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Wednesday, June 9, 2010

More Stimulus, Please

Leaders call on Congress to act and avoid a double-dip recession

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Could more federal stimulus funding help to prevent a double-dip recession and spur job growth?

The new funds, proposed in smaller, more specific bills than the $787 billion American Recovery and Reinvestment Act (ARRA), could help to shore up Medicaid spending, extend unemployment benefits, keep teachers in classrooms and continue subsidizing COBRA health insurance policies for laid-off workers.

That’s why local and national leaders are calling for another round of domestic spending to kick in when the original recovery funds taper off.

One such bill is the Local Jobs for America Act, co-sponsored by Congresswoman Gwen Moore (D-Milwaukee), which would add an estimated 1,630 jobs in the city of Milwaukee and another 530 jobs in the rest of the county. The bulk of the money would go to states and local communities to create or retain jobs; the rest would be spent on teachers, law enforcement and firefighters, according to the Milwaukee-based Community Advocates Public Policy Institute.

Whether any job-creation bill will be passed is up in the air, and some measures have been stripped from larger bills pending in Congress. But local leaders are calling on Washington to act before it’s too late.

“We do need another [round of domestic spending] or we’re going to have those massive cuts in the number of public employees and teachers that we avoided last year during the next year,” said Robert Kraig, executive director of Citizen Action of Wisconsin, which is part of the Wisconsin Alliance for Strong Communities, a group that is urging Congress to increase spending on jobs.

‘We’re Coming Back,’ Rep. Moore Says

Wisconsin has used its portion of ARRA funds to create or retain about 59,000 jobs already and an estimated 70,000 total when its funds have been distributed fully. The largest pool of money has been spent on education—$1.2 billion, according to the state’s ARRA website—while hundreds of millions of dollars have been spent on infrastructure, health care, energy, workforce development and the environment.

Even Milwaukee County Executive Scott Walker—who’d once said he wouldn’t submit a list of potential projects to be funded by the stimulus—recently has boasted of taking advantage of ARRA funding with the low-interest Build America Bonds. Walker’s campaign claims the bonds saved county taxpayers $3 million. Walker, a Republican candidate for governor, doesn’t promote the fact that the bonds were part of the stimulus package, however.

Thus far, Milwaukee County agencies, businesses and residents have received $413 million in stimulus funds.

That investment is largely unseen and unnoticed, since it helped to keep people on the job and conduct business as usual. But the local coalition argues that the funds helped to prevent another Great Depression.

As Rep. Moore put it at a press conference last week, “It’s very, very difficult to feel and understand that we’re coming back from the brink unless it touches you personally.”

She said a tangible, high-profile sign of the impact of ARRA funds on the local economy is Talgo’s decision to locate in Milwaukee and assemble and maintain trains for high-speed rail. The project will create 125 permanent jobs in Milwaukee and indirectly create up to 450 additional jobs throughout the Midwest. The high-speed rail line, eventually to run from Chicago to Minneapolis, is funded by the stimulus package. More than $800 million in federal funds will be spent on Wisconsin’s rail infrastructure.

“We’re coming back,” Moore said.

The Fragile Recovery

The recovery, however, is fragile and the high unemployment rate—combined with the cutoff in stimulus funding—could lead to a double-dip recession if more federal funds aren’t provided to cities and states.

“Some of the effects of the stimulus are ongoing, but they’re beginning to dissipate,” said Citizen Action’s Kraig. “They’re certainly going to dissipate when the aid given to states and cities to prevent very deep cuts in public services ends. Those cuts are going to kick in very soon unless there’s another major investment.”

Visible signs of vulnerability are the proposed job cuts at Milwaukee Public Schools in the coming school year. Legislation to fund teacher jobs around the country has stalled in Congress. An estimated $400 million of the proposed $23 billion would have flowed into Wisconsin to keep teachers in the classroom. Without the funds, an estimated 680 positions will be cut in the next school year.

Kraig said that the debate over domestic spending is a test of whether the federal government can act effectively in an economic emergency.

“This is what a democratic government was created to do,” Kraig said. “It can do things the market can’t do to protect people’s livelihood and prosperity. Large corporations that caused the financial collapse are not going to resolve this problem—they have no interest in solving this problem.”