Our country has faced a terrible economic crisis in the past two years. I would like to talk to you about the great recession, the federal stimulus and what the future holds for us, our families and our communities.
It is important to remember how the recession started and what it did to all of us. Investment bankers triggered the great recession playing mortgage monopoly with our investments and pension money. The game exploded and we are all paying the price.
How many people lost pension money?? How many people have a mortgage that is underwater? How many people know someone who lost their job? This recession was the worst since 1929 and we are still trying to clean off the effects. 8.4 million jobs were lost Every salesperson, secretary and nurse in US gets a pink slip Pension funds dropped a trillion dollars in value Enough to purchase ExxonMobil, Microsoft, Wal-Mart and General Electric
The recession hit the private and public sectors. When people lose their jobs – they don’t pay income tax. When the job market is tanking, people stop buying anything but necessities and sales tax revenue drops like a rock. When the real estate bubble burst – property tax revenue goes down. When these revenues shrink – state and local government lose the capacity to pay for crucial services.
In February, 2009 the President worked with Congress to pass the American Recovery and Reinvestment Act – the stimulus bill. This legislation allowed the federal government to invest $800 billion in states for 2009-2010 to prevent a complete collapse of the economy. Over one third went straight to Americans pocketbooks through tax cuts and direct financial aid. Billions went to prop up vital infrastructure and services that allow communities to function and prepare for recovery.
There has been a lot of frustration that the Recovery Act/stimulus did not solve the unemployment problem. There was significant opposition to the Recovery Act in Congress which resulted in less funding than was really needed to create new jobs. The stimulus protected communities from falling apart– like sandbags in a flood. This massive investment was a preventive strategy – which worked.
The Recovery Act/stimulus stopped the job loss from getting worse. Looking at this chart, you can see the job loss numbers growing from 2007 to the beginning of 2009. After the recovery Act in February 2009, the job loss rate starts to get smaller and we are beginning to see hiring in mid-2010.
The Recovery Act is bringing Wisconsin over $13 billion during the two year period – 2009-2010. A huge portion of that is through tax cuts to individuals and families. Many people didn’t notice this because the money was spread throughout the two years by reducing the federal payroll taxes. This was designed to increase spending. The child deduction amount went up as did credits for college, conservation and major purchases- homes, cars, etc
There are thousands of stories about how the stimulus helped individuals, families and businesses. The Recovery Act touched everyone – workers, unemployed, poor people, business owners and public sector employees. More than that, the funds protected communities by making sure that vital programs and services continued. Without good roads, safe airports and effective schools – there is no way to grow the economy for a prosperous future.
State budget problems are serious this year but they will be much worse next year unless the federal Government extends aid to the states. This is likely to be a very SLOW RECOVERY – HOUSING PRICES are not recovering in most places, consumer debt still high, half the American public says they are worried about their job -- Property taxes remain low and with 10% unemployment, STATE INCOME TAX REVENUES are still DOWN. Nationally, states are looking at a $300 billion deficit in 2011-2012. Federal help is desperately needed.
The state collects revenue and distributes these funds to cities, counties, schools, colleges and state programs to cover their costs of operation. This includes the contracts with thousands of privates businesses that produce and install materials and equipment into our public structures. When the state runs out of money, the entire state economy is damaged.
The Tea Party has made a big splash calling for cuts in taxes so people and businesses have more money. If these protesters had their way – there would be no street, sidewalks, electrical power, traffic safety system. Many Americans take the public structures for granted and forget that it costs money to maintain communities in the same way it costs money to watch cable TV or operate computers.
Many people are also in denial that we could lose our public structures but it is already happening. In Colorado Springs, Colorado where the TABOR laws have starved state government for ten years, the city ran out of money for basic services. The city held a local tax referendum to raise enough money to maintain operations but people voted no. Life has changed in Colorado Springs. READ THE STORY!!!!
Public sector employees know how important their work is for people across the state. It is crucial that union members talk about this issue with family and friends to make sure everyone knows what is at stake. It is also vital that people speak out to federal representatives.
The private sector economy is dependent on state and local governments – especially outstate where cities, counties, schools, colleges, prisons and other institutions are the prime employer and purchaser of goods. If the public sector institutions stop building, repairing and buying – everyone loses money.
The Recovery Act injected hundreds of millions of dollars into programs that serve the elderly including Medicaid and local services providing food, housing, jobs and support for people over 65.
The Recovery Act was family friendly legislation that kept day care centers open, provided tax breaks for children and education, helped schools protect programs, provided low-interest college loans and supported services for persons with disabilities from early childhood to old age.