The Recovery Act Worked | Richmond Times-Dispatch
source: http://www2.timesdispatch.com/news/2010/aug/29/ed-cass29-ar-476773/
Richmond, Va. --
It not only could have been worse -- it most assuredly would have.
The longest, deepest recession since the Great Depression knocked the pins out from under Americans from all walks of life. People lost jobs and, with them, health coverage. Consumer spending withered, putting even more jobs in jeopardy.
Private-sector expansion ground to a halt; businesspeople without customers can't be optimists.
The recession caused record-breaking declines in state revenues nationally. Virginia's general fund tax revenue fell for two years in a row for the first time in 50 years.
And that didn't happen in isolation. At the same time revenues were collapsing, the need for essential services was going up. More families needed help with health care, food assistance, job training; meanwhile, K-12 school and college enrollments were rising. Somehow that widening gap between needs and resources had to be met.
It makes for good TV sound bites to say we should just slash spending. But that's no way to help struggling families and protect Virginia's economy. It's no way to make sure investments are made that will help the commonwealth make the most of prosperity when it returns.
Someone had to do something; luckily, the federal government did. The primary vehicle for assistance has been the federal Recovery Act adopted in February 2009. By the end of this year, the act will have provided Virginia and its citizens with about $9 billion.
Recovery Act money sent directly to the state budget closed a large portion of state budget shortfalls, which helped preserve jobs and maintain many services. Virginia also is receiving valuable federal funding for schools, jobs, housing, transportation, public safety, health, and social services.
And Virginia households benefited directly from Recovery Act provisions like tax credits for working families, economic recovery payments to seniors, disabled adults, and veterans, and extended unemployment payments.
But this is about more than dollar figures and program names. Direct aid to Virginians and fiscal relief for the state budget put money back into the Virginia's economy at a time when consumer demand was plummeting.
When people lose their jobs or see their hours reduced, families cut back on purchasing to reflect their loss of income. That only makes the recession worse: As consumers cut back on what they buy, business profits fall and they too scale back employment, further reducing demand. Someone has to break that vicious downward cycle.
Enter the Recovery Act.
Yes, we are not out of the woods yet. Yes, unemployment is still too high. Yes, it would have been nice if the Recovery Act had provided even more assistance, but that's politics. There is no denying that people are working today, and spending money, who wouldn't be if Congress and the president had listened to the do-nothing voices.
The widely respected, nonpartisan Congressional Budget Office has found that the Recovery Act created between 1.8 and 4.1 million jobs nationwide through March 2010 and raised inflation-adjusted gross domestic product by 1.7 to 4.2 percent. Virginia's proportionate share would come to between 46,000 and 105,000 jobs.
Critics say the Recovery Act will make the federal deficit worse. They are wrong.
First, it's important to point out that most of the deficit comes from the huge tax cuts of the Bush years, fighting two wars, and the monumental economic downturn of the recession. When the economy is back on its feet, we need to turn more attention to the deficit. But the first priority needs to be the nation's jobs deficit.
What the federal government is spending on recovery is but a fraction of the deficit and by preventing a deeper recession and returning the economy to normal more quickly, Recovery Act spending may well reduce long-term deficits.
Looking forward, Virginia still has work to do. Despite crucial assistance from the Recovery Act, many important public services have been cut.
State leaders have repeatedly decided to follow primarily a cuts-only strategy (only raising taxes on low-income working families by slashing the state earned income tax credit in the latest budget, for example) instead of a balanced approach that would position us to provide the services we expect from our public sector and help create the kind of state we all want.
It not only could have been worse -- it most assuredly would have.
The longest, deepest recession since the Great Depression knocked the pins out from under Americans from all walks of life. People lost jobs and, with them, health coverage. Consumer spending withered, putting even more jobs in jeopardy.
Private-sector expansion ground to a halt; businesspeople without customers can't be optimists.
The recession caused record-breaking declines in state revenues nationally. Virginia's general fund tax revenue fell for two years in a row for the first time in 50 years.
And that didn't happen in isolation. At the same time revenues were collapsing, the need for essential services was going up. More families needed help with health care, food assistance, job training; meanwhile, K-12 school and college enrollments were rising. Somehow that widening gap between needs and resources had to be met.
It makes for good TV sound bites to say we should just slash spending. But that's no way to help struggling families and protect Virginia's economy. It's no way to make sure investments are made that will help the commonwealth make the most of prosperity when it returns.
Someone had to do something; luckily, the federal government did. The primary vehicle for assistance has been the federal Recovery Act adopted in February 2009. By the end of this year, the act will have provided Virginia and its citizens with about $9 billion.
Recovery Act money sent directly to the state budget closed a large portion of state budget shortfalls, which helped preserve jobs and maintain many services. Virginia also is receiving valuable federal funding for schools, jobs, housing, transportation, public safety, health, and social services.
And Virginia households benefited directly from Recovery Act provisions like tax credits for working families, economic recovery payments to seniors, disabled adults, and veterans, and extended unemployment payments.
But this is about more than dollar figures and program names. Direct aid to Virginians and fiscal relief for the state budget put money back into the Virginia's economy at a time when consumer demand was plummeting.
When people lose their jobs or see their hours reduced, families cut back on purchasing to reflect their loss of income. That only makes the recession worse: As consumers cut back on what they buy, business profits fall and they too scale back employment, further reducing demand. Someone has to break that vicious downward cycle.
Enter the Recovery Act.
Yes, we are not out of the woods yet. Yes, unemployment is still too high. Yes, it would have been nice if the Recovery Act had provided even more assistance, but that's politics. There is no denying that people are working today, and spending money, who wouldn't be if Congress and the president had listened to the do-nothing voices.
The widely respected, nonpartisan Congressional Budget Office has found that the Recovery Act created between 1.8 and 4.1 million jobs nationwide through March 2010 and raised inflation-adjusted gross domestic product by 1.7 to 4.2 percent. Virginia's proportionate share would come to between 46,000 and 105,000 jobs.
Critics say the Recovery Act will make the federal deficit worse. They are wrong.
First, it's important to point out that most of the deficit comes from the huge tax cuts of the Bush years, fighting two wars, and the monumental economic downturn of the recession. When the economy is back on its feet, we need to turn more attention to the deficit. But the first priority needs to be the nation's jobs deficit.
What the federal government is spending on recovery is but a fraction of the deficit and by preventing a deeper recession and returning the economy to normal more quickly, Recovery Act spending may well reduce long-term deficits.
Looking forward, Virginia still has work to do. Despite crucial assistance from the Recovery Act, many important public services have been cut.
State leaders have repeatedly decided to follow primarily a cuts-only strategy (only raising taxes on low-income working families by slashing the state earned income tax credit in the latest budget, for example) instead of a balanced approach that would position us to provide the services we expect from our public sector and help create the kind of state we all want.
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- Community, Politics, Progressive America, Current Democrats, 1 more
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- tags:
- Virginia, recovery act
