken away five years later. More than 10 million food stamp recipients would see their benefits cut in 2013 and more than 300,000 low-income people would be cut off food stamps altogether unless Congress acts to extend the policies. Another reason for including this contentious legislation is that a boost in food stamps would help reduce economic recession. Recipients could receive 20 percent more buying power for six months--one of several economic stimulus tactics being considered by the federal government. Increasing food stamp benefits could proceed quickly and recipients would most likely spend benefits quickly. Over 35 million Americans--including more that 12 million children--struggle to put food on the table. Along with SCHIP, at risk of being forgotten and bounced to the next Administration and Congress, compromise on this critical legislation could help with the current crisis. More next week on the potential for incorporating these two bills and other critical provision into the economic stimulus package. An Alternative PerspectiveA conscientious Ohioan, upon hearing about the potential for what happened this week, offered a variety of suggestion from which these several were excerpted: I hope our elected officials will consider the following: Before anyone begins to think about what you might do with an extra (money) in your pocket, consider possibly creating or donating to projects that will make sure the money is spent locally. For example, what if people donated to a community agency that would help make home repairs on the homes of those who don't get this money? Or use it to start a local community garden? A farmers market? Let's urge our friends not to stimulate the Best Buys and the Wal-Marts, but rather turn these dollars in our local community! The State of Ohio, local governments and the business community should do all they can to multiply the effect of the stimulus to impact the local economy. What if the City would work with its many community organizations, lenders and local builders, plumbers, electricians, roofers, etc., to help consumers with their $600 checks to obtain the home repairs they need? There are lots of ways to do this -- it just takes some creativity and ability to be flexible and work quickly. Unfortunately, state and local officials will need to be vigilant to discourage possible scamming operations that may arise with an influx of money into a community. Finally, the stimulus package should include aid to the States by increasing the federal match on Medicaid dollars. Usually Ohio gets about 60 cents of federal money for every 40 cents it spends on health benefits provided through the Medicaid program. In 2003 the federal share was lifted slightly, and it helped Ohio avoid Medicaid cuts. The same is needed now, so that dental benefits and provider rate increases promised last June can be implemented. A healthy economy needs healthy workers! Sincerely, Kathleen Gmeiner PRIMARY REFERENCES AND LINKS(*) You may also email your response. For your personal congressional representative, check www.house.gov and put in your zip code in the box at the upper left hand corner. For other federal representatives, click on link just below under "Offices" on "Representatives." FRAC's Weekly News Digest (January 22, 2008) Food Stamp Boost Considered to
Help Block Possible Economic Recession (NPR, January 11, 2008; Associated Press,
January 11, 2008; Reuters, January 17, 2008, New York Daily News, January 21,
2008): Food Research and Action Center (FRAC). Urgent Action Needed! 1.23.07: Coalition on Human Needs. "State budget might suffer massive cuts Shortfall could near
$1.9B; "Override of veto on kids' health plan fails" http://www.cleveland.com/news/plaindealer/index.ssf?/base/news/ "Cost of War Nearly $2 Billion a Week," September 28, 2006: Boston
Globe "Stimulus deal near as Bush, lawmakers make concessions" by Andrew
Taylor; "Recession stimulus package should be short-term and targeted":
Cleveland Plain Dealer; http://www.cleveland.com/editorials/plaindealer/index.ssf?/base/ "Fed's action will eventually help economy, experts say": Akron Beacon Journal; http://www.ohio.com/news/top_stories/14019492.html "Bush, Lawmakers Are Close to Deal on Stimulus Package": Washington
Post; http://www.washingtonpost.com/wp-dyn/content/article/ Juxtaposition: "Government isn't a cure for economy" by Cal
Thomas, "Bush Threatens Veto of Indian Health Care Bill": New York Times: http://www.nytimes.com/2008/01/23/washington/ Editorial: Real recovery: Columbus Dispatch; http://www.dispatch.com/live/content/editorials/ "Farm Bill Update": EPPN Lenten Series: For the Beauty of the
Earth; "Farm Bill Sign-On Letter"; 1.22.08: Bread for World. Larry Hollar "Bush and House in Accord for $150 Billion Stimulus" by DAVID M.
HERSZENHORN. New York Times. "Economic Stimulus Package," 1.19.07: Kathleen Gmeiner;
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