Should We Scrap the Stimulus and Start Fresh?

As I mentioned this morning, that is the argument some make.  It's compelling.  One thing I learned from post-disaster recovery work is that urgency compels a certain degree of immediate stabilization - stanching the bleeding, if you will.  But that urgency is often overstated, cited as driving decision-making when in actuality the crisis might warrant stopping and thinking and making new and different decisions than ones similar to those that got us to the crisis in the first place.  Trying to return to the status quo, which right now is an economic inequality that rivals that leading up to the Great Depression, is never advisable.  And the current stimulus package - long on tax cuts and short on stimulus - will do exactly that.

Now, here at POA I've been arguing for passage of the pre-Collins/Nelson version of the Senate bill.  I argued earlier that it was an interesting if untested mix of short-term stabilization measures and longer term investments in areas Obama deemed important for our long-term health.  I would be okay with that earlier version still, even as I agree with those who say it was never enough to begin with.   But at this point, I am drawn to those who say - let's forget the whole thing and start fresh.

Consider this: Our economy is 5M jobs in the hole; we lack at least 5M units of affordable housing in the U.S.; almost 14M people owe more on their mortgages than their houses are worth; and we've lost $2T from our retirement accounts in one year.

In CT, where my mom lives, state mental health hospitals are being closed and patients are being moved and people are facing layoffs; in CA, one of the largest and oldest work programs for low-income young adults is likely to be eliminated.  Yet, the current Senate bill removes $40b in aid to states.  Unemployment benefits would only be increased $25 per week, or $3/day.  Almost half of all Americans out of work are not even receiving unemployment benefits.

The Senate has also proposed eliminating, among other things:

• $1.25 billion project based rental
• $2.25 Neighborhood Stabilization (Eliminate)
• $1.2 billion in Retrofiting Project 8 Housing.

So there's goes the money for additional housing vouchers, money for local anti-foreclosure efforts, community development projects (repairing blighted properties, fostering small business development, affordable homeownership sales, etc.), and upgrading older, energy inefficient properties to cut residents' utility costs.  Keep in mind that the majority of low-income individuals who benefit from community development interventions and housing subsidies are single moms with kids, the elderly and the disabled.  Christy Hardin Smith's got the dirt on how hard children are being hit by the current crisis and this proposal.

Obama assures us that whatever's not in the bill now, we'll get to in the future.   Right.  Others foresee liberal House Dems going to the mat for a more generous bill.  All I know is that our government is subjecting us to ideological debates when they should be figuring out how to relieve the crushing burden of debt individual households and entire communities bear.  This means throwing out foolish proposals for tax credits for more homeownership when we still need prices to fall further.  This means pursuing bankruptcy reform now.  This means keeping workers - including government employees - in their jobs if they still have them and providing emergency relief to their neighbors and loved ones who are already out of work.  This means providing aid to states so they can continue to provide healthcare, food and shelter - directly and through their non-profit partners - to Americans struggling nationwide.   And it means figuring out how to best design and allocate funds for job creation, so we can slowly move people back into the workforce and get some much needed modernization in education, healthcare and infrastructure that this country desperately needs.

I don't know...maybe we should just walk away.  Tell Congress to start over with the stimulus proposal.  If they could get some aid to states I'd be all for a healthy planning process over a part two focused on job creation.  I have a friend here who's originally from France, married to an American now, and she wishes we protested more as a country.  Who knows, maybe she'll get her wish yet.