Navigation

Update on the Federal Recovery Package and the States

Jobs Creted by Different Measures in Recovery Program Progressive States highlighted a range of studies and analyses in last week's Dispatch on the importance of aid to the states as a centerpiece for economic recovery.  Many state leaders praised the House version of the package introduced last week.  Additional studies released this past week continue to reinforce the point that investments in the states are key to economic recovery:

  • In New Analysis Shows Strong Job Effects from Including Aid for Hard-Pressed Families and States in a Recovery Package, the Center for Budget and Policy Priorities highlights findings by top Obama economists that assistance for safety net programs like food stamps and unemployment insurance will effectively produce one-fifth of jobs in 2009 under the proposed recovery plan, which along with fiscal relief  to the states will account for 40% of jobs generated in 2009 and 2010.
  • The House version of the recovery program adopts the Unemployment Insurance Modernization Act (H.R. 291) to help states upgrade their unemployment programs to extend help to more workers, including: part-time workers; the long-term unemployed; those with additional dependents; those forced to leave jobs because of issues like domestic violence; those suffering reduced benefits because of antiquated benefit rules; and a number of other reforms.  As the National Employment Law Project documents, the House bill will also increase unemployment benefits across the board for 18 million workers.  Additionally, the bill provides $500 million in new funding to help the Employment Service better assist workers in finding new jobs, as well as subsidies to help workers below 200% of the poverty line either hold onto their old employer-based health care or receive Medicaid.
  • A new report, How Infrastructure Investments Support the U.S. Economy: Employment, Productivity, and Growth  emphasizes the job gains from investments in highways, bridges, waterways and transit.  The report by the Alliance for American Manufacturing (AAM) and University of Massachusetts-Amherst's Political Economy Research Institute (PERI) estimates that 2.6 million jobs would be created by accellerating such investments and spending $148 billion per year to rebuild U.S. infrastructure.
  • Despite fears of the costs of the federal economic recovery proposal, an analysis by the Center for Budget and Policy Priorities finds that the $825 billion proposal will amount to just 3 percent of the overall projected budget shortfall through 2050, indicating that a prudent stimulus of the economy today will not create significant, long-term budget challenges.