Americans are engaged in vigorous debate about the size and role of government, from health care reform to rebooting our distressed economy. One side opposes federal investment in job creation as “big government” and advocates a return to the failed policies of tax cuts for the wealthy and lax regulation that created the current economic crisis. It is incumbent on those who believe in government as a positive tool for change to demonstrate how it actually makes people’s lives better.
Before Social Security and Medicare, most American seniors lived in abject poverty without quality, affordable health care. Before the Clean Air and Clean Water Acts, pollution menaced public health, poisoned fish and wildlife and diminished recreation opportunities. Research and development conducted by the National Institutes of Health, the Centers for Disease Control and Prevention and other federally funded programs and institutions have resulted in longer, healthier and more productive lives for millions of Americans. Without Veterans Affairs, our armed forces would not receive the health care they deserve, the educational opportunities they have earned and the support owed by a grateful nation.
We’ve recently seen how deregulation and weak enforcement yielded unsafe cars, food and toys and the near cataclysmic collapse of our banking and real estate sectors.
Dr. Lawrence Mishel of the progressive Economic Policy Institute spoke at the Maine Center for Economic Policy’s 2010 tax and budget conference. He notes that in the period after World War II through the 1970s the typical American worker’s income grew along with productivity. But under the prevailing economic policies of the last 30 years, incomes barely grew, despite continued, vigorous productivity increases. In fact, during the last recovery from 2002 to 2007, the hourly compensation of people with a high school diploma or a college degree did not grow at all, even as overall productivity skyrocketed.
“That’s the mess our economic policies over this period created,” Mishel concludes.
Mishel points to even more distressing impacts from this steep decline. Between 2008 and 2011, average income for low-income families will drop by $1,160, a 7.2 percent decline, and middle-income families will lose $3,460 or 5.6 percent of their income each year. In 2007, 18 percent of America’s children lived below the official poverty level, in 2010 that number had soared to 27 percent.
“Some people seem to believe that when you reach 10 percent unemployment, 90 percent of people are OK,” Mishel adds. “That’s just not true.”
In 2008, Americans voted overwhelmingly for change. With the 2009 American Recovery and Reinvestment Act, Congress and the president began to chart a new economic course. But we cannot turn a vessel as large and unwieldy as our nation’s economy around in a matter of days, weeks or months.
ARRA stopped the downward economic spiral by boosting consumer and government spending and pumping money into the economy at a time when sustaining demand is the crucial problem. It preserved or created more than 750,000 jobs, including 10,000 here in Maine. But just restoring all of the jobs lost since the recession began will require even more robust government action.
In a Feb. 25 Politico column, Mishel and David Walker, CEO of the conservative Peter G. Peterson Foundation, argue that “today’s high deficits will have to go even higher to help address unemployment.”
These ideological opposites agree on specific steps needed: extension of unemployment insurance and other benefits for laid-off workers searching for a new job; budget relief for state and local governments; increased public investment in infrastructure; and a jobs creation tax credit.
“Public spending can help compensate for the fall in private spending, and help stem the pain of substantial job losses,” Mishel and Walker add.
Congress has taken some halting steps toward these objectives, but our nation’s economic health depends on swift passage of all of these measures.
Christopher St. John is executive director of the Maine Center for Economic Policy. Lawrence Mishel is author of “The Great Recession: Getting Back to Work,” for the series MECEP Choices, available online at www.mecep.org.