In the clearest indication yet that the White House believes the economy needs more stimulus to keep the recovery going, President Barack Obama sent a letter to the Congressional leadership of both parties, begging that they add into upcoming bills measures to keep poor people on their health insurance and aid struggling state and local budgets.
In the long, four-page letter, Obama says that “we are at a critical juncture in our nation’s path to economic recovery,” and that more support must be given to the economy in upcoming bills before Congress. Specifically, Obama wants Congress to pass a $6-8 billion measure to extend the 65% subsidy for COBRA eligibles, so jobless Americans can keep the health insurance provided by their former employer. He wants $23 billion in FMAP funding to go to the states so they don’t have to cut back on their Medicaid rolls. Both of these measures were cut from the tax extenders/jobs package in the House, a concession to Blue Dogs nervous about short-term deficits.
In addition, Obama calls on Congressional leaders to include $25 billion for state education and public safety jobs for state and local governments in the war supplemental. The Senate passed that bill in late May without the state aid, and while House Appropriations Committee Chair David Obey has vowed to include it in his version of the bill, he has wavered in recent days, talking about cutting back the $25 billion to $10 billion. Finally, Obama touts the Home Star program of rebates for energy efficiency audits of commercial and residential buildings, and his $30 billion small business lending fund which he promoted in a speech this week. He does nod to some of his medium-term measures, like the budget freeze on discretionary spending, and the bank tax to pay for TARP losses, selling off federal property and expediting rescissions to the budget (a form of the line-item veto).
Here’s an excerpt from the letter, which should leave no doubt about the attitude in the White House, that the recovery is perilous without emergency measures:
I am concerned, however, that the lingering economic damage left by the financial crisis we inherited has left a mounting employment crisis at the state and local level that could set back the pace of our economic recovery. Because this recession has been deeper and more painful than any in 70 years, our state and local governments face a vicious cycle. The lost jobs and foreclosed homes caused by this financial crisis have led to a dramatic decline in revenues that has provoked major cutbacks in critical services at the very time our Nation’s families need them most. Already this year, we have lost 84,000 jobs in state and local governments, a loss that was cushioned by the substantial assistance provided in the Recovery Act. And while state and local governments have already taken difficult steps to balance their budgets, if additional action is not taken hundreds of thousands of jobs would be lost.
That’s about as clear as you can get. Obama only withholds the fact that the kind of assistance necessary to the crisis in state and local budgets was originally present in the Recovery Act, but Ben Nelson, Susan Collins and Arlen Specter deleted $100 billion from the final cost on a whim and to look moderate. Most of that money came from state and local governments, leaving those “moderates” directly responsible for that job loss.
Rather than lament this, the Administration at least recognizes the need for action. He notes that allowing hundreds of thousands more layoffs just adds more costs in automatic stabilizers like unemployment and job training, as well as lowered demand for goods that can no longer be afforded, and lower tax revenue as jobs vanish. “That is why the actual cost of saving state and local jobs is likely to be 20 to 40 percent below their budgetary cost,” Obama writes.
So far, the President has not been able to persuade lawmakers of the importance of more stimulus in the short term to just maintain, let alone further, economic recovery. But this is the strongest statement yet, clarifying what some Congressional aides have considered mixed signals on deficit reduction and job creation. Here, the President is affirmatively asking for over $50 billion dollars in new stimulus.
The next move would be in the Senate, where the tax extenders bill is on the floor. But Senate leadership has not rounded up 60 votes, and while they’ve re-inserted the FMAP funding, the COBRA subsidy has only been offered as an amendment.



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I’d sure like a little stimulus to be thrown my way – and a decent job.
You can hold the pony though…
2 little, 2 late. Spread among 50 little Hoover’s, 50 billion is nothing.
Before the inauguration, Obama had the best advice in the world about how large a stimulus was needed and he chose to listen to Rubin and Summers instead.
Given the number of private-sector, non-Census Department jobs created in May (41,000), and the anemic May retail sales numbers…
Is this news really a surprise?
The bigger surprise, perhaps, is that after spending $800 billion last year on economic stimulus…the President appears to believe an additional $50 billion will get the job done.
Does it really matter, anyway? $50 billion, $500 billion, however much more additional stimulus…
It’s all deficit spending at this point…there’s no money.
There’s no limit on the money-supply, just our productive capacity. Sovereign deficits are an anachronism of accounting rules that didn’t undergo the same radical shift that literally everything else about first-world currency did back in 1971.
That said, no amount of stimulus money is going to help much if we don’t clear our insolvent financial sector out of the way first. All the stimulus money ends up channeling through that system eventually, and when it does… it stops moving, stops stimulating. It just sits there shoring up balance sheets. The insolvent financial sector acts as teams of concrete-filled sunken frigates that have been scuttled to block the canal to recovery, we have to clear them outta there first, or we’re not going anywhere.
There is no money for national healthcare, alternate clean energy, a clean environment, education or anything for people. This is because the people’s money and government was stolen by the establishment, the Banksters with their frauds and the neo-cons with their wars.
Obama out, Palin in…before the USA becomes a bloodless whited sepulcher.
There is not a permanent, finite amount of money; we haven’t run out of it and it’s not all gone because it was stolen. The Fed Govt can at any time create money to fund economic stimulus, and it should be doing a lot more.
A central problem now is that whatever stimulus effect US spending is having is being offset by budget curtailments and layoffs by the states. The net effect is like 50 Hoovervilles working to put people out of work and depress their own economies. The US has to offset that state contraction and do even more to create demand.
How many times did numerous economists practically scream the first stimulus package was not large enough? Add to that, a third of the “stimulus package” going to tax cuts during a time when people fear losing their jobs or have lost their jobs and cut back on spending and what do you get…less revenue AND less money circulating in the economy. The focus should have been on jobs from the start, stimulating the economy instead of bailing out banks and giving us health insurance reform written by the health insurance industry and the Heritage Foundation.
Now the President gives conflicting messages… on one hand, acting like a “deficit hawk”, wanting to cut back on social safety net programs such as Social Security and Medicare (as if that is a real solution instead of dealing with the real issue – our excessive military spending), then asking for a new “stimulus” package. Is this more rhetoric for the masses, while he works behind the scenes telling the “Blanche Lincolns” to work against it?
Obamaco Imperial Presidency wants to outdo Bushco Imperial Presidency and is expanding Executive powers to do so. Why not grow a pair then and start ruling by fiat; Congress is worthless anyway and would likely acquiesce. While favoring his hidden benefactors via fiat, at least we could get back on our economic feet while Obama simultaneously sells the country to the highest bidder.
“We” would?
I would also like to add that assistance for state and local governments of $100 billion was originally in the American Recovery and Reinvestment Act but removed thanks to Ben Nelson, Susan Collins, and Arlen Specter. Now the situation in many states gets worse and he continues on the same failed economic policies of the past 30 years. Too many mixed signals.
You’re right, Nathan.
My post should have had more specificity. The money supply is only limited to the extent that the federal government is unwilling to print unlimited amounts of currency.
I was foolishly applying the anachronistic notion of somehow relating the ability of government to spend in a manner even minimally related to actual revenue collected through taxation or borrowing, to the notion of government spending unfettered by such annoying limitations.
I stand corrected.
Who is we? Tee Hee! G)
That ain’t us it is them, we’uns is left holding the bag.
The question is what is Obama willing to do? How far is he willing to go to demand he get this? Is he willing to twist some arms finally? Is he ready to send Biden into the Senate to do some arm twisting? Is he ready to threaten individual lawmakers’ pet projects to get their votes? Time to put up or shut up Mr. President.
Book Salon up at the Mothership with Paul Rogat Loeb’s Soul of a Citizen: Living with Conviction in Challenging Times hosted by Jason Rosenbaum
Hmmm…
The actions you’ve described could best be described as a situation where President Obama displays the willingness and ability to “lead”, Margaret.
Hmmm…
They can put all the stimulus they want,it would only be a short term fix.
Unless we are manufacturing stuff here in America & not in China,we are chasing our tails.
Almost all the stimulus dollars that create jobs here is going to purchase stuff from China.
Letter from the White House
So, here we have it:
“In recent weeks, I have also proposed additional measures to discipline the budget process with expedited rescission, agency incentives to identify ways to save money, and a process to better use our federal property and sell off the property we do not need.”
Here we go, more privatization of public assets.
I’d like to get out of the job market altogether and leave room for young supporters of families to work. After 30 years of meaningless low paying work, I’m dog tired and physically damaged, but too young to retire. The one job I had in all that time which included a health care and a pension plan disabled me before I was vested. I’m not disabled enough to qualify for disability support, but too disabled to do most jobs or work without stultifying pain. tricky.
I don’t think our Information Society requires many workers. I do think that’s why the development and incorporation of well-paying jobs in a new green energy and infrastructure/transportation/ and ecological manufacturing paradigm seems so promising to many. American Made earned its excellent reputation. We can do it cleanly and conscientiously now that we know and understand more about our impacts on our habitat. Education and health care could produce numerous jobs by the end of the year with proper funding and policies.
I feel like we’ve stalled for some reason. Every resolution to our national problems includes enormous job creation, yet Congress can’t decide what to do? I don’t get it.
Yes. There’s a paucity of comprehension, honesty, and vision. Yikes, makes me think of the movie “Idiocracy”!
A billion here, a billion there and sooner or later your talking about big money…A.Greenspan. The Federal government is broke and many states are on the brink of bankruptcy. This is nothing other than deficit spending by creating more worthless dollars we don’t don’t have. You can only cook the books so long. No inflation? Bull. All you have to do is look at the price of gold which is the true barometer of inflation. It is the hidden taxes that government never discusses like those taken by the fed’s and states for every gallon of gas, diesel and natural gas we use. It’s higher fees for this and that, higher tuition bills and medical costs along with food.
The game is over Mr. President. Your lenders have cut you off and now you truly are head of the largest debtor nation on earth with no place to go except raising taxes after the November elections. Game, set match.
As long as the “revenues” are captured from the taxpayer and the “royalties/revenues” are hoarded by the industries and banks gambling crowd, what else would you suggest? My grocer still uses dollars and cents price markings.
Looks like we’re the only ones here so I’ll submit to you that much of these taxes could be used more efficiently and effectively if managing a nation was the goal, and there’s a whole revenue generator such as derivatives and ridiculous wealth which gets the hands-off treatment. I think the past and current “goal” is in direct conflict with the proper management of a nation’s (group) wealth.
Not Alan Greenspan, actually, but Everett Dirksen.
Bull yourself. Gold doesn’t necessarily link to inflation. Track the price of gold against the CPI for the past 50 years.
The notion that lenders have cut off the U.S. government is even more easily refuted. The cost of borrowing for the U.S. Treasury is at a historical low from overnight rates out to 30 years. Before lenders cut the U.S. off they will demand much higher interest rates to loan the government money.
Your comment seemed like it may have been sarcastic, but nonetheless… it goes spend then tax; not tax then spend. That’s the way modern money works. Since the break from asset/commodity backed currencies the “value” is wrapped up in the productive capacity of the state that issues the currency. They don’t have to collect reserves of physical things (like Dollars) in order to make more of them.
The the cycle was tax then spend, we’d never have money in the first place, because the government never would have “spent” it to put it out in the market to tax later.
How in the world is Gold a barometer of inflation? It’s just a single commodity that has price variations for all manner of reasons. Speculation, artificial supply constriction, mass irrationality, etc.
Furthermore, you can keep creating money without inflation as long as one of two conditions hold. The nation remains in a liquidity trap (wherein the banking system is so insolvent, that all the money you create is devoured by their debts) or there’s significant slack between actual production and productive capacity. We have both.
Sorry you sensed sarcasm, Nathan…
But anyway, I was so impressed with your summation of the tax/spend, spend/tax relationship…
Could you similarly address the chicken/egg, egg/chicken conundrum?
That’s the one I really struggle with…
It might make some kind of sense if the House hadn’t taken all that money and put it into the Afghan war.(I watched them do it)
As it is, they play with people’s lives as if they enjoy it.
Scarecrow is upstairs!
Lessons in Accountability: Escrow Accounts for BP, Bailouts for Wall Street
You got that right-You can give a dead man a transfusion as many times as you like but it won’t make him rise. The economy is fucked from 30 years of outsourcing the manufacturing might of our country.The only way to right this country is for people to take it back. Like the labor wars of the 20′s and 30′s,people are gonna have to take some lumps doing it.
Marcy Wheeler is upstairs!
NYT, Republican Opposition Rag
The reason the last stimulus didn’t work is, because He passed that money out to the States and all his Budds.
FIFTY Billion Dollars actually spent creating jobs would help the country.