From the Dispatch

Over 225 Legislators From 48 States Stand Up For Jobs Now

Charles Monaco — Fri, 04 Nov 2011 20:33:15 +0000

This week, conservatives in the United States Senate blocked a $60 billion piece of President Obama’s American Jobs Act from advancing — a package that would have created a national infrastructure bank and funded needed infrastructure projects while putting 450,000 Americans back to work, paid for by a miniscule 0.7 percent surtax on taxpayers making over a million dollars a year. This follows the similar conservative blockage last month of $35 billion in aid to states that would have allowed states to save the jobs of hundreds of thousands of teachers and first responders. All told, Congress has now blocked three separate jobs bills over the past month (including their original rejection of the entire American Jobs Act), a striking display of intransigence on the part of conservatives who claim to be concerned about job creation. As jobs efforts stall in the nation’s capital due to this right-wing obstruction, state legislators from 48 states and counting are letting D.C. know their states need jobs now, and many are taking the lead on job creation themselves.

Over 225 lawmakers from 48 states and three territories have now signed on to an open letter first released by Progressive States Network last month calling for the passage of the American Jobs Act, described in the letter as “a common-sense package of proposals that recognize the crisis of job losses in the states while adopting effective job-creation solutions that many of our states are already advancing.” The letter focuses on four elements of federal a jobs bill that would save and create jobs in the states: relief to state budgets that will allow states to avoid slashing the jobs of more teachers and first responders, inclusion of revenue generating measures that ask the wealthiest 1% to pay their fair share, adoption of innovative state and bipartisan policies to save and grow jobs such as work sharing and the prevention of employer discrimination against the unemployed, and expressing concern about cost shifts to states in any adjustments to Medicaid.

The direct aid to states to filibustered in the Senate in October remains one key priority of state lawmakers across the nation. On the White House blog, North Carolina State Rep. Pricey Harrison recounted what that bill would have meant for jobs in her state:

“I spent part of Tuesday with President Obama as he met with and spoke to teachers, students, staff, and other citizens of Guilford County while in Jamestown on the campus of Guilford Technical Community College. The President was there to promote the American Jobs Act, which is projected to create more than 2 million jobs nationwide and help rebuild our middle class and an economy that works for all of us... [The plan] will provide over $900 million to North Carolina to support up to 13,400 educator jobs.”

With jobs continuing to be the chief concern of voters, conservatives on all levels of government have also felt pressure to come up with their own “jobs” plans in response to the plans being offered by President Obama and responsible lawmakers. The resulting proposals reflect their proponents’ true priorities. As United Steelworkers president Leo Gerard wrote, the conservative Congressional "jobs" plan to gut Wall Street reform, shred regulations, and repeal health care reform under the guise of job creation is truly a “ruse to firmly establish in America an economy designed for, dedicated to and directed by corporations rather than a just economy controlled by and beneficial to the 99 percent.”

The jobs plans proposed by conservatives in the states have been no less cynical. In Wisconsin, Gov. Scott Walker called a special session purportedly to spur job creation but which was described by State Rep. Marc Pocan as consisting of giveaways to corporate interests that are “straight from the conservative corporate mastermind, the American Legislative Exchange Council (ALEC).” One of the most prominent bills to be debated in Wisconsin’s special “jobs” session has been one allowing guns on the floor of the state capitol.

Some more encouraging news emerged from a special jobs session in Connecticut, where lawmakers reached almost unanimous bipartisan agreement on a $626 million package of measures including the expansion of workforce development, funding infrastructure repairs, retrofits to home heating systems, and tax credits for hiring the unemployed. “This bill gives [Connecticut families] more than hope,” commented Connecticut House Speaker Chris Donovan on the achievement. “It gives them a program that invests in their future. It fosters an environment that will create jobs, help small businesses grow, spur innovation, educate and train our workforce, and make Connecticut competitive again.”

As the Senate continues to debate and vote on more elements of President Obama’s American Jobs Act in the coming weeks, including extension of unemployment insurance and extending the payroll-tax cut, progressive state lawmakers will simultaneously be preparing for sessions next year focusing on policies they can advance to create jobs in the absence of federal action. The National Employment Law Project recently released “Filling the Good Jobs Deficit: An Economic A Recovery Agenda for Our States and Cities,” a set of suggested policy options for cities and states to consider in dealing with the continuing jobs crises they face. Some of the measures highlighted in the report include raising the minimum wage, strengthening enforcement of wage and hour laws, getting the long-term unemployed back to work, protecting against further layoffs through work sharing, and retrofitting buildings to make them more energy efficient — all policies that Progressive States Network will also be supporting in the coming year and which have broad potential to advance in the states.

Full Resources from this Article

Over 225 Legislators From 48 States Stand Up For Jobs Now

White House — American Jobs Act
National Employment Law Project — Filling the Good Jobs Deficit: An Economic A Recovery Agenda for Our States and Cities
Progressive States Network — State Legislator Letter of Support for the American Jobs Act

This article is part of PSN's email newsletter, The Stateside Dispatch.
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More Affordable (and Clean!) Energy for Hawaiians, All While Supporting Small Businesses

Fabiola Carrion — Thu, 21 Oct 2010 15:12:15 +0000

Last week, the state of Hawaii approved its first roll-out of Feed-in Tariffs (FIT), a reward program that allows homes and businesses to get paid for building renewable energy systems such as rooftop solar panels and feeding that energy into the electric grid. To implement the plan, companies that install and maintain a renewable source device receive a Power Purchase Agreement from a utility, while the state government regulates the electricity tariff rate. In this transaction, the renewable energy producer is guaranteed a rate for the power supply to the grid. Consequently, installation takes place quickly, the customer pays no upfront costs (the renewable energy provider pays for the entire project, including installation, maintenance, and trouble-shooting), the service is predictable, and the rate is comparable with other retail electricity rates.

The Hawaii FIT program roll-out will take place on all of the state's grids within six weeks. Hawaii joins Vermont, Washington, California, and Oregon in introducing statewide feed-in-tariffs. Under the Oregon plan passed just this year, feed-in-tariff applications for solar projects were submitted so quickly that 15 minutes after the program was opened, no more applications could be received.

By generating its own energy sources, Hawaii will become less dependent on foreign fossil fuels. The program is particularly necessary in a state where 90 percent of the energy it consumes are from imported petroleum. In addition, FIT can help reduce utility costs. Currently, Hawaiians pay among the nation’s highest prices for electricity and fuel: The state spends about $7 billion to meet its energy needs. Further, feed-in-tariffs will bring gains for Hawaiian energy businesses, placing them in a competitive global clean energy market. In fact, feed-in tariffs have played a role to develop Germany’s world-leading solar power industry.

As it stands, Hawaii’s FIT program covers renewable energy generators of up to 500 kW in size; the Utilities Commission is still working out the details of the FIT for larger renewable energy systems up to five megawatts. Some members of the solar industry have expressed concerns over the program’s unspecified grid interconnection costs (the fees an energy producer pays to distribute energy) and utilities’ ability to halt energy production; to address these concerns, the Utilities Commission is seeking to monitor the program and revise it to make it better.

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Obama's $50 Billion Infrastructure Job Program Could Increase Impact with Focus on Funding Local Transit

Nathan Newman — Thu, 09 Sep 2010 16:34:20 +0000

President Obama this week announced a proposed $50 billion initiative to upgrade America's transportation infrastructure. The proposal includes an infrastructure bank; a plan to rebuild 150,000 miles of roads; projects to construct and maintain 4,000 miles of rail; and an initiative to rehabilitate or reconstruct 150 miles of runway and install a new air traffic control system.

Transportation for America called the plan “fundamental to the long-term health of our economy...The President today has promised to press for carefully targeted investments in those projects that compete best in satisfying clearly articulated national goals for energy security, safety, affordability, environmental sustainability and economic competitiveness."

More Jobs from Transit Spending: While this infrastructure spending is desperately needed, and the focus on upgrading the nation's rail system will have broad economic impacts, the immediate job creation impact could be increased through greater support for local transit projects as well, as a new report by the Transportation Equity Network emphasizes.

According to the report, each billion dollars spent on transit creates 36,108 jobs while the same money spent on roads yields only 30,319. Even more dramatically, spending some of the money directly on local transit operations would actually generate 41,140 jobs for each billion dollars spent. Transit systems across the country have been raising fares, cutting service, and shedding jobs since the onset of the recession, and the crisis is far from over.

This report reinforces the findings of other recent reports (here and here) that analyze the greater job creation potential of funding transit compared to roads.

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Job Creation and State Fiscal Relief Resolutions Moving in the States

Altaf Rahamatulla — Thu, 11 Feb 2010 17:12:03 +0000

In the State of the Union speech, President Barack Obama stated:

"The devastation remains. One in 10 Americans still cannot find work. Many businesses have shuttered. Home values have declined. Small towns and rural communities have been hit especially hard. And for those who'd already known poverty, life has become that much harder... That is why jobs must be our number-one focus in 2010, and that's why I'm calling for a new jobs bill."

With the fiscal crisis forcing states to layoff hundreds of thousands of teachers, nurses and police officers, the need for more federal job creation and state fiscal relief support is clear. And there is substantial momentum building around this issue in the states.

New Mexico Rep. Eleanor Chavez introduced HJM39, a joint memorial calling on the federal government to pass a jobs creation plan. The memorial passed the House of Representatives last Saturday and will now be considered by the state Senate.
Similar resolutions are likely to be introduced in Illinois, Nevada and Vermont. Members of the Tax Fairness Organizing Collaborative (TFOC), including New Yorkers for Fiscal Fairness (NYFF) and the Progressive Leadership Alliance of Nevada (PLAN), are working with lawmakers in their states to highlight the acute need for increased federal support.
Along with Maine Senate President Libby Mitchell, House Speaker Hannah Pingree held a press conference this past Tuesday to garner awareness of Maine's economic and fiscal situation and highlight the need for another round of federal aid.

If you are a lawmaker interested in introducing a resolution requesting the federal government to move a jobs bill, PSN can assist you in that effort. Please contact us at jobcreation@progressivestates.org for support. General resolution language can be found here.

Additionally, over one hundred legislators from thirty-one states have signed on to Progressive States Network's letter calling on the President and Congress to move swiftly on job creation and state fiscal relief. State lawmakers can sign onto the letter here, while citizens and advocates can use this online tool to contact their state legislators and ask them to add their signature.

The Need and Public Support for Action: As we discussed in January, the passage of the American Recovery and Reinvestment Act (ARRA) in early 2009 was critical in preventing a full collapse of the national economy and helping states address huge budget gaps. The Congressional Budget Office (CBO) estimates that the ARRA created or maintained 600,000 to 1.6 million jobs as of September 2009 and found it decreased the unemployment rate by almost one percentage point. Unfortunately, millions of Americans are still out of work and states are struggling to find ways to deal with enormous deficits and plummeting revenue. Projected governors' budgets could lead to layoffs amounting to an additional 900,000 jobs lost in the economy.

There is extensive bipartisan support for federal funding for job creation and aid to states. Winthrop University conducted a poll in late 2009 and found that 71.6 percent of respondents favor funding for jobs (94.5 percent identify as Democrats, 53.4 percent Republican, 68.9 percent Independent) and 62.7 percent support "giving aid to states in serious financial trouble" (80.6 percent Democrat, 50.9 percent Republican, 63.6 percent Independent).

As the U.S. Senate moves on a jobs package within the next few weeks, timing is crucial. State lawmakers must send a strong message to Washington that the country needs jobs and states need relief.

Resources:
Center on Budget and Policy Priorities - Additional Federal Fiscal Relief Needed to Help States Address Recession's Impact
Center on Budget and Policy Priorities - Recession Continues to Batter State Budgets; State Responses Could Slow Recovery
Stateline.org - Economist Mark Zandi: On stimulus, jobs, state finances, inflation and the year ahead
Moody's Analytics - The Case for Another Round of Federal Aid to State & Local Govt
WhiteHouse.Gov - Remarks by the President of the United States in State of the Union Address
Winthrop University - Winthrop Poll Results - November 2009 Findings
Center on Budget and Policy Priorities - Governors’ New Budgets Indicate Loss of Many Jobs if Federal Aid Expires

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State Job Creation Strategies Part I: Finding the Money and Investing in Human Capital and Physical Infrastructure

Nathan Newman — Tue, 19 Jan 2010 17:59:28 +0000

The fundamental challenge in this recession is that the growth that preceded it was a mirage. Bubble era borrowing created a network of financial jobs, real estate jobs and construction jobs that collapsed with the end of the bubble. Many of those jobs will never return.

An extremely high proportion (75%) of job losses in this recession are permanent rather than temporary. States will need to nurture completely new industry sectors and the infrastructure to support those jobs, while the jobless will need retraining in new skills to participate in those sectors.

The Private Sector Can't Do it Alone: As the Economic Policy Institute wrote recently, "it is likely that unemployment will remain above 8% even two years from now in the absence of bold and decisive action to create jobs." With the credit crunch and the reduction in consumer demand, small businesses are experiencing tough times. In 2008, for example, 43,500 businesses filed for bankruptcy, up from 28,300 businesses in 2007 and more than double the 19,700 filings in 2006.

What's needed: As this Dispatch will highlight, the first step is to fund jobs that support long-term economic competitiveness, notably by investing in people and physical infrastructure. While the economic climate for profit-making business opportunities is more limited, investments in education, health care, transit and energy efficiency can create immediate jobs while strengthening building blocks for long-term growth.

Next week's Dispatch will be a second part of this series on how states can nurture startups, strengthen existing industry sectors, and promote green jobs in their states.

Mobilizing for a Federal Support for Jobs and State Fiscal Relief: As we highlighted two weeks ago, a critical part of job creation will be a new round of federal job creation and state fiscal relief. We are asking state legislators to sign onto a letter to promote this job creation plan at www.progressivestates.org/jobcreation or by emailing jobcreation@progressivestates.org. Advocates can sign onto a similar letter for organizations or use our handy online tool to contact their state legislators to let them know about the job creation letter and to encourage them to sign.

Resources:
Progressive States Network - Take Action: Additional Federal Job Creation and State Fiscal Relief Needed
Economic Policy Institute - American Jobs Plan: A Five Point Plan to Stem the U.S. Jobs Crisis
Center for Labor Market Studies (Northeastern Univ.) - The Great Recession of 2007-2009: Its Post-World War II Record Impacts on Rising Unemployment and Underutilization Problems Among U.S. Workers

Direct Public Money to Investments in Economic Growth

In the current economic and fiscal crisis, finding the funds for long-term investments is a challenge, but those investments will deliver both short-term jobs and long-term economic growth to turn state economies around. States need a balanced approach of revenue increases, bonds for long-term investments and tapping existing sources of state capital like state pension funds to marshal the capital needed for economic recovery.

Raise Revenues, Don't Cut Public Investments: The recession has made clear the hollowness of the bubble economy in many states, especially in some of the low-tax, low-investment Sunbelt states touted by anti-tax forces as exemplars of economic growth.

When measuring long-term economic competitiveness, states with some of the highest marginal tax rates on individuals -- from New York to Maryland -- were supporting some of the most innovative "new economy" industries in the country, according to a 2008 analysis by the Information Technology & Innovation Foundation. As we detailed last year, progressive tax increases to fund economic recovery are the better alternative to budget cuts. Many needed investments are in the fundamentals of education and infrastructure as well as in the nurturing of new sectors where private capital is unlikely to effectively step in. Increased tax revenue to fill in government and private sector gaps in investment is clearly needed.

Use State Bonding Authority: One obvious source for funding long-term growth projects are new bonds that can be paid back with the tax revenue yielded by greater economic growth. Especially where tolls or energy savings will directly return revenue to the state from bonded investments, legislative leaders are aggressively pursuing new bond investments.

The federal ARRA recovery plan provides a two-year 35% tax credit for state Build America Bonds, which is yielding record low interest rates for states that are issuing bonds. For example, Washington state received an interest rate equivalent to 3.52 percent on $500 million in bonds issued in October. To help municipal governments take advantage of lower interest rates and lower issuance costs, nearly a dozen states have created "state bond banks" to pool the loans of local governments.

A few examples of recent state bond discussions around the country include:

The Ohio House of Representatives has approved placing a $950 million bond issue on the May 4th ballot to renew for another five years the state’s largest economic development project, the Third Frontier, which invests in research and commercialization of technology in five industries sectors and created 41,300 jobs from 2003-2008.
Last week, the Washington State House Capital Budget Committee approved sending $861 million Jobs Act Bonds to voters in November to fund schools and colleges to fund energy upgrades. The sponsor, Rep. Hans Dunshee, estimates it would create 38,000 jobs and generate energy savings that will cover much of the interest costs.
Minnesota legislative leaders are proposing $1 billion in bonds to build and repair facilities around the state.

Use Pensions Funds for In-State Investments: Unwilling to rely on uncertain global investment markets to fuel economic growth, states are increasingly choosing to directly invest in local state businesses. Instead of giving away corporate welfare and subsidies, states can offer needed capital to create a financial stake in firms. If these businesses are successful, they return equity to taxpayers that can be reinvested in other projects.

One study found that the California Public Employees' Retirement System's in-state investments fed an estimated $15.1 billion into in-state economic activity in 2006 and created 124,000 jobs-- more jobs than the construction or motion picture industries. Other examples of in-state pension investments include:

Florida Governor Charlie Crist recently signed an economic stimulus plan for the state that redirects $1.95 billion of the state's pension fund into direct investments in Florida's economy.
Washington state held $1.4 billion in Washington-based investments at the end of 2008, using the money to leverage additional capital from other sources to invest in the state.
New York held $403.6 million as of March 2009 through its Common Retirement Fund with another $500 million available to invest in New York-based businesses.
The Invest Michigan! Fund features The Michigan Opportunities Fund and the Growth Capital Fund and is capitalized with $300 million from the state's pension fund.
In Indiana, the public pension funds collaborated with state universities and various health-based companies to launch the Indiana Future Fund, an investment fund designed to benefit Indiana companies, especially in the life sciences and high technology arena.

Avoid Privatization as a Funding Source: Given budget deficits, some states are being lured by the supposed "free lunch" offered by selling or leasing public assets to private firms with the promise of upfront private investment. Unfortunately, as we have detailed repeatedly (see here and here and here), privatization of public assets are inherently likely to ripoff the public to the benefit of private interests.

As detailed in a U.S. PIRG report last year, since governments can issue tax-free bonds at lower rates than private investors, "deals based on private capital are inherently more expensive than public financing." In 2008, Missouri was planning to use some form of privatization with investors to fund an ambitious plan to repair or replace 802 bridges. Now, the Missouri DOT is funding the entire project through the sale of government bonds.

Don't Waste Money on Direct Subsidies to Businesses: One general caution for states is to limit grants, tax credits and other giveaways to business. Instead use either direct equity investments or loans that are repaid in order to replenish the supply of public capital over the long-term.

States waste money competing for firms to cross the border from another state, rather than on fostering entrepreneurship and new jobs. A recent Good Jobs First report on high-tech deals by states notes that many are extremely costly. The poster children for bad deals are North Carolina's large subsidies to Dell Corporation, who took the money, but then sent the 900 jobs off-shore four years later and New York giving microchip maker AMD (later Global Foundries) $1 million in taxpayer funds for each job being created by the firm upstate. As the report states:

Tax reductions, exemption or credits “exert a very small marginal influence on corporate investment decisions because other cost factors such as labor, occupancy and other key inputs are far larger than taxes (or tax breaks)”¦ For the vast majority of companies, tax breaks are windfalls, not determinants, and are therefore wasted.

Redeploy Wasted Corporate Giveaways to Real Public Investments: If states do a thorough review of ineffectual subsidies, costly contracting out, and tax credits, they can generate additional revenue that can be used for more effective job creation efforts. Progressive States Network has worked with allies to outline model Corporate Transparency in the State Budget legislation and set up a supporting campaign webpage to help achieve that goal.

As the rest of this Dispatch emphasizes, states can better invest scarce public dollars in upgrading the quality of the workforce and infrastructure, rather than engaging in costly bidding wars with other states for jobs.

Resources:
Information Technology & Innovation Foundation - The 2008 State New Economy Index: Benchmarking Economic Transformation in the States
U.S. PIRG - Private Roads, Public Costs: The Facts About Toll Road Privatization and How to Protect the Public
Council of Development Finance Agencies - State Bond Banks: Municipal Borrowing Made Easy
CALPERS - CalPERS - An Economic Engine
Good Jobs First - Growing Pennsylvania's High-Tech Economy: Choosing Effective Investments
Progressive States Network - Corporate Transparency in State Budgets

Invest in People- the Key Engine of Growth

In a global economy where the quality of the workforce increasingly determines the standard of living, investing in an educated and healthy population is key to promoting state economic growth.

Invest in Education: One of the largest successes of the recovery plan has been preventing massive teacher layoffs and creating or preserving 250,000 education positions. Additional federal help will be needed to stave off reductions in the coming years, but it is a marked success that despite the largest downturn in post-war history, the core educational infrastructure of our nation has been preserved.

Why this is so important is highlighted by a number of recent studies that emphasize that investments in education have clear dollar returns to state governments.

Each new high school graduate yields a net public benefit of $127,000 or 2.5 times the cost of needed public investments, according to a Columbia Teachers College report. In fact, cutting in half the number of high school dropouts would yield $45 billion in extra tax revenues. High school graduates themselves will earn $117,000-$322,000 more in their lifetimes than dropouts, with female college graduates, for example, earning $800,000 more than dropouts.
As we detailed last spring, early education investments in particular show long-term economic payoffs. A recent Cornell University study found that funds spent in the early education sector have more stimulative effect on the economy than most other spending. Early education programs help parents take advantage of opportunities in the workforce and child care improves parents' productivity at work. One study by the business-backed Committee for Economic Development, estimated that for every dollar invested in preschool, there was an expected return of $2 to $4 in future societal benefits.

Part of youth education is giving them entry-level job training. The federal recovery plan helped revive summer youth job programs across the country, offsetting massive youth unemployment in the private sector. The Idaho Labor Department sponsored its first youth employment program in over a decade.

Support Worker Retraining: While training can't create jobs, it can ensure that workers who are unlikely to be reemployed in their old industry sectors have a chance to be reemployed somewhere else -- and that vibrant industries have the skilled workforce needed to expand in a state.

A Michigan Council for Labor and Economic Growth study found that a five percent increase in college-educated adults would boost economic growth by 2.5% over ten years and real wages by 5.5%. Similarly, studies show that just helping workers get their GED significantly boosts their employment in the long-term. Notably, a study by the National Skills Coalition (formerly the Workforce Alliance) found that even as unemployment mounted in summer 2009, 60% of employers still had trouble finding qualified applicants for the vacancies they did have -- emphasizing the lack of fit in skills between those laid off and the sectors where growth is likely to occur.

In our Dispatch Averting Layoffs and Revitalizing the Manufacturing Economy, we highlighted a range of best practices through which states can both work to avert impending layoffs and use rapid-response to help employees get new jobs or enter retraining programs as quickly as possible. These include Rapid Response programs used by some states to on-site contact with employees before layoffs, accessing training programs like Trade Adjustment Aid, working with communities to tailor training and placement programs, as well as promoting Peer Networks to train groups of workers during layoffs to collect information from fellow workers, help connect them with community services, promote job referrals, and work with community leaders.

Fund Health Care and Support the Safety Net: Health care and other safety net spending is not just a public expense; it is also itself an investment in economic growth. A healthier workforce means greater economic productivity and more years of productive labor. And the health care industry is itself a source of good quality jobs.

A few years ago, a Commonwealth Fund study estimated that labor time lost due to health reasons totalled $260 billion per year. And unhealthy workers often have lower productivity at work. In fact, because people are living and working longer, long-term economic growth is likely to be far higher than many current government projections, according to a recent study by North Carolina State University. "Spending on health care productivity, biomedical research and universal health care should be considered an investment that will eventually lead to increased economic growth," argues co-author Dr. Al Headen. The payoffs are likely to be more taxes paid, more consumer spending and far lower public expenditures on programs like Medicare than currently assumed.

Another remarkable accomplishment of the federal-state partnership in the last year has been not only preservation of basic health care spending for low-income families, but the expansion of SCHIP programs for children and COBRA subsidies for the unemployed. This is in sharp contrast to the recession in the early part of this decade when literally millions of people lost publicly funded health coverage. Maintaining health programs will continue to be a challenge for states -- and new federal funds are a key part of that solution -- but it should be considered a key part of long-term investments in a healthy workforce.

Integrate New Immigrants into the Economy: As we emphasized last week, keeping an estimated 12 million people in the shadows of the economy is bad for them, bad for native workers and bad for the U.S. economy. A recent report estimated that immigration reform that integrates new immigrants into the U.S. economy would create $1.5 trillion in added GDP over ten years and newly legalized workers would increase tax revenues by up to $5.4 billion in the first three years. Another study by the CATO Institute found that legalization would boost the incomes of U.S. households by $180 billion annually by 2019.

Across the board, the goal should be to maximize the productivity of all workers in our economy and produce the most economically competitive workforce in the world.

Resources:
Progressive States Network - Early Education Investments: Economic Importance and Policy Implementation
Columbia Teachers College Center for Benefit-Cost Studies of Education - An Excellent Education for All of America's Children
Workforce Alliance - Job Training is Key to Success of Jobs Bill: Analysis and Recommendations
Progressive States Network - State Action for the Unemployed
National Employment Law Project - Rapid Response Training Overview
Michigan's Human Resource Development Institute - Peer Networks
Commonwealth Fund - Health and Productivity Among U.S. Workers
Council for Labor and Economic Growth - Transforming Michigan’s Adult Learning Infrastructure
Center for American Progress and the Immigration Policy Center - Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform
Cato Institute - Restriction or Legalization? Measuring the Economic Benefits of Immigration Reform
North Carolina State University - Study shows health care spending spurs economic growth

Creating a 21st Century Infrastructure in the States

“As a country, we’re deluding ourselves if we think we have put enough into infrastructure," notes the Urban Land Institute. "We’ve been under-investing for 30 years.” As a percentage of gross domestic product, infrastructure spending actually has been declining since 1959. A 2009 American Society of Civil Engineers (ASCE) assessment calculates that $2.2 trillion is needed for infrastructure repairs and upgrades just in the next five years. In contrast, China has committed $259 billion to its plans for building the world's largest high-speed rail system -- with trains going up to 218mph -- and plans to add another half trillion dollars in the next few years for a total investment to $730 billion by 2012. That's more than the entire 2009 federal recovery plan.

The federal recovery plan had $132 billion for infrastructure of all kinds, from roads to transit to smart energy grids, but that's a tiny part of what is needed for the U.S. to retain global competitiveness.

More and Better State Transit: Focus on repairing existing infrastructure, strengthen gateway infrastructure in ports and cities which are the focus of global shipping and travel, and reconfigure suburbs to better integrate regional economies.

Public Transit Investments are a Key Job Creator: One clear lesson from the recovery plan, according to a recent report, is that money spent on public transit yields nearly twice the jobs compared to similar amounts spent on highway projects. This result is due to the fact that public transit spends less money on real land costs and supports vehicle manufacturing and maintenance jobs. It also especially helps low-income workers save money in getting access to jobs where transit integrates communities. One innovative, lower-cost transit approach is bus rapid transit (BRT), which builds separated lanes for larger buses that can move at speeds approaching subway lines. Pioneered in Ottawa, Canada and Adelaide, Australia, similar systems are spreading to Latin America, China, India and Mexico. In the U.S., Los Angeles and Boston have adopted BRT principles and Chicago will be inaugurating BRT service in 2010.
Integrate transit with land use planning: Building transit in the middle of sprawl does little to ease congestion; instead transit funding needs to be linked to development planning that integrates transit with access to jobs and retail. The Denver region is a notable success story in using transit and land use zoning to reclaim its urban downtown, adding a 122-mile light rail system, instituting a Bus Rapid Transit system to link to nearby Boulder, and linking the urban core to multiple town centers in the surrounding suburbs.
Strategically Apply User Fees to Fund Infrastructure: The Urban Land Institute emphasizes that more of the costs of transit infrastructure will inevitably need to be borne by consumers in the form of higher gas taxes, tolls and congestion pricing in urban areas. This needs to be combined with targeted tax relief to ease the burden on low-income families. The reality is that gas taxes in the U.S. are far smaller than European economic competitors, who use those revenues to fund far more robust transit upgrades across their continent.

Broadband and Smart Grid Investments: Despite the U.S. playing a key role in creation of the Internet, a study by the International Telecommunications Union found that the United States now ranks 17th in global broadband penetration. Lack of affordable broadband access undermines the international competitiveness of our communities and workforce. The $7.2 billion of direct broadband funding in the federal recovery plan and pockets of other funding for digital infrastructure throughout the ARRA also emphasized broadband as a catalyst for spurring job creation and economic growth.

A number of state legislators have created Broadband Strategy Councils to focus on using those and internal state funds to increase access to and adoption of affordable broadband. Beyond investing in physical infrastructure, increasing digital literacy is a key investment as well. During the 2008 legislative session Washington state passed SB 6438, which created a statewide high-speed Internet development process and established the Community Technology Opportunity Program (CTOP) that will provide resources for capacity-building and grant-giving to Community Technology programs that provide hands-on technology access and training to residents.

Water Systems: Many cities and regions are using old water systems desperately in need of repairs and upgrading. Nationwide, the U.S. Environmental Protection Agency (EPA) projects a $224 billion funding gap between 2000 and 2019 between what states are spending and federal requirements for water quality. Part of the solution are new policies to reduce wasteful water use, since per capita domestic water consumption in the U.S. is more than twice as much as most global competitors-- and more than four times the use by citizens of Great Britain and China.

In California, where some water bills can approach $500 a month, jurisdictions began to require retrofitting homes on resale. Development needs to be restricted in areas lacking water systems, since such growth just dumps costs on government and leads to underfunding water systems in established areas.

Infrastructure Projects already approved: Some notable examples of integrated infrastructure investment programs around the country include:

Illinois Department of Transportation has $3.1 billion in committed projects in 2009. In addition, Illinois is creating a major “inland port” with the development of Union Pacific's new intermodal facility in Joliet that will create an estimated 7,000 jobs.
Iowa's I-Jobs program approved last year has created a three-year, $830 million investment in Iowa’s infrastructure using existing gaming revenue including public improvements, community colleges, veterans homes ($285 million), disaster recovery and prevention ($165 million), improving transportation infrastructure ($115 million), rebuilding universities ($115 million), improving environment and water quality ($80 million), and enhancing telecommunications and renewable energy ($35 million).
Oregon's Job and Transportation Act invests more than $1 billion to address all sectors of Oregon's transportation system, including roads, bridges, bike and pedestrian facilities, mass transit, railroads, ports and airports. Green aspects of the bill included multi-modal transportation, increased transit funding, planning for greenhouse gas reduction scenarios, a congestion pricing pilot project, and an urban trail fund for non-motorized vehicles and pedestrians.

The key to long-term growth is moving infrastructure investments from one-off projects towards integrated investments that connect them into a holistic plan for growth. As Robert Puentes of the Brookings Institution said this past year at a Congressional hearing, "the problem is that there is too little integrated decision making that crosses disciplines and joins-up solutions in infrastructure investments." To achieve maximum effectiveness, transit and other infrastructure investments need to be coordinated not only with each other, but also with land use and housing decisions.

Next Week: State Job Creation Strategies Part II: Supporting Innovation, Industrial Clusters & Green Job Creation

Resources:
Urban Land Institute - Infrastructure 2009: Pivot Point
American Society of Civil Engineers - Report Card for America's Infrastructure with State and Local Report Cards
U.S. PIRG, Smart Growth America, CNT - What We Learned from the Stimulus: And how to use what we learned to speed job creation in the 2010 jobs bill
Progressive States Network - Making Broadband a Key Part of States' Economic Recovery

Article Images

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Take Action: Additional Federal Job Creation and State Fiscal Relief Needed

Altaf Rahamatulla — Tue, 05 Jan 2010 19:34:38 +0000

With the new year, Progressive States Network is working with allies to launch a campaign to demand a new, federal job creation plan that includes fiscal relief to state and local governments in order to foster economic growth and create and maintain jobs. We are asking state legislators to sign onto a letter to promote this job creation plan, the full text of which can be seen at www.progressivestates.org/jobcreation. Legislators can sign the letter at www.progressivestates.org/jobcreation or by emailing jobcreation@progressivestates.org.

We are also asking advocates to sign onto a similar letter for organizations in support of additional federal action on job creation and state fiscal relief. Activists, too, can also take action by using our handy online tool to contact their state legislators to let them know about the job creation letter and to encourage them to sign.

The passage of the American Recovery and Reinvestment Act (ARRA) in early 2009 was critical for staving off a full collapse of the national economy, helping states create and maintain jobs and addressing gaping state budget deficits. By directing a substantial portion of funds towards education and Medicaid, the Recovery Act kept teachers in our classrooms, nurses employed in our clinics and hospitals, and public safety officers protecting our streets.

Nevertheless, economic uncertainty persists. Although the national recession may have technically ended, millions of Americans are out of work and states are struggling to find ways to deal with enormous deficits. High unemployment, a record number of foreclosures, huge cuts to public services, and decreased quality of educational systems threaten long-term recovery.

The gravity of this crisis demands swift and bold action by federal lawmakers on job creation. Accordingly, Progressive States Network is working to highlight state voices advocating for additional action on jobs. PSN encourages legislators to sign on to our letter calling on President Barack Obama and Congress to enact a new, broad-based job plan, including fiscal relief to states and local governments to foster growth and create jobs across the nation.

TAKE ACTION: www.progressivestates.org/jobcreation

Table of Contents:

- 2009 Recovery Plan Provided Significant Support to the Ailing Economy

- Why More Federal Job Creation Funding is Needed

- Economic Benefits of Public Programs: Why Federal Dollars Should Be Invested in the States

- The Need for Federal Action

- TAKE ACTION: Sign on to PSN's Job Creation Letter

2009 Recovery Plan Provided Significant Support to the Ailing Economy

The core of the Obama administration's response to the economic downturn was the passage of the American Recovery and Reinvestment Act (ARRA) last February. In a speech to the Federal Reserve Bank of Chicago in September 2009, Christina Romer, Chair of the Council of Economic Advisers, confirmed that, "[p]roviding $787 billion of tax cuts and spending increases [is] the boldest counter-cyclical fiscal expansion in American history....the key reason that we begin this fall with a sense of hope rather than dread of a second Great Depression is because the policy response in 2008 and 2009 has been fast, bold, and effective."

Indeed, the rapid implementation of the Recovery Act has alleviated the severity of the recession. After four consecutive quarters of decline, the country posted a 2.2 percent increase in gross domestic product (GDP) in the third quarter of 2009. The Council of Economic Advisers finds that the ARRA has had an immense impact on national economic performance and added up to 4 percent to growth in the third quarter. The Congressional Budget Office (CBO) estimates that the ARRA created or maintained 600,000 to 1.6 million jobs as of September 2009 and found it decreased the unemployment rate by almost one percentage point. With large portions of the stimulus funding public education and health care programs in the states, a key part of that job creation program was to keep teachers in the classroom and medical professionals caring for patients across the country. It is estimated that there would be 250,000 fewer education professionals employed across the country without the ARRA funds.

The Recovery Act has not only assisted national economic performance, but has also provided relief to families. The Center on Budget and Policy Priorities (CBPP) analyzed the affect of several provisions of the ARRA, including the expansion of tax credits for working families, temporary strengthening of unemployment insurance benefits, increasing food stamps, and a "one-time payment for retirees, veterans, and people with disabilities," and discovered that the recovery efforts are responsible for keeping over 6 million Americans above the poverty line and alleviating the severity of poverty for almost 33 million.

Why More Federal Job Creation Funding is Needed

Yet, federal action did not go far enough. In fact, several economists called for a much larger recovery package at the time of its passage.

An analysis by the Economic Policy Institute (EPI) entitled Jobs Crisis Fact Sheet provides a somber analysis of the current situation: 15.4 million Americans are unemployed; 38.3 percent of unemployed have not had a job in over six months; 8 million jobs were lost during the recession, which includes 1.6 million lost in construction and 2.1 million lost in manufacturing; 1 in 10 Americans are unemployed; 1 in 6 Americans are underemployed; and 15 states are experiencing double-digit unemployment.

Two recent reports, the Pew Center for the States' Beyond California: States in Fiscal Peril and the National Governors Association and the National Association of State Budget Officers' joint publication, Fiscal Survey of States, both highlight burgeoning budget gaps, precarious economic circumstances, enormous declines in tax revenue, and generally reveal a poor fiscal outlook for states in the upcoming years. Currently, 48 states confront deficits in the upcoming years. In fact, CBPP estimates that states will face cumulative budget deficits of approximately $350 billion in 2010 and 2011. The downturn has additionally taken an enormous toll on tax revenue. Mark Zandi, Chief Economist at Moody's Economy.com, reports that state and local tax revenues have dropped 9 percent from last year, "the largest decline on record going back to just after World War II."

Source: Center on Budget and Policy Priorities - Recession Continues to Batter State Budgets; State Responses Could Slow Recovery

The ARRA played a significant role as a buffer against larger budget cuts this fiscal year, which would have severely hampered economic recovery even further. However, states will again be forced to consider drastic fiscal measures to alleviate budgetary strain that will likely result in enormous cuts to vital social programs, like education and health care. CBPP examined the states' response to shortfalls and notes that to date:

28 states instituted cuts that will limit low-income children's access to health care
24 states have slashed services for the elderly and disabled
36 states have reduced funding for higher education
42 states implemented cuts that affect state employees, including 26 that have hiring freezes, 14 that have announced layoffs, 26 that have decreased wages

Since August 2008, state and local governments have eliminated 132,000 positions from their workforces. Teachers, nurses, public safety officers, and many other state and local employees face the dire prospect of job loss during a time of economic uncertainty. At the same time, families will have to deal with the reality of budget cuts: larger class sizes, an inferior educational system, reduced health care services, and generally diminished quality of vital public programs. Furthermore, as EPI indicates, budget cuts have a detrimental impact on private employment and performance. About half of the economic activity and jobs lost due to budget cuts will occur in the private sector.

Economic Benefits of Public Programs: Why Federal Dollars Should Be Invested in the States

As federal aid to states has a very high economic multiplier effect or "bang for the buck," states are some of the most effective vehicles for job creation. Moody's Analytics finds that every federal dollar spent on extending unemployment insurance benefits fosters $1.61 in economic activity. Similarly, a federal dollar spent on:

Temporarily increasing food stamps creates $1.74 in economic activity
Aiding state governments creates $1.41 in economic activity
Investing in infrastructure creates $1.57 in economic activity

On the other hand, tax cuts and credits generally do not produce similar economic benefits as assisting families or state governments. For instance, a dollar spent on cutting the corporate income tax only results in $0.32 of economic activity. As a result, direct relief to states and a concerted effort to create and sustain jobs for Americans on Main Street is the most prudent course of action.On the flip side, EPI provides the following chart illustrating the unique danger of state budget cuts, which can ripple through the economy as teachers, nurses and police are laid off, state funds supporting private sector activity are reduced, and individuals receiving state support stop spending in their local communities.

Source: Economic Policy Institute - Dire states--State and local budget relief needed

The Need for Federal Action

For these reasons, the federal government must take proactive steps to create jobs and enact further fiscal relief for state and local governments. This includes extending the federal medical assistance percentages (FMAP) increase for Medicaid, providing additional support for education, boosting funding for infrastructure projects and public transportation investments, supporting the long-term unemployed to sustain them until they reenter the workforce, and providing direct and comprehensive financial assistance to state and local governments to perform the vital services needed to maintain growth in local communities.

There is abundant bipartisan support for federal funding for job creation and aid to states. Winthrop University conducted a poll in November 2009 and found that 71.6 percent of respondents favor funding for jobs (94.5 percent identify as Democrats, 53.4 percent Republican, 68.9 percent Independent) and 62.7 percent support "giving aid to states in serious financial trouble" (80.6 percent Democrat, 50.9 percent Republican, 63.6 percent Independent).

Congress has begun taking action. On Wednesday, December 16, 2009, the House passed H.R. 2847, the Jobs for Main Street Act of 2010, which would redirect money from the Wall Street bailout to fund environmental and infrastructure projects, extend FMAP, support education jobs, and provide small business loans. Some of the major provisions include:

$23.5 billion to extend the higher federal match for Medicaid through June 2011
$27.5 billion for highway improvements
$8.4 billion investment for public transportation investments
$23 billion to create and maintain 250,000 education jobs to modernize public education facilities
$1.18 billion to support 5,500 law enforcement positions
$2 billion for clean and safe drinking water projects
$2 billion to address public housing needs
$500 million to retain and hire firefighters

This is a good start, but Congress should go further. The federal government must act boldly to ensure a robust economic recovery and provide relief to working families across the nation. Moreover, federal lawmakers should include provisions for the highest level of transparency in any jobs bill to guarantee that recovery efforts are equitable and efficient. To that end, PSN is a member of States for a Transparent and Accountable Recovery (STAR), a network of groups that work at state and local levels to ensure that the implementation of ARRA is transparent, accountable, fair and effective.

TAKE ACTION: Sign on to PSN's Job Creation Letter

If you are a state or local lawmaker, please sign onto a letter calling on the President and Congress to enact a comprehensive jobs plan, including fiscal relief to states and local governments to foster economic growth and create and maintain jobs. Organizations can sign onto a similar letter as well. Activists are invited to contact their state legislators and ask them to sign on to this letter.

PSN looks forward to working with lawmakers and advocates on this issue. If you are a lawmaker interested in introducing a resolution requesting the federal government to move a jobs bill, PSN would like to assist you in that effort. Please contact us at jobcreation@progressivestates.org.

Resources

2009 Recovery Plan Provided Significant Support to the Ailing Economy

Bureau of Economic Analysis - Gross Domestic Product: Third Quarter 2009
Center on Budget and Policy Priorities - State-Level Data Show Recovery Act Protecting Millions From Poverty
Center on Budget and Policy Priorities - New CBO Report Finds Recovery Act has Preserved or Created up to 1.6 Million Jobs
Congressional Budget Office - Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009
Christina D. Romer, Chair, Council of Economic Advisers - Back from the Brink
Christina D. Romer, Chair, Council of Economic Advisers - On Today's GDP Numbers
Government Accountability Office - Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability
The New York Times - U.S. Economy Started to Grow Again in the Third Quarter

Economic Benefits of Public Programs: Why Federal Dollars Should Be Invested in the States

Center on Budget and Policy Priorities - Additional Federal Fiscal Relief Needed to Help States Address Recession's Impact
Center on Budget and Policy Priorities - Recession Continues to Batter State Budgets; State Responses Could Slow Recovery
Center on Budget and Policy Priorities - An Update on State Budget Cuts
Economic Policy Institute - Dire states--State and local budget relief needed
Economic Policy Institute - Jobs Crisis Fact Sheet
National Governors Association and the National Association of State Budget Officers - Fiscal Survey of States
The New York Times - New Consensus Sees Stimulus Package as Worthy Step
Pew Center for the States - Beyond California: States in Fiscal Peril
Stateline.org - Economist Mark Zandi: On stimulus, jobs, state finances, inflation and the year ahead
Mark Zandi - The Impact of the Recovery Act on Economic Growth
Moody's Analytics - The Case for Another Round of Federal Aid to State & Local Govt

The Need for Federal Action

AFSCME - Legislative Report
Winthrop University - Winthrop Poll Results - November 2009 Findings

Article Images

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Buy American and Fair Trade Policies to Spur National and Global Economic Recovery

Nathan Newman — Mon, 27 Apr 2009 16:53:05 +0000

When Congress enacted the federal recovery plan, many state and federal leaders demanded "Buy American" provisions to ensure that the recovery plan funds would be directed to job creation in communities devastated by layoffs, particularly in steel and other manufacturing sectors especially hard hit by the economic meltdown. While these provisions were fiercely resisted by multinational corporate interests (and watered down in the final federal bill), they are one key policy to help revive the U.S. manufacturing sector and reorient the economy away from the neo-liberal "free trade" policies that have undermined wage standards throughout the economy.

The reality is that the U.S. manufacturing sector is in free fall, threatening a core engine of our economy and threatening to lower wages further for workers in our nation. And this is just part of a more general crisis, at home and globally, of falling wages undermining global demand and further weakening the overall economy.

As this Dispatch will outline, Buy American policies are a first step in promoting an alternative to the trade and deregulation policies that fueled the current economic crisis. Ultimately, we need policies that strengthen local tools for economic growth at home, combined with fair trade policies to raise wage standards abroad as well. Also, as corporate interests increasingly use trade agreements to restrict state authority to protect worker, consumer and environmental interests, states are increasingly reviewing those trade agreements in order to restore states' ability to effectively respond to economic crises and protect the long-term interests of working families.

Instead of the casino economy of financial excess, rising economic inequality and stagnant wages, we need to restore an economy based on a vibrant manufacturing sector at home and a fair trade system globally that raises wage standards for all workers around the globe.

Table of Contents

- The Problem: The Collapse of the Manufacturing Economy

- Why "Buy American" is Good for Global Economic Recovery

- Implementing Recovery Plan's "Buy American" Provisions in the States

- Using State Spending to Raise Wages Globally

- Reviewing Trade Agreements to Strengthen States' Ability to Respond to Economic Crisis

- Conclusion: The Need for a Bottom-Up Recovery

The Problem: The Collapse of the Manufacturing Economy

While the common perception is that manufacturing jobs have been declining for decades, the truth is that between 1967 and 1997, manufacturing jobs cycled between a low of 16.5 million and a high of just over 19 million. After 1997, however, the numbers began to drop precipitously, reaching 13.9 million in 2007—its lowest point since 1949. Between 2001 and 2007-- long before the financial crisis -- states lost 3 million manufacturing jobs with those losses only growing since then.

Corporate Excess, Not Workers' Wages, Drove U.S. Manufacturing Collapse: Despite attacks on workers and unions as the cause of the decline of American manufacturing -- notably present in the rhetorical attack on the auto bailout -- the reality is that manufacturing wages in the U.S. are lower than many other nations as highlighted the Economic Policy Institute highlights in its report, Squandering the Blue-collar Advantage :

Of the 20 richest countries tracked by the U.S. Bureau of Labor, the United States ranks 17th in hourly pay for production workers in manufacturing.
Of the 16 nations with higher compensation for production workers in manufacturing, the United States has the most productive workforce (save for Ireland with a manufacturing workforce less than 2% the size of that in the United States) in terms of “value-added per employee” (a common measure of productivity).

While health care costs are a problem for U.S. manufacturers, the real problem is overpaid CEOs and managers. In fact, if the wages of U.S. managerial and non-supervisory labor were similar to the median wages of their counterparts in comparable countries, U.S. manufacturing would have a 6.4% cost advantage over major trading partners. These excessive salaries and compensation at the top, in addition to the wealthy's other bloated gains such as the financial sector's bubble, are what have truly undermined the U.S. economy.

"Free Trade" Deals have been Pushed by the Same Multi-National Companies Benefiting from Low Wages Globally: The companies opposing Buy American policies are the same ones that pushed the deregulation and "free trade" policies that got us into the current economic mess in the first place. As the Economic Policy Institute explains, "Companies like Caterpillar...want unfettered access to cheap steel from countries like China, which poured more than $15 billion into energy subsidies into that sector in 2007 alone. Chinese steel imports more than doubled between January and November 2008, while U.S. steel production fell nearly 40%."

If manufacturing and a high-wage economy for workers in America is to be saved, it will be in spite of the corporate elite that is interested only in their own global profits.

Resources:
Center for American Progress - Wage Inequality Is a Global Challenge
International Labor Organization - Global Wage Report 2008/09
Economic Policy Institute - Big business lobbies for importers
Economic Policy Institute - Squandering the Blue-collar Advantage: Why Almost Everything Except Unions and the Blue-Collar Workforce Are Hurting U.S. Manufacturing
Public Citizen's Global Trade Watch - Firms That Sent U.S. Jobs Offshore Now Claim That Investing U.S. Taxpayer Funds in America Is "Protectionism

Why "Buy American" is Good for Global Economic Recovery

Despite the myth, "Buy American" provisions are neither a threat to global trade nor are protectionist ("fair trade" policies aren't protectionist either as will be discussed below). In fact, the greatest danger is that without such domestic purchasing provisions in stimulus packages around the world, global production and trade could collapse.

Protectionism is when private purchasers of any product are required to buy only domestic versions of a product or are required pay such a high tariff on foreign products that it creates the same result. The "Buy American" provisions in the recovery plan, on the other hand, are quite limited, applying only to the purchase of iron, steel and manufacturers goods by government agencies using recovery funds. Though this is hardly enough to undermine the global trading regime, fears that federal spending would not lead to creating domestic jobs threatened to undermine support for the overall hundreds of billions needed for the stimulus.

How Domestic Buying Mandates Can Spur Global Trade Growth: Globally, all nations would be better off if each would engage in fiscal stimulus, but any individual country doing so might be hurt if they are the only ones. Requirements to buy domestically may be the key to convincing enough nations to pass sufficient amounts of stimulus to jump start the global economy.

The problem right now is that nations fear that going into heavy amounts of debt could undermine their economies in the future. Even worse, if stimulus spending goes to buy foreign products, that debt will do little to revive their own economies in the immediate future. The Economist magazine recently highlighted resistance to stimulus spending by countries like the Netherlands out of fear that money spent would just flow through trade to other countries because of the European Union's internal trade rules, where the gains to growth "will not remain within one country’s borders, nor will that growth be controlled by any one government."

Domestic buying provisions tied only to the debt being used to pay for stimulus funds can solve this dilemma. By enacting domestic buying requirements, each nation can expect to reap immediate job creation results from that stimulus debt, while their citizens will be free to spend their new salaries on all manner of goods, foreign and domestic, thereby adding to global demand. If domestic buying requirements tied to stimulus debt encourage nations to engage in greater stimulus, the end result will be greater global spending, greater global demand and expanded global trade -- despite the tut-tutting of the "flat earth" free traders.

Implementing Recovery Plan's "Buy American" Provisions in the States

The core of the Buy American provisions in the federal American Recovery and Reinvestment Act are in Sec. 1605:

None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

There are exceptions for particular projects where the lack of availability of U.S. alternatives would increase the price too much or where doing so would undermine international trade agreements to which the U.S. is a party. This builds on the 1933 Buy American Act, which applied to federal contracts, and the 1982 Buy American Act, which applied to transit-related projects funded by the federal government.

"Buy American" Policies Don't Violate Current Trade Rules: As this report by the Association for American Manufacturing outlines, the Buy American provisions in the Recovery Act are designed to be consistent with both international law and the practice of many of our trading partners. The U.S., for example, did not subject any state level procurement actions to NAFTA, including state procurement financed with federal funds, and it has specifically excluded federal funds for mass transit and highway projects from all trade agreements to which it is a party. Also, other countries maintain domestic spending requirements for government procurement:

A number of Canadian provinces maintain “Buy Canada” and other policies that put U.S. suppliers at a disadvantage.
In Europe, goods with majority EU content receive preferences over U.S. goods in certain water, transportation, energy, and postal services contracts.
China’s 2002 Government Procurement Law requires government entities at the central and sub-central level to give priority to local goods and services in contracting decisions, with some exceptions.
India’s procurement law has given preferences to goods provided by domestic state-owned enterprises, and the office of the U.S. Trade Representative reports that foreign firms “rarely” win government contracts.

Because the U.S. and thirty-seven states have signed onto the World Trade Organization's General Procurement Agreement (GPA), the recovery plan's Buy American rules can only be applied in a limited fashion to other signatories of the GPA, but this does not apply to major steel producers such as Russian, China, Ukraine, India and Brazil which are not GPA signatories.

Even with sources from countries that are members of the GPA, one independent corporate legal analysis of the Buy American provisions noted that whatever the constraints on the federal government due to trade agreements, the 13 states and District of Columbia which have not themselves signed onto the GPA "should be free to apply ARRA funds for public building and public work projects in accordance with the Buy American provision." Other states that agreed to the GPA may be able to rely on certain exemptions, such as for construction-grade steel, motor vehicles and coal, as well as improvement of environmental quality or mass transit, highway projects and potential funding going to local communities not covered by the GPA.

States and Communities Support Buy American provisions: A recent poll shows that 84% percent of Americans support “Buy America” provisions. So far, more than 350 “Buy American” resolutions have been passed around the nation, with notable action in a number of key industrial states:

The PA House unanimously passed a Buy America resolution last week by a vote of 192-0.
The Indiana State Senate Passes a Buy America Resolution.
New York's Governor David Paterson has introduced Buy American provisions as part of his economic plans (see section 5 and 6 as a major part of this bill).

Other Buy American bills include Alabama's HJR 346, Kentucky's HCR 147/HCR 144, and Minnesota's S 241/H 352.

The United Steelworkers has a "Buy American" Resolution Tool Kit including model resolutions, fact sheets, and other resources to help spread support for Buy American resolutions in other states and communities.

Resources:
Thompson-Hine - How Will the Buy American Provision of the ARRA/Stimulus Package Conform With U.S. WTO Obligations?
Public Citizen - Backgrounder: Companies that Offshored Jobs Attacking "Buy America"/Stimulus on False Grounds
Association for American Manufacturing - Buy America: Key to America's Economic Recovery
AAM - Poll: Americans Overwhelmingly Support ”˜Buy American’
United Steelworkers- Make Our Future Work 'Buy American' Resolution Tool Kit

Using State Spending to Raise Wages Globally

Beyond buying American goods, governments can work to raise wage standards globally by requiring that all contractors, whatever their country of origin, meet labor, environmental and human rights standards.

Problem of Rising Wage Inequality is Global: The wage inequality problem in the United States is just an extreme version of a global problem of low wages undermining global growth. An International Labor Organization study last fall, entitled Global Wage Report 2008/09, found that since 1995 inequality between the highest and lowest wages has increased internally in more than two-thirds of the countries for which there is data. The U.S. leads the advanced economic world in rising inequality, but there has been similar rising wage inequality in countries ranging from Germany to Poland to Thailand to China. As the Center for American Progress argues, "declining wages mean a decrease in global purchasing power and a slow down of global consumption," fueling the loss of manufacturing jobs since consumers around the world lack the income to purchase goods.

Combating the Global Race to the Bottom: Sweatshops and the "race to the bottom" of lower global wages is not actually a foreign problem but one driven by our own multinational corporations. For example, while China has contributed to stagnant wages through ruthless suppression of organizing by independent unions, multinationals from wealthy nations have been a chief driver of the low-wage expansion in China. Morgan Stanley’s chief economist Stephen Roach estimates that 65% of the tripling of Chinese exports —from $121 billion in 1994 to $365 billion in mid 2003 — is traceable to outsourcing by Chinese subsidiaries of multinational corporations and joint ventures.

The problem is that there are 150 million unemployed workers in China, far more than the actual number of workers in the United States. With so many workers competing for jobs, wages are likely to remain at rock-bottom rates, hovering at about $100-$120 month for industrial workers .this for long hours 6 or 7 days a week in often toxic and unregulated work conditions. Global Labor Strategies wrote in 2008 in a comprehensive evaluation of strategies for raising wage standards in China and globally:

"Raising wages in China is one of the prerequisites for bringing the global economy and the Chinese economy into a better balance. Higher wages would not only reduce some of China's allure as an export platform, but would also stimulate China's potentially huge domestic market. More money in the pockets of ordinary Chinese could translate into more total jobs in the global economy."

Many right-wing leaders have sought to scapegoat undocumented immigrants for wage problems in the U.S., but Jeff Faux of the Economic Policy Institute has explained the dilemma: "Since NAFTA's inception in 1994--indeed, for the 20 years of neo-liberal 'reform'--the Mexican middle class has shrunk and the number of poor has expanded . . . So the northward migration continues." Raising living standards in Mexico and other countries where migrants are suffering from failed trade policies is a far better solution to immigration concerns than the punitive policies proposed by the right.

While any comprehensive solution must include global trade deals that include requirements to respect the right of workers to form unions and collaboration to promote higher wage standards, state governments can take action through their government contracts to effect wage standards in countries from which they purchase goods and services.

Ending Subsidies for Sweatshops: Subsidizing Sweatshops II released this month by Sweatfree Communities details a range of U.S. government contracts going to sweatshops around the world that "inadvertently use tax dollars to increase the downward pressure on labor rights and wages, hastening a race to the bottom which is costing many U.S. workers their jobs." It doesn't have to be that way, as communities and states increasingly are toughening procurement standards to require that government contractors raise wage, safety and environmental standards at their overseas operations and subcontractors.

Already, eight states, thirty-five cities and many other local government units have adopted "sweatfree" procurement policies to require contractors to raise workplace standards. These include California, Illinois, Maine ( 2001 law, 2006 law, 2007 law), New Jersey, New York (2006 law, Apparel, Sports Equipment), Ohio, Pennsylvania (Policy, March 2004, Resolution, July 2008), and Vermont.

In Oklahoma last year, state Representative Rebecca Hamilton filed HB 3067 to address the trade-driven causes of immigration. The bill repealed portions of last year's anti-immigration law, and instead, made it illegal for the state of Oklahoma to contract with any company that has closed American facilities and opened new factories outside the country, unless they operate those factories in compliance with United States wage, safety, and human rights guarantees. Rather than punishing hardworking immigrants, legislators can support American-made goods and fair labor standards.

Resources:
Global Labor Strategies - Why China Matters: Labor Rights in the Age of Globalization
China, the WTO and Globalization: Looking Beyond Growth Figures
AFL-CIO - Stop Sweatshops
Sweatshop Watch:
Sweatfree Communities - Subsidizing Sweatshops II and Adopted Policies and Model Code of Conduct and Sweatfree Procurement Policy
Sweatfree Washington - Learn about efforts to pass sweatshop-free ordinances in Washington State.

Reviewing Trade Agreements to Strengthen States' Ability to Respond to Economic Crisis

As we detailed two years ago, and various allies such as Global Trade Watch, the Forum on Democracy and Trade, and the AFL-CIO have documented, a key threat is the increasing encroachment of trade agreements on state authority over a range of labor, environmental and consumer concerns. Here are just a few threats to state procurement rules detailed in this recent Global Trade Watch fact sheet :

Requirements for recycled content in paper and other goods or energy from renewable sources are exposed to challenge;
Trade deals may limit state governments from disqualifying government contracts because of labor, safety or environmental records or practices;
Holding corporations responsible for human rights abuses-- as was done with the successful Apartheid-era bands on doing business with companies operating in South Africa -- could be banned.

New proposed trade agreements could not only further limit state procurement powers but undermine other areas of state authority. Proposed WTO's General Agreement on Trade in Services (GATS) rules could undercut efforts to promote universal health insurance by barring certain health regulations and state professional licensing laws as illegal "service monopolies" or undercut state powers over zoning and land use or gambling limits.

States Taking Action: Various states have established oversight committees to develop expertise on the effect of international trade agreements on state powers and better position states to weigh in during the trade agreement negotiating process to highlight states' interests in pushing for fair trade agreements. For example the Maine Citizen Trade Policy Commission (CTPC) was created by statute in 2003 and held public hearings on the Central American Free Trade Agreement (CAFTA) in 2004 and has lobbied U.S. trade representatives on an ongoing basis.

More generally, what have also been called "Jobs, Trade and Democracy Acts," establish not only oversight authority but would prevent governors from signing on to trade agreements without approval by state lawmakers.

New Jersey's legislature has engaged in one of the most thorough reviews of how its state policies impact outsourcing and offshoring and the final report of the commission set up the legislature has a range of recommendations for changes in policy, from enacting trade oversight commissions, discouraging contracts for businesses eliminating in-state jobs by offshoring them, discouraging privatization more generally, strengthening anti-sweatshop rules, requiring a living wage for all contractor employees, and strengthening public transparency of the contracting process.

Building Coalitions for Fair Trade: Critical to any successful fair trade will be building a broad coalition of legislators, community groups, unions, environmentalists and human rights groups. Such a coalition must work together to promote a global vision of growth through raising wage standards globally as an alternative to the reining neoliberal "free trade" regime of limited local autonomy and a race to the bottom of lowered wages and expectations. For a good example of such a coalition and its principles, see Washington State's Platform for Fair Trade which includes, among other provisions:

commitments to enforceable environmental, labor, health and human rights standards in trade agreements;
protection of public goods and services from deregulation and privatization;
commitment to development in the world's poorest countries;
protection of democratic participation and local authority over key public decision-making.

Resources:
New Jersey Commission on Outsourcing and Offshoring Final Report
Jobs, Trade and Democracy Act Language
Progressive States Network - Preventing Trade Deals from Undermining State Power
Public Citizen's Global Trade Watch - Guide to States' Rights and International Trade and Fact Sheet Series: Trade Agreement Threats to State and Local Policy and WTO, NAFTA and ”˜Free Trade Agreements’ Even Meddle in How We Can Spend Our Tax Dollars
Forum on Democracy and Trade
Trade Reform, Accountability, Development and Employment (TRADE) Act - Learn more about a bill that creates a positive and pragmatic vision for fair and sustainable international trade.
AFL-CIO Global Economy Website - Wide-ranging set of resources (including news and blogs) on the impacts of trade policy on worker rights.
Sierra Club's Responsible Trade Program - Information on how trade policy affects national & international environmental protection

Conclusion: The Need for a Bottom-Up Recovery

Investing in the manufacturing economy is the first step in promoting policies that raise living standards for working families. Rather than focus economic growth on the favored few at the top of the economic pyramid as was true throughout recent decades, we need a new global economic system that encourages cooperation in helping each nation raise wage standards for all workers.

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The Financial Bailout and the Challenge for the States: De-Leveraging Working Families

Nathan Newman — Mon, 29 Sep 2008 22:09:42 +0000

According to The Wall Street Journal, "Fed and Treasury officials have identified the disease. It's called de-leveraging, or the unwinding of debt. During the credit boom, financial institutions and American households took on too much debt."

But let's not buy into a false equivalence of "financial institutions" and those "American households" borrowing beyond their means. Wall Street leverage was built on obscene wealth looking to become only more obscene, while the leveraging and debt of working families was driven by expanding income inequality, stagnant wages and rising health care costs that left families with less and less money available to gain a basic foothold in the American middle class.

As this Dispatch will emphasize, policymakers need to not just “de-leverage" the burden of debt speculators in the financial casino; they need to take action to reverse the economic burden on working families that has forced so many of them into debt in the first place.

The Real Crisis Facing Working Families

Let's be clear: the crisis we're talking about today is not shareholders losing a few dollars or even a few firms ceasing to exist and their traders losing their jobs. That just reflects the real crisis that has been sweeping across this nation for years. For regular families, it is not about financial speculation, but being driven into debt by what New York Times writer Steven Greenhouse has called in his recent book the Big Squeeze:

The bottom 90% of households saw only a 10% increase in real income in the three decades between 1976 and 2006, while the richest 1% saw a 232% income increase in the same period.
In the most recent 2000s business cycle, employment increased at only one-third of the pace of the 1990s cycle.
A quarter to thirty percent of the jobs actually created since 2000 were due to the housing bubble, a froth of jobs that are quickly disappearing. Yet, between 1995 and 2005, our nation has lost 3 million core manufacturing jobs that represented real wealth creation, almost all of that loss occurring during the 2000s business cycle.
Real costs burdening families have been escalating. The recent jump in energy prices comes on top of rising education costs, day care costs, and most punishingly, health care costs. One study found that 49 million Americans under 65 lived in families where more than 10 percent of family income went to health care costs, with 19 million spending 20 percent of income on health care.

The result of this squeeze of stagnant incomes and rising costs is unsurprising. With less money in their pockets, families were pushed into greater debt, which became a vice pushing many of those with homes into foreclosure as the housing bubble bursts and prices fall, especially as the predatory terms of their "subprime mortgages" sprung into action.

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State Leaders Saw the Subprime Mortgage Crisis Coming - But Feds Block Reforms

Even as those economic realities building up over years were ignored by national politicians and the mainstream media, those same national political leaders and media were lauding and even encouraging "financial innovation." At its core, this "innovation" meant using advanced technology to skirt regulation of things previously prohibited under the law and taking risks with debt that previous generations of regulators would have prohibited without the capital on hand to back up failed loans.

That those loans are going bad in communities across the country speaks to the real economic burdens on families; many families facing these burdens were lured into mortgages with "subprime" terms that left them in economic traps when the housing market went south.

Some in Congress actually recognized the problem of under-capitalized mortgages as early as 1994, when they passed the Homeownership Opportunity and Equity Protection Act. This law required the Federal Reserve to regulate the loan-origination standards of mortgage companies that were not otherwise government-regulated. But Fed Chairman Alan Greenspan failed to implement the law.

States Took Action but Feds Blocked Reform: Community organizations began agitating against "subprime loans," the polite term for predatory lenders targeting vulnerable working families. Pushed by these advocates, 30 states in the 1990s and 2000s passed laws to implement tougher standards on mortgage companies since the federal government was failing to implement the 1994 Act.

But adding insult to injury, the federal government not only failed to use the 1994 law to restrain predatory lending, it went to court claiming that law preempted state protections. As PSN detailed last year, the Office of the Comptroller of the Currency claimed in 2004 that federal law preempted Georgia's Fair Lending Act, which had offered protection against predatory lending, including outlawing extreme prepayment fees or penalties, unreasonable monthly payments, and increased interest rates after default. This was followed by the OCC preempting New Jersey's Home Ownership Security Act, which prohibited abusive lending practices, which was followed by OCC challenges to other state laws. The federal courts largely backed this federal preemption of state authority with federal courts striking down predatory lending laws in a number of states.

Whatever the courts decide now, the damage has been done. During the critical period of the recent housing bubble, as speculation and predatory lending ran amok, state regulators were so involved in defending their laws in court that their effectiveness was undermined and the costs are being borne by some of the most vulnerable borrowers in the market. A report by the Center for Responsible Lending released in December 2006 showed that as many as 2.2 million subprime borrowers face foreclosure on their home loans, but few at the federal level listened to the warnings.

While some national leaders and media are saying "we" all have to cut back to pay for the excesses of the financial failures, state leaders should be loud in proclaiming that most of us didn't create this crisis; in fact, most advocates for working families and most state legislatures took action early on to try to restrain subprime predatory lending. It was colossal stupidity and greed by the wealthiest financial corporations in the country, along with lax federal financial regulation and their active assault on those state anti-predatory lending laws that created this crisis. So responsibility and the costs should be borne by those who caused the problem and those who benefited from those excesses.

State leaders need to speak up against bad federal policy: One thing state leaders should be vigilant on is making sure that supposed "reforms" don't undercut their present ability to protect working families. Earlier this year, the Bush Administration, led by Treasury Secretary Henry Paulson, proposed a sweeping new proposal, its Blueprint for a Modernized Financial Regulatory Structure, to "reform" regulatory oversight of different financial sectors. But the proposal was little more than an industry wish list, including replacement of state regulation of insurance with a single federal regulator, which would likely preempt stronger consumer insurance protections at the state level. At the time, Michael McRaith, insurance director for the Illinois Department of Financial and Professional Regulation, noted that insurance companies, "[v]ery large, wealthy companies would get to choose the lesser level of regulations," much as banks were able to escape tougher state mortgage regulations for lax ones at the federal level. Even now, rightwing politicians are seeking to use the financial crisis to gut state insurance regulations. So state leaders should be loud in demanding that any federal policies not weaken the ability of state regulators to be an alternative check on financial abuses.

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Lessons from the $700 Billion Bailout: States Should Take Bold Action to Help Working Families

Now Washington is discussing stabilizing the financial system with $700 billion in federal investments. After an initial proposal that was a pure giveaway to the banks, some improvements by progressive national leaders may provide some taxpayer protections, though the proposal will still hardly address the real burdens facing working families. The final plan for some improvements, including some taxpayer protections, the principle of an equity stake for the government in firms bailed out, and helping mortgage holders. But given that the plan is initially being implemented by the same federal regulators who failed in the first place, these principles may well not be implemented in practice.

However, state leaders can learn some lessons from the whole credit crisis debacle and the bailout bill:

The Feds Won't Save Working Families by Themselves: While there were some discussions about increasing aid to states to help working families as part of the deal, this was largely blocked by conservatives at the federal level. The bottom line is that state policy leaders should not depend on the federal government to take on the fundamental challenge of easing the burdens on working families that underlie the original demand for subprime mortgages in the first place. State leaders should demand and lobby for whatever aid Congress will allocate to help states and families, but the states need to take leadership on this issue. The worst thing possible is for state governments to slash spending on education, health care and help for those same families in the middle of a recession.
Big Problems, Big Investments Needed: But the $700 billion committed by the federal government, whether this particular proposal is the right one or not, shows that our nation has the resources to address big problems if we have the political will. States need to make similarly bold, not incremental plans to address the real needs of working families. While the temptation is for states to cut back in hard times, they should instead be increasing their spending to counterbalance lower spending by working families.
Investments in Economic Growth Pay Dividends in the Future: In principle, the new version of the federal bailout would require banks whose debt is purchased to give the federal government an equity stake in those firms, so if they recover financially, taxpayers would see more of their investments paid back. The idea is that while government may make initial upfront investments, returns from economic growth and contributions from the wealthy who most benefit should ultimately fund such long-term investments. Just as the feds are projecting that upfront investments in the financial system will lead to a financial recovery and higher asset values that will help pay off initial investments in troubled assets, an even better investment is for states to help working families "de-leverage" their financial burdens. Investing in job growth, whether through education or transit or other means, will pay off in the longer term with higher tax revenues.
States May be the Only Institution that Can Borrow and Invest Effectively: A key lesson is that in an economic credit crunch, it is government and often only government that can continue to borrow and invest to keep the economy moving forward. State tax and bonding authority, if focused on real investments, can create jobs and put money in the hands of working families in a time of economic crisis. Notably, states have access to credit at less expensive rates than a private sector caught in the credit crunch and can therefore be a critical player in jumpstarting a range of initiatives.
Taxing the Wealthy for Economic Investments Makes Economic Sense:If the borrowing needed does seem too daunting, financially or politically, then raise taxes from your wealthiest residents, the one group who saw their incomes triple in the last three decades. Taxing the wealthy to fund long-term investments is not a punitive goal, but an economically rational one. Not only do the wealthy benefit the most from economic growth, as the federal bailout plan acknowledges, but money in the hands of the wealthy does not, contrary to supply-side economics, trickle down to working families. In fact, much of it gets flushed down speculative toilets, as during the S&L scandal in the 1980s, the dotcom meltdown, and the current speculative subprime crisis. A dollar of taxes collected from the wealthy and put in the hands of working families is a dollar that is almost guaranteed to be spent on goods and services in the real, not speculative economy, and far more likely to stay circulating in your state to multiply into broader economic growth.

States should be emboldened to reject the remaining holdouts of rightwing ideology and reinvigorate their regulations on behalf of working families and investments in real economic growth.

Inexpensive Ways for States to Help De-leverage Working Families

There are basic standards that we can return to the workplace and our economy that don't cost the state treasury much if anything, yet will put more money in the hands of working families and help them cope with their costs and debt burdens.

Raise the Minimum Wage: The most obvious action is to further raise the minimum wage, whose value has been destroyed by inflation in the last three decades. Compared to 1968, when the federal minimum wage was the equivalent of $9.34 per hour accounting for inflation, even the highest state minimum wage rates have lost value against inflation. States should be aiming to raise their minimum wage rates to that level or a bit higher, and then index it to inflation to avoid erosion over time. Part of that effort should be toughening enforcement of the law, to assure that those owed the minimum wage and overtime receive it.
Help Balance Work and Family: Given that it usually takes at least two incomes to sustain a household budget these days, helping families navigate the tensions between the demands of work and family are critical. States moving to enact paid family leave and paid sick days laws guaranteeing all workers time to care for themselves and family members without fear of losing their jobs are desperately needed.
Raise Labor Standards and Union Rights: States should work to raise wage standards across the board, including strengthening the ability of all workers to join a labor union to help them demand a fairer wage share of profits generated from their employers. These can include using government contracting rules to promote stronger prevailing wage standards in more sectors, extending bargaining rights to agricultural industries and groups of independent contractors denied bargaining rights under federal law, and expanding general free speech rights in the workplace to better protect workplace-based advocacy for workers rights.

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Long-Term Investments to Create Strong State Economies

On the other hand, there is no getting around the fact that we need to shift our economy from one where speculation has soaked up trillions of dollars to one that invests in good jobs for working families. And some of those investments need to be by state governments, because while they may require significant upfront costs, the results will permanently strengthen state economies, lower costs for taxpayers, and save money for both government and household budgets over the long-term, helping to pay off any borrowing needed.

Health Care: The reality is that our health care system suffers from similar problems to Wall Street speculation; too lax regulation, too much profiteering, and too much waste without real returns. Investing in comprehensive health care for all state residents will not just help working families burdened by health care costs, it will likely save money. Even though the United States spends substantially more per person than any other country, the World Health Organization ranked our health care system 37th in the world in 2000 with working families paying out of pocket costs at twice the international average. Clearly, we spend more, but we get less. In Why Not the Best?, the Commonwealth Fund found that we would save $100 billion in administrative costs if we reached top efficiency benchmarks achieved elsewhere in more integrated government-managed health care systems. So the returns from comprehensive health care investments could easily pay for themselves over time.
Infrastructure Investments: A report last year by the Urban Land Institute found that 83 percent of the nation's transportation infrastructure is not capable of meeting the nation's needs over the next 10 years. There is a $1.6 trillion deficit in needed infrastructure spending through 2010 for repairs and maintenance, yet the U.S is spending less than 1 percent of its GDP on infrastructure. Making serious new investments in infrastructure is critical to increasing productivity, expanding economic growth, creating jobs, and making our states more economically competitive globally.
Broadband: It is estimated that widespread adoption of high-speed Internet will add $134 billion to the U.S. economy annually and create 1.2 million new jobs per year. A recent study found that for every 1% point increase in state high-speed Internet penetration, employment is projected to increase by 0.2% to 0.3%. Assuring that all residents have access to affordable, high-speed broadband is critical for long-term economic growth, especially when we are competing internationally with countries like Japan where households have access to broadband 8 times our average speed at roughly 1/2 of the cost. Again, these are investments that will build permanent economic strength and jobs for working families.
Green Jobs and Clean Energy: Investing in energy independence and green jobs -- from retrofitting homes to alternative fuels to mass transit -- promises some of the highest returns on state investment possible. More energy dollars will go to creating jobs at home and help eliminate wasted energy use. In many cases, families just need help making the energy investments and new technologies that will lower their energy bills far more over time - a clear place where states can help families in ways that, while requiring upfront state spending, will help pay for initial investments over time.

In a time of crisis for working families, state leaders need to step up with both the money and political will to make the investments that will create both more job and better wages for workers. The reward will not only be the de-leveraging of the debt burden for those families but, over time, the higher tax revenues needed to pay back any bonds used to pay for these initiatives.

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Resources

The Real Crisis Facing Working Families

Center for Budget Policy & Priorities - Average Income In 2006 Up $60,000 For Top 1 Percent Of Households, Just $430 For Bottom 90 Percent
Economic Policy Institute - REVERSAL OF FORTUNE: Economic gains of 1990s overturned for African Americans from 2000-07
Brookings Institution - Bearing the Brunt: Manufacturing Job Loss in the Great Lakes Region, 1995-2005
Banthin and Bernard - "Changes in financial burdens for health care: National estimates for the population younger than 65 years, 1996-2003," Journal of the American Medical Association and "Financial burden of health care, 2001-2004," Health Affairs

State Leaders Saw the Subprime Mortgage Crisis Coming - But Feds Block Reforms

Progressive States Network - The Predatory Lending Bubble and How the Feds Made it Worse
Progressive States Network - Gutting State Regulation of Insurance under Bush Administration's Financial Oversight "Reform"
Center for Responsible Lending - Federal Preemption Favors Predatory Lending
Center for Responsible Lending - Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners

Inexpensive Ways for States to Help De-leverage Working Families

Progressive States Network - States Still Leading Feds on Minimum Wage
Progressive States Network - Paid Sick Days & Paid Leave Bills Approved in D.C. and New Jersey
Progressive States Network - Strengthening the Freedom to Form Labor Unions

Long-Term Investments to Create Strong State Economies

Progressive States Network, U.S. Infrastructure: An Economic Disaster Waiting to Happen
Progressive States Network, Health Care for All: Policy Options for 2009
Progressive States Network, Broadband and Technology Investments: Policy Options for 2009
Apollo Alliance, Clean Energy, Good Jobs
Commonwealth Fund, Why Not the Best?
EDUCAUSE, A Blueprint for Big Broadband

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Aiding States to Stimulate the National Economy

Nathan Newman — Thu, 24 Jan 2008 15:33:52 +0000

As Congress debates a stimulus to the economy in the wake of the housing bust, many economists are urging federal leaders to make aid to state governments a core part of the package. While direct tax rebates for individuals can help, it will not do much for the economy if states are forced to cut back on critical spending on public works, health care, and education at the same time. As Nobel prize-winning economist Joseph Stiglitz, who was also chair of the President's Council of Economic Advisors in the 1990s, wrote this week in the New York Times:

The federal government should also provide some assistance to states and localities, which are already beginning to feel the pinch, as property values have fallen. Typically, they respond by cutting spending, and this acts as an automatic destabilizer.

What should go into that stimulus package for states? A few key components include spending on repairing our infrastructure, retrofitting buildings for energy savings, and funding SCHIP and Medicaid to cover families facing rising health costs.

Transit and Infrastructure: A new bipartisan coalition of state and local officials, led by Republican Governor Arnold Schwarzennegger, independent New York City Mayor Michael Bloomberg and Democratic Pennsylvania Governor Edward Rendell called for new spending on repairing infrastructure-- and see it as a critical part of any stimulus to put people back to work and begin addressing the estimated $1.6 trillion of infrastructure spending needed across the country. Similarly, Mark H. Ayers, President of the Building & Construction Trades Department, AFL-CIO, urged spending on infrastructure needs in order to spur growth and job creation since "the economic activity and the jobs directly created by this spending have a beneficial ripple effect as contractors purchase materials and employees spend their salaries."
Retrofitting Buildings: Tax credits for home insulation and for state programs to assist retrofitting buildings should be a key program, especially as Americans increasingly see money that could be creating jobs at home going overseas to pay skyrocketting oil costs. As Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), argues, such a green stimulus "would be the quickest green way to pump money in the economy. The collapse of the housing sector has put hundreds of thousands of construction workers out of work and made contractors desperate for business." A program to encourage building retrofits would reemploy exactly the people facing some of the largest job layoffs and transfer money now going to overseas oil producers into businesses at home.
SCHIP and Medicaid: This last week, the US Congress Joint Economic Committee issued a report that indicated a recession would undermine federal and state budgets as more people become eligible for federal assistance through Medicaid and SCHIP. With an estimated 1.1 million additional children needing Medicaid or SCHIP during recessions, organizations like First Focus have called for a Child-Friendly Economic Stimulus Plan, that includes increased funding for SCHIP and Medicaid.

These are a few key programs that state leaders and advocates should be demanding be part of any economic stimulus passed by the federal government this year.

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NJ: Raising Tolls & Keeping the Money for the Public - Unlike Privatization Ripoffs

Nathan Newman — Thu, 17 Jan 2008 12:13:00 +0000

After discussing the possibility of privatizing major state highways last year, New Jersey Governor John Corzine instead made a proposal earlier this month that called for significant increases in tolls that would provide nearly $30 billion to decrease state debt and invest in state transit projects. Unlike rhetorical promises around privatization money in other states, this plan actually laid out how money would get raised.

Whatever one thinks about raising tolls as public policy, this is at least an honest proposal. The dirty secret of most privatization proposals is that the reason private companies are willing to pay billions to buy or lease highways is that they then have license to raise tolls massively, but that's not how it's sold to the public. And the worse part of the deception of the public is that most of the toll increases then don't go back to public investments but instead line the pockets of the private investors. As we noted last year, while Indiana Governor Mitch Daniels boasted about getting $3.8 billion for leasing 157 miles of highway in that state, independent analysts estimated that the companies buying the lease will get to raise tolls and reap an additional $11.4 billion-- money the taxpayers could have kept if the state had raised tolls itself and held onto the roads as New Jersey is proposing.

There is no such thing as a free lunch, despite privatization being sold that way. Companies pay lots of money for privatized highways because they then get to raise tolls themselves and keep the profit, rather than reinvesting on behalf of the public. Gov. Corzine is arguing that New Jersey can raise $30 billion by keeping the increased toll money that other states like Indiana are giving away to private companies. It's not a free lunch, but at least it's not a deceptive rip-off like the highway privatization scams being promoted around the country.

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