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Rebuilding the Economy from the Bottom Up

SOURCE: AP/Pablo Martinez Monsivais

President Barack Obama delivers a statement on his budget that he sent to Congress on February 1, 2010, in the Grand Foyer of the White House in Washington. The president’s budget request to Congress is a strong down payment on an agenda that invests in workers who want to participate in the economic recovery and families who aspire to join the middle class.

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The Half in Ten Campaign believes that any strategy to cut the U.S. poverty rate in half over the next 10 years must be based on four fundamental principles: promoting decent work, ensuring economic security, providing opportunity for all, and helping people build wealth. The president’s budget released earlier this week reflects those same principles by laying out an agenda for job creation, investing in income and work supports even in the context of a discretionary spending freeze, offering an education and workforce agenda that promotes opportunity, and championing policies that will allow Americans to save and build for the future. Half in Ten urges Congress to pass a budget resolution that adopts and builds on these investments with special emphasis on job creation for low-income and minority communities.

Here’s a closer look at how the president’s budget request matches up with Half in Ten’s principles.

Promoting decent work

The president rightly places a high priority on job creation in this budget, allocating nearly $100 billion to strategies that get Americans back to work in sectors such as clean energy, infrastructure, and small business. The president also includes funding for strategies that will help tackle the disproportionate unemployment rates and related hardships in low-income communities.

Double-digit unemployment rates and projections of a slow recovery in the labor market, however, underscore the need for a jobs package of a larger scale and scope. Similarly, disproportionate jobless rates among low-income and minority communities call for a more targeted approach to job creation. Temporary spending to spur job growth today will lay the ground for longer-term economic prosperity and deficit reduction.

That being said, there is much to like about the president’s jobs agenda. He invests in strategies to directly create jobs for vulnerable populations, providing helpful funding for transitional jobs and increased funding for youth employment programs. The budget also makes a considerable investment in Workforce Investment Act policies designed to help low- and moderate-income Americans prepare for decent-wage jobs in high-growth fields in the future.

The budget embraces extended use of the Temporary Assistance for Needy Families Emergency Fund as well, calling for an additional $2.5 billion in fiscal year 2011. This policy represents an incredibly efficient way to create jobs directly because it can be used to fully reimburse states for creating subsidized employment opportunities for low-income families.

The president should also be applauded for requesting a $244 million boost in funding for national service programs, a policy that will offer opportunities for youth to enter the labor market and will provide needed volunteers to nonprofit organizations struggling to respond to growing need with shrinking resources.

Finally, the president’s budget proposes to save hundreds of thousands of jobs through aid to states and extensions of unemployment and health benefits. The budget includes approximately $25 billion for state fiscal relief—specifically for helping states with their Medicaid costs. This funding preserves decent-wage, public-sector jobs and prevents cuts in critical services that are helping vulnerable populations weather this recession. The budget also includes provisions for extended unemployment benefits and health subsidies for jobless workers. This investment both prevents jobless workers from slipping into poverty and puts money in the hands of people most likely to spend it, thereby boosting economic demand and creating and saving jobs in the private sector.

Half in Ten praises the president’s emphasis on job creation and his inclusion of policies to foster employment in low-income communities. We urge Congress to pass a budget resolution that builds on these commitments with additional investments in aid to states and direct job creation as well as targeting funds to ensure that people in communities hit hardest in the recession have the opportunity to access some of the jobs created in the clean-energy, infrastructure, and small business sectors.

Ensuring economic security

The president’s budget invests in creating jobs while recognizing that Americans should be able to live with dignity when they cannot work or work is unavailable, unstable, or pays too little to make ends meet. This commitment is evident by the fact that the president’s budget makes room for important investments in income and work supports in the context of an overall discretionary spending freeze.

One of the most important initiatives of the president’s budget for working families is that he asks Congress to make permanent the American Recovery and Reinvestment Act’s improvements to the Earned Income Tax Credit and Child Tax Credit. Making these provisions permanent provides a three-fold return on investment: It puts money in the pockets of people most likely to spend it, thereby stimulating the economy; it “makes work pay” for millions of low-wage employees; and it lift millions of children out of poverty.

The president also reaffirms his commitment to ending child hunger by calling for $1 billion a year in new investments for child nutrition programs while fully funding the Women, Infants, and Children program that provides nutritious food packages to pregnant and nursing women and young children. And the budget sets forth an innovative legislative proposal, The Healthy Food Financing Initiative, to help bring grocery stores to “food deserts” or communities with little access to nutritious and affordable food.

Finally, the budget includes an innovative $500 million Fatherhood, Marriage, and Families Innovation Fund to encourage states to develop effective programs to promote responsible fatherhood and to improve services for single parents who face barriers to achieving self-sufficiency.

Providing opportunity for all

This budget acknowledges that even though we must tackle immediate needs, we must also invest in long-term economic growth by emphasizing education and workforce development. The president recognizes that “In the 21st century, the best antipoverty program around is a world-class education” and asks for a 6.2 percent increase in the budget for the Department of Education. This funding would help improve teacher quality, enhance afterschool enrichment programs, provide higher Pell grants for low- and moderate-income students struggling to pay for college, and invest in community colleges, among other things.

The president makes a historic commitment to childcare and early childhood education in this budget, too. The budget requests that the investments made in the American Recovery and Reinvestment Act for the Head Start and Early Head Start education programs be extended, which would allow an additional 64,000 children and families to be served. The president also requests an additional $1.6 billion in expanded funding for child care, which would allow states to provide subsidies to 235,000 more children than they could have otherwise. These investments create new jobs for childcare and Head Start workers, help low-income parents maintain steady employment, and provide an enriching environment for low-income children so that they are more on pace with their higher-income peers when they enter school.

Helping people build wealth

Last but not least, the president’s budget includes several provisions designed to build assets for long-term economic prosperity. As a cross-cutting initiative the president proposes asset-test reform so that families don’t have to spend down all of their assets before qualifying for services they need in tough economic times. The president proposes that families should be allowed to keep at least $10,000 in assets before losing eligibility for means-tested programs.

The president also proposes a large-scale initiative to increase retirement savings for low- and moderate-income families. Under this program employers who do not offer a retirement plan could automatically enroll their employees in a direct-deposit IRA plan, and employers who do offer such plans would be able to enroll their workers more easily. The plan would also provide incentives for low- and moderate-income Americans to save for retirement by providing a larger saver’s tax credit.

Conclusion

The president’s budget is more than numbers on a ledger—it is statement of priorities. And judging by this administration’s budget request to Congress, the president places high priority on laying the groundwork for a shared economic recovery and helping families hit the hardest in this recession get back on their feet.

We see the president’s commitment in his investments in the types of programs that reflect the four Half in Ten principles for cutting poverty in half in 10 years: decent work, economic security, opportunity for all, and building wealth.

The Half in Ten campaign looks forward to working with Congress to pass a budget resolution that reflects these principles and builds on the president’s request, particularly in the area of increased investments and additional targeting for job creation in economically distressed communities.

In short, the president’s budget request to Congress is a strong down payment on an agenda that invests in workers who want to participate in the economic recovery and families who aspire to join the middle class.

Melissa Boteach is the Half in Ten Manager at American Progress.

 

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