Stimulus bill

More State Aid? Yes, Please (UPDATED)

Adam Doster — Wed, 11 Nov 2009 10:45:56 -0800

Over a year ago, we wrote our first post advocating in favor of federal assistance for state governments. The reasons were simple enough: a slowing economy causes revenues to decline and demand for services like Medicaid to rise; recessions always hit states later than the federal government; and the General Assembly is required by law to pass a "balanced" budget.

The Obama administration delivered with its $789 billion economic stimulus bill. Illinois received $2.9 billion in Medicaid relief, $1.6 billion in education money, and another $374 million in flexible state block grants. (The last figure was supposed to be considerably higher, but was cut during negotiations to appease "conservative" Democrats in the Senate.) These resources prevented devastating cuts to the state's human care infrastructure and saved thousands of jobs, a fact conservative critiques of the stimulus plan consistently overlook.

But Illinois' FY 2011 budget deficit will be even wider than it was this year. Indeed, it's currently estimated at $12.8 billion, thanks to declining tax receipts, loads of borrowing, and the fact that the remaining $1.4 billion in federal aid is scheduled to run out at the end of 2010. Nationwide the situation is no different, with states facing their largest collective budget shortfall in recent memory.

In a new paper published today, the Center for Budget and Policy Priorities (CBPP) offers a novel solution for policymakers in Washington: buoy states by approving additional fiscal relief. Without it, social services will be slashed and unemployment rates nationwide could skyrocket:

Some private forecasters have begun to ask whether the state budget cuts and tax increases that lie ahead will stall the economy. Goldman Sachs estimated last July that the fiscal drag from state budget cuts and tax increases could reduce GDP by 0.6% to 0.7% over the coming year as states move to close their deficits. The outlook for state fiscal year 2011 is even grimmer; as noted, actions states will have to take to eliminate deficits for that year are likely to drag down GDP by more than 0.9% and could cost 900,000 jobs.

The implementation of such a plan would be very simple; Robert Reich writes that Congress could just cut 50 checks asking states to commit to (at least) maintaining their current taxing and spending policies. The politics of Obama's "second stimulus" would be a little bit trickier, especially with health care and cap-and-trade legislation moving forward. But state governments, which will begin crafting their new fiscal budgets in the coming weeks, are running out of options. And time.

Read the whole report here.

(H/T Heartland Alliance)

UPDATE (12:51 PM): Want some more evidence that Illinois could use an outside boost? A new report from the Pew Center on the States lists Illinois as one of 10 states pushing toward "economic disaster." The Gatehouse News Service has more:

Authors of the report cited Illinois for "its lack of fiscal discipline to balance its state budget." They noted that Illinois' $13.2 billion budget gap for fiscal year 2010 was among the top three in the country.

"Officials have used all sorts of short-term approaches to address the budget gaps, but two of the most significant and consequential are to put off paying bills and skimp on the state's annual pension payments."

Image used under a Creative Commons license by Flickr user myoldpostcards.

On Federal Spending, Biggert Tries To Have It Both Ways

Adam Doster — Wed, 28 Oct 2009 10:20:14 -0700

When back in the 13th Congressional District, Rep. Judy Biggert sure likes to praise the result of bills she opposed on Capitol Hill.

Earlier this year, the Hinsdale Republican lauded two transportation projects in her district that were funded through an appropriations bill she had voted against. Then in early October, she called for a six-month extension of the first-time homebuyer's tax credit -- initially implemented via the federal stimulus bill she vehemently opposed. Yesterday, she went even further, applauding the arrival of two stimulus grants (amounting to $10.9 million) intended to upgrade Naperville's municipal electric utility.

The political opportunism here is self-evident. In February, just as the stimulus negotiations were wrapping up, Biggert spread lies about a 2007 report on the economic benefits of tax cuts by President Obama’s Economic Council of Advisers Chairwoman Christina Romer and eventually voted against the package. Just this past month, she issued a statement suggesting that "it's long past time for Congress to reject the big-spending approach to recovery that has clearly failed to stimulate job growth or ease the financial burden on struggling families." But then she sayd those stimulus programs directly benefiting her constituents are worthy of federal support?

She can't have it both ways. And judging from his comments to us over the summer, Democratic challenger Scott Harper plans to drive home this point.

The "Food Stampede" Continues

Adam Doster — Fri, 02 Oct 2009 09:18:47 -0700

As the state's unemployment rate grows, so too do the food stamp rolls. About 16.5 percent more households used the federally-funded program in August than the same period in 2008, translating to aid for about 100,000 additional families. "It's a new record every month," Department of Human Services spokesperson Tom Green told the Pantagraph's Mike Riopell.

A few things to note here. While it's unfortunate that so many people are struggling right now, it's great that more and more are using the benefits provided to them; many eligible people simply don't apply, which is unfortunate for their families and the economy at large. It's also important to remember that without the stimulus bill this year, which dedicated an additional $890 million in funding to the program, the benefits would be smaller, the state would bear a larger administrative burden, and the federal food stamp fund would be drained of considerable resources.

Most importantly, the new data illustrates just how deep this recession is. If this many people in Illinois now qualify as desperately poor, even more aren't earning enough to be financially independent. And it's a problem we will be dealing with for years.

Illinois' Smart Future

Angela Caputo — Wed, 30 Sep 2009 14:58:54 -0700

As part of its ongoing Chicago Matters: Beyond Burnham series, WTTW's Chicago Tonight took a closer look at plans to create a smart grid in the region last night. As we've previously noted, smart grid technology -- which includes digitalizing meters, offering consumers a real-time breakdown of their energy use (including power sources like wind, solar, or coal), and enabling power companies to reroute energy with the flick of a switch -- is still in its infancy. ComEd's pilot project to install 130,000 new residential meters has put Illinois on the cutting edge of developing the technology. And with another $4.5 billion federal stimulus money on the table, the Chicago Building Owners and Managers Association (BOMA) is hoping for a cut to begin implementing the technology in Chicago's Loop. WTTW highlights the projects. Watch an excerpt (full video here):

Congress Considers Second Unemployment Benefit Extension

Adam Doster — Mon, 14 Sep 2009 10:44:35 -0700

While widely lambasted by stimulus opponents as useless "social spending," it's pretty clear that boosting the length and size of unemployment benefits has had a positive effect on those struggling to find work during this recession. The Center on Budget and Policy Priorities (CBPP) report (PDF) we flagged last week estimated that 700,000 adults and children nationwide stayed out of poverty thanks to multiple federally-funded extensions (which provides 53 extra weeks in Illinois) while 100,000 avoided financial ruin because of the $25 per week increase in the size of the benefits.

Unfortunately, unemployment is still extremely high and many companies have not yet started to expand their payrolls. So tomorrow the Senate Finance Committee will take some time off from debating health care legislation to hear testimony about the need for another round of benefit extensions. The National Employment Law Project's Beth Shulman, who will testify before the committee on Tuesday, echoed House Speaker Nancy Pelosi in an interview with the Detroit News, calling the bill "absolutely imperative:"

Another 13 weeks of benefits for the unemployed in Michigan is "absolutely imperative," a workers' advocate will tell the Senate Finance Committee on Tuesday.

Beth Shulman will try to convince lawmakers that the government has "to ensure that people can support themselves and their families," especially those in states with at least 8.5 percent unemployment. Michigan's jobless rate is 15 percent -- the worst in the nation.

"We are in the worst economic downturn since the Depression," said Shulman, who chairs the board of the National Employment Law Project.

A bill (H.R. 3403) already exists in the House that would distribute an additional 13 weeks of coverage in states -- like Illinois -- that are experiencing unemployment rates of 9 percent or higher. With over 50,000 Illinoisans expected to exhaust (PDF) their final benefits by December, now would be a good time to act.

Will Illinois Forgo Millions More In Food Stamp Aid?

Angela Caputo — Fri, 11 Sep 2009 10:39:55 -0700

Yesterday, we flagged new research estimating that 305,000 Illinoisans were spared from poverty this year thanks to the federal stimulus' investment in the social safety (unemployment benefits, food stamps, etc.). As we've pointed out before, food stamps can play a crucial role in providing economic stimulus. Not only do the enhanced benefits help put food on the table for millions of struggling families, they also provide a much-needed boost to local businesses and the overall economy. But is Illinois doing all it can to ensure we reap the full benefits of the program?

Perhaps not, according to the Washington D.C.-based Food Research and Action Center (FARC). While food stamp enrollment grew in Cook County by 31 percent between 2005 and last year -- from 592,295 to 778,323 -- the anti-hunger policy group reports (PDF) major gaps in enrollment in the region. At least 141,843 eligible households failed to enroll in the program as of 2007 (the most recent U.S. Department of Agriculture data available). By not getting those people signed up, Illinois left an estimated $85 million in federal food stamp money on the table that year.

"We can do better," Illinois Hunger Coalition's Diane Doherty tells us. But that's going to require some leadership at the state level and a commitment to boost -- not cut -- human services outreach. Doherty explains via email:

Maybe if the members of the General Assembly can see that any reduction in DHS staff and services will also mean a reduction in the amount of federal money that is transformed into $1.83 in the local economy for every $1 in federal food stamp money ...

[W]e cannot afford to lose any of the gains we have made which will be inevitable if we downsize DHS offices or take them out of neighborhoods with high poverty rates.

As far as we know, the Quinn administration's troubling plan to "consolidate" 17 human service offices still remains on the table. Before making any future decisions on this front, Quinn and lawmakers ought to thumb through FRAC's report.

Number Of The Day: 305,000

Angela Caputo — Thu, 10 Sep 2009 08:26:29 -0700

Since the first stimulus dollars went out the door, we've been doing our best to track the impact of the federal funds on Illinois' economy. Schools have been spared massive cutbacks, unemployed workers have been thrown a lifeline, and increased food stamp allowances have ensured that low-income families can put dinner on the table. Taken together, these human investments have spared six million Americans -- including 305,000 Illinoisans -- from slipping into poverty in 2009, according to a report (PDF) released by the Center on Budget and Policy Priorities (CBPP) yesterday.

It's worth noting that CBPP's latest report only weighs the benefits of the stimulus spending so far -- enhanced unemployment insurance, tax credits for low- and moderate-income families, increased food stamp allowances, and a one-time "bonus" checks issued to retirees, veterans, and the disabled -- which accounts for only $205 billion of the estimated $787 billion Congress authorized under the bill. In addition to giving the overall economy a jolt, CBPP's Arloc Sherman explains, this type of spending has strengthened the social safety net at exactly the time it is needed most:

The recession has affected family income and poverty status in two major ways. First, it has exposed more families to the risk of poverty by increasing unemployment and underemployment and thereby reducing their earnings. Second, it has increased participation in key income-stabilizing programs — such as unemployment insurance and food stamps — that the stimulus bill temporarily expands further. Failing to account for either of these changes would understate the role of the stimulus in protecting families from income loss and poverty.

Stimulus "Social Spending" Jumpstarts Chicago SBA Lending

Adam Doster — Mon, 31 Aug 2009 14:51:44 -0700

One of Rep. Mark Kirk's problems with the stimulus package is that he thinks it's wrongly focused. According to the Senate candidate, 80 percent of the package funds "social programs," which are purportedly not "job-producing." We addressed his lousy critique last Friday. But then an instructive article surfaced this morning.

Because of the nation's credit crisis, lending by the U.S. Small Business Administration (SBA) dried up in 2008. One solution envisioned by the Obama administration was to devote a certain amount of stimulus dollars to subsidizing lending incentives. Namely, fees that borrowers incur when they deal with the SBA --which typically run about $53,000 for a $2-million loan -- would be entirely waived. After the federal government directing $733 million to the project earlier this year, Crain's reports that the loans are going out faster than ever:

Federal stimulus incentives are jump-starting government-backed loans to small Chicago-area firms, creating almost a year’s worth of activity in the last few months.

Nationally, average weekly loan guarantee approvals by the U.S. Small Business Administration are running 50% ahead of where they were before the stimulus package was enacted Feb. 17, and current loan activity in Illinois is even higher than that, according to Robert Esquivel, chief financial officer of the SBA’s Midwest regional office in Chicago ... Since February, Illinois borrowers have saved $4.8 million in fees on 861 loans totaling $351.3 million, counting all types of SBA loans.

One would suspect that some of the loans allowed businesses to produce jobs.

Transcribing Kirk's Stimulus Nonsense

Adam Doster — Fri, 28 Aug 2009 15:34:22 -0700

Earlier this month, we criticized some local media outlets for uncritically reporting Republican Senate candidate Mark Kirk's dubious talking points on health care. Today, the Alton Telegraph took that approach to a whole new level. In a story about Kirk's campaign event with fellow GOP Rep. John Shimkus, the paper reprinted multiple claims from Kirk, but made no apparent effort to verify anything he said. Here's one example:

The federal stimulus plan, of which only 12 percent has been spent, has done little to revive the economy, [Kirk] said, and it's wrongly focused, with 80 percent on social programs that are not job-producing.

Kirk said he would reroute most of the stimulus into infrastructure, because it has a lasting effect and does more for jobs.

It's technically true that only 12 percent of the stimulus spending money has been distributed. What's misleading is the pejorative use of the term "only." It's no surprise that the federal aid has not been distributed yet. That's because the spending is spread out over 18 months by design. For example, $115 billion is scheduled to be spent on infrastructure projects during the 2010 fiscal year, which begins September 30. If Kirk expected all of the money to show up in a lump sum, he misread the bill.

Then there's Kirk's contention that spending on "social programs" is not "job producing." Again, this is a common canard from he and his fellow Republicans. But let's get the facts straight: The stimulus package was passed with the specific intention of infusing money into the economy quickly to promote consumer spending. The best way to do that, according to economists, is to put money into the hands of people who need it the most. That's why spending on food stamps and unemployment benefits provide the biggest bang for the buck. And there's evidence that such spending has helped the economy recover more quickly than it would have otherwise.

Let's also not forget that the president said the stimulus package would create or save millions of jobs. That's exactly what the $140 billion in aid to states is doing. The Center on Budget and Policy Priorities estimates that stimulus funds are covering 30 to 40 percent of overall state budget shortfalls, preventing layoffs and service cuts to the nation's most vulnerable before tax receipts rebound and states can cover their deficits. Without the stimulus, for example, Illinois schools would be over $1 billion in the hole.

We've repeatedly documented how Kirk plays loose with numbers. If a reporter doesn't have enough time or resources to check out his claims, they simply shouldn't be printed.

Number Of The Day: $550 Million

Adam Doster — Thu, 27 Aug 2009 09:15:54 -0700

After years of preparation by rail advocates and months of lobbying from Illinois pols, the Illinois Department of Transportation formally submitted its application for federal high speed rail funds on Monday, as the Pantagraph reports. Officials requested $550 million from the initial $8 billion stimulus pot, money that would be used in part to upgrade railroad sidings to allow slower freights trains to pull over for faster passenger lines.

The state also wants to spend $140 million to reduce congestion around freight lines in the Chicago region and $10 million to initiate a feasibility study showing that travel times between Chicago and St. Louis could be cut to less than two hours if trains ran at speeds reaching 220 m.p.h. The Midwest High Speed Rail Association has already looked into the latter possibility on its own (PDF).

Because of the diligent work of rail advocates in the region, Illinois is in prime shape to take home the resources IDOT requested. And more money is likely to funnel down to states in the future. That's because the House already passed a $123 billion transportation and housing appropriations bill, which included $4 billion in new funding for President Obama's high speed rail initiative. "People need to understand this isn't about winners and losers," Federal Railroad Administration Administrator Joseph Szabo told the Wall Street Journal," this is simply the beginning."

Grants will be awarded beginning in late September or early October. Work could begin shortly thereafter.

Image used under a Creative Commons license by Flickr user Strychnine.