Economic Recovery: Part Two
KEEP FIGHTING! | Urging delegates at this summer’s AFL-CIO convention to pass the federation’s health care resolution.
KEEP FIGHTING! | Urging delegates at this summer’s AFL-CIO convention to pass the federation’s health care resolution.
Photo Credit: Bill Burke/Page One Photography
Message from the President
By Gerald W. McEntee
As the recession continues, cash-strapped states scramble to plug historic budget holes. Across the country, we’ve had an $8 trillion loss in the value of housing and a $4 to $6 trillion loss in stock value. It all stems from the Bush administration’s wrong-headed economic policies. Among the many victims are the AFSCME members who must shoulder furloughs, layoffs, wage freezes and benefit cuts while trying to provide the essential services that keep our nation strong.
But Pres. Barack Obama has made good on his promise of change. His first month in office, he signed the $787 billion American Reinvestment and Recovery Act (ARRA). When the federal government started distributing the funds, the $225 billion state and local aid headed the list. According to the Economic Policy Institute, the stimulus has already put $135 billion back into the economy, boosting our output by nearly $170 billion. A simpler way to view it is that every stimulus dollar eventually produces $1.36 in increased economic output.
The Good News
ARRA covered 30 to 40 percent of state budget shortfalls for 2010. AFSCME was instrumental in creating ARRA, and the initiative has brought workplace relief to our members across the country. From Oregon to New York, Ohio to Florida, and states in between, aid flowing from the Recovery Act has helped to avert large tax increases and cuts to government social programs and services.
Additionally, state fiscal relief has played a critical role helping states that face large budget shortfalls amid the recession.
Economic forecasters say the economy has most likely begun an upswing, in part because of public works projects funded by the ARRA.
The Bad News
But states aren’t out of the woods. At least 36 project that their combined fiscal 2011 budget shortfalls will hit at least $180 billion. In California, UDW/AFSCME had to go to court to block cuts that would have eliminated 7,000 or more AFSCME home care worker jobs. The state has already increased co-pays and reduced dental benefits for needy children. In Rhode Island, more than 1,000 state jobs are on the chopping block and funds for affordable housing have already been cut. In Michigan, Detroit alone has a $300 million deficit as it plans to reduce city payrolls by 1,000 workers. And in Puerto Rico, the governor is planning to lay off 20,000 public employees.
By year end, the unemployment insurance benefits depended on by 1.5 million workers will stop. There’s additional danger that state governments will adopt fiscal policies that reinforce—rather than combat—the recession. Their spending cuts take money out of the economy, reducing consumption and demand, and force even more job losses.
A Better Tomorrow
The initial recovery package helps everyday people. Given enough time, a second Recovery Act or an extension of the current one could make all the difference. With a second infusion of funds, our fiscally battered states and localities will move even closer to recovery, preserving vital services. Remember this: What was destroyed in eight years can’t be put right in one.
