TheLoop21.com

By: Algernon Austin (Add to your loop)
Thu, 01/22/2009 - 16:40

Obama's stimulus plan is good, but we've got ideas to make it better.

President Barack Obama’s American Recovery and Reinvestment Plan is a good one that will create jobs at a time when America is going through one of the worst recessions in many decades. Some analysts worry, however, that the plan is not big enough given how bad this recession is. The last two recessions lasted eight months. This one is already a year old — and it is not over yet. The country has lost 2.6 million jobs, and the rate of job losses has been accelerating. These are very bad economic times.

How much worse could it get? If there is no federal stimulus, the national unemployment rate could go as high as 10.2 percent. That amount translates to about 18.2 percent for blacks and 55.7 percent for black teens, according to estimates produced by my organization, the Economic Policy Institute. The black foreclosure rate is already high and about three times the white rate. As more people lose their jobs, foreclosures will continue to increase.

These economic conditions call for massive federal investment in the economy. Thankfully, Obama is aware of this fact. But there is some debate as to whether his plan will make a big enough dent in the expected job losses.

What else could Obama do to stimulate the economy? What projects could he add to increase the size of the plan? Obama’s economic advisers admit that the tax cuts provide the weakest job-creating effects in the package. So, one could also ask, what proposals could he substitute for some of the tax cuts? By substituting, the plan could be improved without any increase in spending.

Public transportation

Dean Baker of the Center for Economic and Political Research has some good ideas, like increasing federal aid for public transportation. This policy would benefit average working people who use mass transit and save energy and the environment.

Early childhood education

It is great that Obama has promised $10 billion dollars for early childhood education. High-quality early childhood education leads to higher educational achievement, higher employment and earnings, and lower likelihoods of negative outcomes like being involved in crime. Black communities would benefit a great deal from this investment since blacks on average have below average educational achievement and higher than average crime rates.

Obama could go a great deal further in his early childhood investments, however. The National Institute for Early Education Research called for a $20 billion investment in early childhood education, twice as much as Obama promises. For about $70 billion we could ensure that all children have access to quality preschool. A bigger and better stimulus package could be created with increased early childhood investments.

Jobs for poor minority communities

For the nearly 40 years that the black unemployment rate has been precisely tracked, it has been about twice the white unemployment rate. This disparity has been present in the good economic times and the bad. In 2000, when the black unemployment rate reached the historic low of 7.6 percent, the white unemployment rate was 3.5 percent. When the black unemployment rate reached a historic high of 19.5 percent in 1983, the white unemployment rate was 8.4 percent.

The need for a big economic stimulus creates an opportunity for the federal government to develop policies to bring the black unemployment rate down to the white rate. In addition to the general stimulus, investments could be targeted to reach the poorest minority communities. There could be pre-apprenticeship and apprenticeship positions for blacks and other racial and ethnic minorities connected to the jobs created in occupations with expected future job growth. These policies would provide work for the most disadvantaged groups and put them on a path to a good career and out of poverty.

The Obama plan is good, but it could be better. More investments in public transportation, early childhood education and in poor minority communities would make it so.

Hear Algernon Austin talk about his book, Getting It Wrong: How Black Public Intellectuals Are Failing Black America, in a podcast with The Loop's Marvin King.

Algernon Austin is director of the Race, Ethnicity and the Economy program at the Economic Policy Institute in Washington, D.C.

Should Obama put a moratorium on off-shore drilling leases?

Absolutely

Maybe, until the oil is cleaned up

No, but regulations should tighten

No, we need the oil production

I don't know