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Safety net needed as we wait for help
Robert Reich
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TEXT OF COMMENTARY
KAI RYSSDAL: You emember the S-chip debate from a couple of years ago -- whether to bump up cigarette taxes to pay for an expansion of the State Children's Health Insurance Program? S-Chip. Congress said yes. The president said no. Said it twice, in fact, with vetoes.
Today, the House said yes yet again as part of President-elect Obama's promise of universal health care.
Commentator Robert Reich says that support is exactly the kind of thing people need until economic help arrives.
ROBERT REICH: The safety net created in the 1930s to protect Americans from extreme poverty is in tatters. Now that we're in the worst downturn since the Depression, that safety net needs mending. This should be a key part of any stimulus plan.
Unemployment insurance, for example, was created in 1935, when most people who lost jobs had held those full-time positions for some years. But most people who are losing jobs now have not been in them all that long. Typically, the last ones hired are the first fired. And many job losers have only worked part time.
Either way, they don't qualify for unemployment benefits. In fact, fewer than 40 percent of people now losing their jobs qualify. So a necessary step toward mending our safety net is to get unemployment benefits to everyone who loses a job. And if it's a part-time job, partial benefits.
And remember welfare? We started that program in the depths of the Depression. We officially abolished it in 1996, during the strongest job-creating recovery in memory. We substituted a new law that gives people a maximum of 60 months in their lifetimes to get aid for themselves and their kids.
Over the last dozen years, as more and more people hit that 60-month limit, the nation's welfare rolls naturally declined -- even though the percent of families in poverty stayed roughly the same, just under 10 percent.
But now as the economy plunges, many more families are moving toward poverty. So that 60-month limit should be lifted, at least until the economy turns up again.
Giving American families more economic security during this downturn isn't just fair. It's also good policy, because the money they get to buy goods and services keeps other people in their jobs. In fact, strengthening our national safety net is one of the fastest and most direct ways to stimulate the economy.
And after all, if executives on Wall Street and in Detroit deserve a safety net, why should American families be left out in the cold?
RYSSDAL: Robert Reich teaches public policy at the University of California, Berkeley. His latest book is "Supercapitalism."
Is it economic stimulus time again? Probably, but the last stimulus was sort of a dud.
The purpose of an economic stimulus is to get consumers (that’s us) whose purchases are directly responsible for over 70% of our Gross Domestic Product (GDP), back into the market and buying things again. However, we Americans are rather prudent and much of the last stimulus bonanza went right into non-stimulating things like paying off bills and saving for rainy days.
Hooray for us, but this didn’t create the extra demand that would stimulate companies to ramp up employment, buy more raw materials, produce more stuff and ultimately make more money. So, shame on us. We consumers aren’t doing our patriotic duty. We aren’t spending enough and the world economy is going right down the tubes.
Anyway, we probably don’t want to do the last stimulus program over again. We’ve been there, done that and those darn consumers just didn’t step up to the task. So, have we learned anything? Is there a better way? How can we encourage consumers to meet their consuming responsibilities?
One way might be to engage consumers by setting up some sort of 50/50 price matching stimulus program where the government would pick up half the tab on your purchases up to a set amount. In other words you would have to SPEND a dollar to get a dollar. This would look a bit like a half price deal to consumers, and the government wouldn’t have to pay out a single dollar that didn’t turn into two dollars of actual stimulation.
In order to spread the stimulus around and help state and local governments a little bit, the 50/50 deal would only apply to sales taxable purchases. You wouldn’t be able to use it to pay off bills, buy separately taxable stuff like gasoline, liquor and cigarettes, non-taxable services like medical expenses, accounting fees and airline tickets or the labor portion of services like auto repairs.
As for administration, we have Gift Cards, Debit Cards and Reward Cards, world class technology and expertise, nationwide communications and good old American ingenuity. Seems like with all this and a bit of ‘go for it’, we should be able come up with a workable 50/50 stimulus program in rather quick fashion..
Every time you have Dave Frum on I want to write in and say can the blind ideologues.... but then you put such rational well thought out ideas from this well versed "Lefty" and all I want to do is send you flowers. Keep the debate flowing!! And stop crying about bankrupt businesses while you're at it, I know FAR more human beings who are hurting these days. Marvin is doing much worse than Mervyn's. And one of them is still eating well.
