The Economic Crisis: Where Do We Go From Here?

By Pete Stark

I recently held an economic forum in San Leandro to hear from people in our community about how the financial crisis is affecting us here at home. There was a common thread: worry that not enough is being done to help middle-class Americans, and that the Bush Administration is ill equipped to heal our economy. I share these concerns. I look forward to a new administration and a new Congress that can change our country’s course.

First, government can help. “Spending” isn’t a bad word when it means investing in our own economy. Now is the time to investment in programs that will stimulate our economy. Funding infrastructure improvements like roads, bridges, and public transportation is a solid first step. This fall, the House passed an economic stimulus bill that included $12.8 billion for aging highways and bridges; $5 billion to improve flood protection, navigation, and hydropower; $3 billion to repair crumbling schools; $7.5 billion for drinking water and sewer projects; and $3.6 billion to expand public transportation. Funding these programs helps existing industries, provides new jobs, and creates resources for our struggling communities.

We also need to help people placed in financial peril by the recession. It is vital that we extend unemployment payments for workers who have exhausted the regular 20-week benefit. This is a quick way to stimulate the economy as these workers will immediately spend their unemployment check on the cost of daily living. It is only humane to increase funding for food stamps to address rising food costs for seniors, people with disabilities, and very poor families.

We should temporarily increase the Federal Medical Assistance Percentage (FMAP) for Medicaid health costs. As people lose their jobs, they turn to public programs for help. Medicaid is a federal-state partnership. The failing economy makes more families eligible for Medicaid at the very time states can least afford the increased bill. Temporarily increasing the federal portion of state Medicaid budgets would directly inject funds to our states – and help protect the health of poor children who depend on Medicaid.

We must also assist homeowners. California currently leads the nation in foreclosure rates, and homeowners in our state have seen their home values fall 34 percent in the past year. I opposed the initial $700 billion bailout bill because it included nothing for homeowners. American families must not be ignored in favor of big industry. That means requiring any financial institution that accepts federal money to work with borrowers to write down principal amounts or adjust monthly payments. We should also change our bankruptcy laws to allow judges to adjust mortgage amounts in a bankruptcy settlement.

These actions won’t be cheap, but they are needed. We’ve approaching a trillion dollars spent in Iraq. Now that Iraq has a $79 billion surplus, we should withdraw our troops and turn our focus – and our investments – homeward."