This morning the news came that unemployment has reached a 16-year high of 7.2%. This recession is already longer than the previous two that the U.S. has been through, and the Economic Policy Institute estimates we can expect unemployment to continue to climb through 2010, with full economic recovery taking 3 to 4 years beyond that point. Without a serious recovery package we would be facing 10% unemployment at the height of the crisis, with 5.5 million jobs lost, underemployment would be at 18%, affecting 27 million Americans. We are now, approximately twelve months into the recession, at 2 million jobs already lost.
9% unemployment means 7-10 million more poor, on top of the 37 million poor in 2007, and approximately 3 million of the newly poor (21 million total) will be children. The first six months of 2008 already saw a 31% increase in young children in food insecure households. Charities across the country have seen an increase in demand, along with a drop in donations that worsens the gap between need and supply.
Getting us out of this will require a serious plan of investment in creating jobs. A jobs package of the size that Obama has talked about, $700-800 billion, is unprecedented, but would create as many as five million jobs in its first two years, and keep unemployment rates 3% lower. And the recovery plan may need to get even larger.
But what jobs, what industries, and which workers would benefit from the proposed plan? So far much of the focus has been on industries that are traditionally male, such as construction, steel, car manufacture, etc. There are some reminders out there that any "new deal" that incorporates job creation needs to focus on more than just traditionally male-dominated industries, but also a backlash that says a focus on trying to secure aid for traditionally female industries might actually impede recovery. Meanwhile, we know that one of the main factors in women's unemployment and underemployment is a lack of reliable low-cost childcare. We could kill two birds with one stone by instituting universal preschool or a nationwide childcare subsidy to help get parents into the workforce while providing jobs for childcare workers.
Just about every business is trying to jump on the bailout bandwagon, from RV manufacturers to porn producers. The problem is that in a recession of this magnitude, every type of business is going to take a hit, and some will fail. American consumption represented 70% of our economy, and now the average person no longer has the ready cash to continue funding that level of spending. Investors need to be able to take the hit for bad investments, otherwise we create a system of privatized profit and socialized loss. We can't save every business, nor should we.
In fact, when we look at the economic realities of return on investment for federal dollars spent, it is clear what is effective, and what isn't.
Return for Each Federal Dollar Invested
Temporary Increase in Food Stamps: $1.73
Extending UI Benefits: $1.64
General Aid to State Governments: $1.36
Increased Infrastructure Spending: $1.59
Make Dividend and Capital Gains Tax Cuts Permanent: $0.37
Tax breaks are one of the least effective investments the government can make to help ease the economic crisis and build the country's workforce, while investment in the social safety net, and programs like food stamps, are one of the most effective. By investing in social safety net programs we not only help those who have been most hurt in the current recession, but we also build the economy more quickly and more efficiently. Unfortunately, the proposed stimulus plan has lots of tax cuts, and not enough help for safety net programs, but progressives aren't going to take it lying down.
For the past 8 years, government has given priority to tax breaks for multimillionaires and big corporations. Now we must focus on things that will turn our economy around and help working families: health care, schools, and energy independence. When we invest in health care, education, and jobs, we are investing in America's future. Improving transportation, modern-izing schools, promoting energy independence, and creating good jobs are smart investments in the nation's future. As it is, 85% see economy as in bad shape, and 64% support expanding public investment to create jobs.
Despite the occasional bright spot, it is clear that the economic situation is hurting millions, and will only get worse if serious action isn't taken immediately. Even the Federal Reserve is backing a serious economic recovery plan of federal spending. The country can't afford for Congress to wait on an economic investment plan, and with the rush to push a bailout for Wall Street a few months ago, and the lack of oversight into where that money has gone, insistence on lengthy deliberation is clearly obstructionist.
Here are some actions you can take:
Demand to know where our bailout money has gone
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