Reality Based Stimulus

What a treat to get a sound projection for what works this morning from New Jersey Governor Corzine. With a solid grip on the realities of the situation, he does a down and dirty job of making a plan that can work, and putting it on paper. The states have for the most part had the full weight of support for social services over the past eight years, and the situation is desperate on that level. Many are out of funds for education, infrastructure, and unemployment.

Warning: this is not light reading.

The stimulus should be roughly divided into five categories: infrastructure, countercyclical programs, housing, education block grants and middle-class tax cuts.

· For every billion dollars we spend on infrastructure, we can put upwards of 20,000 people back to work. On one hand, we've learned painful lessons about the need to modernize our bridges and levees. On the other hand, we must think broadly about the idea of infrastructure: How many hours do people waste circling airports because our air-traffic control systems are outdated? We must commit to improving our transportation system, energy grid, Internet technology, ports, public housing and school facilities.

· Unless we also help states shore up their safety-net social programs, the economic impact of the federal stimulus will be negated.

Most states are constitutionally required to balance their budgets. Given the sharp decline in state revenue, we are not able to support, let alone increase, spending to meet growing demands for basic needs such as unemployment insurance, food assistance programs and health care -- including mental-health services to those with developmental disabilities.

Most states are facing cuts to these essential services, reductions that will exact an enormous toll on our most vulnerable citizens and remove money and jobs from the economy just when we need to promote growth. Put another way, even if the federal government dedicates a large sum to infrastructure, cutbacks in state and local safety-net programs would cancel out much of the effect of the stimulus.

Over two years, the federal government should boost its countercyclical spending by at least $250 billion. It can do so by increasing the Federal Medical Assistance Percentages; the federal share of Medicaid costs; and other health-care-related programs such as reimbursement to hospitals for treating the uninsured, Temporary Assistance for Needy Families and child-care grants.

Many state unemployment trust funds are already depleted. Rising unemployment rates and reduced revenue over the next few months are likely to trigger major payroll tax increases in 2009. This harm could be partly mitigated by doubling proposed federal funding for state unemployment trust funds under the Unemployment Insurance Modernization Act, which would provide incentives to cover vulnerable low-wage and part-time workers who are often denied benefits.

· Unless we strike at the cause of the meltdown -- the collapse of the housing market -- our economy will continue spiraling downward. The federal recovery package should include funding for state housing mortgage authorities and for programs that help people restructure their mortgages, stay in their homes and find new shelter if evicted.

· If we are to pursue relief and recovery, it's essential that we continue developing a workforce that is able to meet the demands of the 21st-century economy. At least $250 billion in preschool-through-college education block grants would help states meet their school budget obligations; more important, such grants would enable greater strides toward universal early childhood education and fully funded programs for special-needs students -- improving the situation today and laying the foundation for a better tomorrow.

· A sizable middle-class tax cut is key. Over the past decade, median family income has failed to keep pace with inflation, especially given the sharply rising costs of health care and education. Most Americans have lost ground. Relief for the middle class would help our families weather the storm and also boost economic demand.

In 1932, Roosevelt warned against being of "faint heart, fearful of change, sitting tightly on the rooftops in the flood." His words are still prescient today. We must be bold -- $1 trillion bold. America has abundant resources and a generous, ambitious spirit. If we work together, we'll emerge stronger and more prosperous than ever.

That we have to tighten our belts as a society, and get to work, is not a surprise. Eight year of right wing dominance has strained all systems to the breaking point, and economic sphere beyond that point. The diversion of all our national resources into corporate welfare has been a huge theft from the public.

The strictures we are all facing will not be painless. They will be a solid reminder that allowing wingers to ignore and trample on our laws does not make anyone better off. Even business suffers from 'business side' economics as practiced by the crooks who took over the White House in 2001.

That reality-based public servants are here to step in for the real work is heartening. We have many good people stepping up to the plate, and thanks are due to them for taking hold.

For shame, Republican Party for destroying the economy.