You've Received Your Economic Stimulus Check: Now What

May 15, 2008 EPI Policy Memorandum #124

Making the case – again – for an economic rebound
by Nancy Cleeland and John Irons

With federal stimulus checks in the mail this month, it’s worth reconsidering the much-trumpeted bipartisan accord that was reached in January to jumpstart the U.S. economy – and all that it fails to do. For instance, the stimulus deal provides for no extension of unemployment benefits; no aid to cash-strapped states; and no spending on immediate repairs to schools, bridges, ports, and other crucial infrastructure. All of the above were identified by EPI as cost-effective ways to inject money into a shrinking economy, in many cases, creating good jobs in the process. They were not incorporated into the plan then, and despite far worsening economic conditions, efforts to revive the ideas have not gathered sufficient support. In fact, the latest effort toward a second stimulus package in the House, which began with talk of halting foreclosures and building infrastructure, has shrunk down to a minor extension of unemployment benefits tagged onto a supplemental appropriations bill used to fund the war in Iraq.

The good news is that the January deal between House leaders and President Bush puts cash in the pockets of people who are likely to spend it, ratcheting down the payments for individuals who earn more than $75,000 a year. The bad news is that businesses get tax breaks worth an estimated $45 billion this year that will do nothing to get the economy moving again—businesses need customers, not incentives to increase capacity. If there was any doubt of recession in January, it should be gone by now, after four months of shrinking employment, a quarterly gross domestic product rate that is barely above zero, and signs of a pullback in consumer spending.

Here is some of what needs to be done in a second stimulus package to immediately boost the economy, create jobs, and ensure against a prolonged period of economic weakness:

Infrastructure:
With thousands of bridges in need of repair, accelerated investments in road and bridge repair would create jobs today while making our transportation system safer;
A school maintenance and repair initiative would eliminate years of deferred maintenance and improve the learning conditions for students and teachers;
By putting a down payment on regional transportation projects by creating an infrastructure investment bank we can begin to meet long-term infrastructure needs.

Unemployment insurance:
With long-term unemployment at unusually high levels, extending unemployment insurance benefits would yield an immediate stimulus and protection against a longer-term economic downturn.

State aid:
States continue to project significant budget shortfalls; providing emergency aid to states would prevent cutbacks that would worsen economic conditions.

Economic Policy Institute www.epi.org

New Campaign to Cut Poverty in Half

From Poverty to Prosperity: A National Strategy to Cut Poverty in Half


While thirty-seven million Americans living below the official poverty line, and many millions more unable to meet their basic needs, a mere 150,000 families or 0.01% of the nation’s population accounts for 5.5%of total income. As millions of homeowners face foreclosure and the value of the dollar continues to tumble, inequality in the Untied States has surpassed that of many developing and third world countries. While elective and cosmetic surgeries become ever more popular, the number of working Americans with health insurance continues to decline, exceeding forty-seven million people. And, while crime continues to decrease, the Untied Sates prison population continues to grow, topping 2.2 million people incarcerated, the cast majority of whom are poor and men of color.

As our inequality continues to grow and take an ever larger toll, our elected officials continue to ignore reality and since the end of John Edwards’ presidential campaign, poverty is not even an issue on the campaign trail. While Republicans and Democrats continue to squander billions on a failed war effort, social programs are forced to cut back, increasing the burden on working and low income families.

A new effort has been launched to address these inequalities in America, Half In Ten, a campaign to cut poverty in half within ten years. Spearheaded by former Senator john Edwards and the Association of Community Organizations for Reform Now (ACORN), the Center for American Progress Action Fund (CAPAF), the Coalition on Human Needs (CHN), and the Leadership Conference on Civil Rights (LCCR), the campaign goals are to:

1) Elevate and sustain a focus on the situations facing the poor and middle class today (2) Build and strengthen an effective constituency to demand legislative action on poverty and economic mobility (3) Advance specific legislative and policy proposals that will deliver real benefits to struggling American families.

This campaign is based upon a report published by the Center for American Progress, titled From Poverty to Prosperity: A National Campaign to Cut Poverty in Half. The report lays out four principles that guide the campaign, they are:

• Promote decent work
• Provide opportunity for all
• Ensure economic security
• Help people build wealth

To realize the goal of cutting poverty in half within ten years, the report sets out the following twelve point agenda:
1) Raise and index the minimum wage to half the average hourly rate
2) Expand the earned income tax credit and child tax credit
3) Promote unionization by enacting he Employee Free Choice Act
4) Guarantee child care assistance to low-income families and promote early education for all
5) Create 2 million “New Opportunity” housing vouchers and promote equitable development in and around central cities
6) Connect disadvantaged and disconnected youth with school and work
7) Simplify and expand Pell Grants and make higher education accessible to residents of each state
8) Help former prisoners find stable employment and reintegrate into their communities
9) Ensure equity for low wage workers in the Unemployment Insurance system
10) Modernize means-tested benefits programs to develop a coordinated system that helps workers and families
11) Reduce the high cost of being poor and increase access to financial services
12) Expand and simplify the Saver’s Credit to encourage saving for education, homeownership and retirement.

The entire report From Poverty to Prosperity: A National Campaign to Cut Poverty in Half, can be accessed at: http://www.americanprogress.org/issues/2007/04/poverty_report.html

The web site for Half In Ten From Poverty to Prosperity can be accessed at: http://www.halfinten.org/aboutus.html

US: ‘Drug War’ Unjust to African Americans

Two National Reports Detail Racial Disparity in Arrests and Imprisonment

Washington, DC, May 5, 2008) – Ostensibly color-blind, the US “war on drugs” disproportionately targets urban minority neighborhoods, Human Rights Watch and The Sentencing Project said in two reports released today. Although whites commit more drug offenses, African Americans are arrested and imprisoned on drug charges at much higher rates, the reports find.

In the 67-page report, “Targeting Blacks: Drug Law Enforcement and Race in the United States,” Human Rights Watch documents with detailed new statistics persistent racial disparities among drug offenders sent to prison in 34 states. All of these states send black drug offenders to prison at much higher rates than whites. “Most drug offenders are white, but most of the drug offenders sent to prison are black,” said Jamie Fellner, senior counsel in the US program at Human Rights Watch and author of “Targeting Blacks.” “The solution is not to imprison more whites but to radically rethink how to deal with drug abuse and low-level drug offenders.”

Key findings in the Human Rights Watch report include:

• Across the 34 states, a black man is 11.8 times more likely than a white man to be sent to prison on drug charges, and a black woman is 4.8 times more likely than a white woman.
• In 16 states, African Americans are sent to prison for drug offenses at rates between 10 and 42 times greater than the rate for whites.
• The 10 states with the greatest racial disparities in prison admissions for drug offenders are: Wisconsin, Illinois, New Jersey, Maryland, West Virginia, Colorado, New York, Virginia, Pennsylvania, and Michigan.

The Sentencing Project’s 45-page study, “Disparity by Geography: The War on Drugs in America’s Cities,” is the first city-level analysis of drug arrests, examining data from 43 of the nation’s largest cities between 1980 and 2003.

The study found that, since 1980, the rate of drug arrests in American cities for African Americans increased by 225 percent, compared to 70 percent among whites. Black arrest rates grew by more than 500 percent in 11 cities during this period; and, in nearly half of the cities, the odds of arrest for a drug offense among African Americans relative to whites more than doubled. “The alarming increase in drug arrests since 1980, concentrated among African Americans, raises fundamental questions about fairness and justice,” said Ryan S. King, policy analyst for The Sentencing Project and author of “Disparity by Geography.” “But even more troubling is the fact that these trends come not as the result of higher rates of drug use among African Americans, but, instead, the decisions by local officials about where to pursue drug enforcement.”

Among The Sentencing Project report’s key findings:

• African-American drug arrests increased at 3.4 times the rate of whites despite similar rates of drug use.
• Extreme city variations in drug arrests point to local enforcement decisions as a prime contributor to racial disparity.
• Six cities experienced more than a 500-percent rise in overall drug arrests between 1980 and 2003: Tucson (887 percent), Buffalo (809 percent), Kansas City (736 percent), Toledo (701 percent), Newark (663 percent), and Sacramento (597 percent). The Sentencing Project and Human Rights Watch urge public officials to restore fairness, racial justice, and credibility to drug-control efforts.

They recommend public officials take a number of concrete steps, including:

• Eliminating mandatory minimum sentences and restoring judicial discretion to sentencing of drug offenders;
• Increasing public funding of substance abuse treatment and prevention outreach to make these readily available in communities of color in particular;
• Enhancing public health-based strategies to reduce harms associated with drug abuse and reallocating public resources accordingly.

These reports follow in the wake of the March 2008 recommendations of the United Nations Committee on the Elimination of Racial Discrimination. The committee urged that US criminal justice policies and practices address the unwarranted racial disparities that have been documented at all levels of the system.