Money Matters: Obama, New Congress Work toward Economic Recovery - 1/23/09
Money Matters
January 23, 2009
Obama, New Congress Work toward Economic Recovery
I. Take Action on Children’s Health Care Reform
II. What’s in the American Recovery and Reinvestment Act?
III. What’s a More Effective Stimulus: Direct Spending or Tax Cuts?
IV. December Sees Sharp Increase in Unemployment
V. The Rising Need for Health Care Supports
VI. What Will Happen to the Rest of the TARP Money?
"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.”
~ President Barack Obama, Inaugural Address, January 20, 2009
Obama’s first full week in the Oval Office will be spent signing several labor bills, including the Lilly Ledbetter Fair Pay Act that passed the Senate yesterday. One of the other first pieces of legislation on his desk will likely be reauthorization of the State Children’s Health Insurance Program, a bill that former President George W. Bush vetoed in 2007. Obama’s main domestic priority will be the American Recovery and Reinvestment Act, which is currently being marked up by House committees.
I. Take Action on Children’s Health Care Reform
Last week the Congress took a huge step toward reforming this country's health care system. The House passed an updated reauthorization of the State Children’s Health Insurance Program (SCHIP), which would extend coverage to 4.1 million more low-income children, including 400,000 legal immigrant children through the Immigrant Children’s Health Improvement Act. Last Wednesday the Senate Finance Committee marked up its own version of the SCHIP reauthorization — it also includes immigrant children. The Senate is expected to discuss SCHIP reauthorization starting today and vote on it early next week. Urge your senators to act quickly and to support three provisions:
- Coverage of documented immigrant children. Currently, immigrant children — even those whose parents arrived in the United States with all proper documentation —have to live in the United States for five years before they qualify for SCHIP. A five-year waiting period is too long for growing children with immediate medical needs. See talking points on the Immigrant Children's Health Improvement Act.
- Coverage of all pregnant women, regardless of legal status. Access to prenatal and postpartum medical care improves the health of child and mother while reducing the costs involved with immigrant childbirth by an estimated 22 percent. The savings result from mothers’ not having to make costly emergency room visits to receive medical attention.
- A 4.5-year reauthorization. Don't let this reauthorization be simply a symbolic gesture — make it a lasting commitment.
II. What’s in the American Recovery and Reinvestment Act?
The House Appropriations Committee released the initial version of the American Recovery and Reinvestment Act last Thursday. The proposal totals $825 billion and includes many of the stimulus provisions that FCNL has been advocating — an increase in food stamp benefits (now known as the Supplemental Nutrition Assistance Program, or SNAP), an extension of unemployment insurance, state money for the Medicaid program, and other income supports that will help working families make it through the recession. See FCNL’s summary and analysis of the recovery proposal
III. What’s a More Effective Stimulus: Direct Spending or Tax Cuts?
Last week, House leaders introduced an $825 billion financial recovery package to counter the recession, but does it do enough for working families? Many of the plan’s provisions are stimulus efforts that FCNL has supported, yet the package also includes tax cuts that are not as effective or efficient. Giving money directly to the low-income people who need it most is the best form of economic stimulus because the money is spent immediately in the domestic economy.
IV. December Sees Sharp Increase in Unemployment
Unemployment is increasing rapidly, rising from 6.8 percent last November to 7.2 percent in December. That means 524,000 jobs were lost in one month. According the Economic Policy Institute, the unemployment rate is likely to top 10 percent by 2010 if Obama’s economic recovery plan is not enacted. Read the Economic Policy Institute’s December “Jobs Picture.”
V. The Rising Need for Health Care Supports
As more people lose their jobs, they are also losing their health insurance. Because entire families often depend on employer-sponsored health insurance, a 1 percent rise in unemployment corresponds to a 1.1 percent rise in people without health insurance. As a result, money for Medicaid, a program that covers low-income families, and COBRA (Consolidated Omnibus Budget Reconciliation Act), the health insurance program unemployment insurance recipients can buy into to continue their health coverage, are especially important at this time and should receive special attention in the economic recovery package.
See a report on the link between unemployment and health insurance by Families USA.
VI. What Will Happen to the Rest of the TARP Money?
The House and Senate both voted on resolutions of disapproval intended to block the release of the second half of the $700 billion Troubled Asset Relief Program (TARP). Yesterday, the House passed its resolution of disapproval 270-155. However, since the Senate had rejected its resolution 42-52 last week, passage of the House resolution was a symbolic gesture. The $350 billion will be released to the Treasury Department on January 27.
On Wednesday, the House passed a bill (H.R. 384), introduced by House Financial Services Committee Chair Barney Frank (MA), that would place certain restrictions on the release of second half of the TARP funds. Frank’s proposal would add more oversight to TARP, place more restrictions on executive compensation, and set aside $40 billion to $100 billion to prevent people from losing their homes.