Carl Levin: Stimulating Michigan’s Economy

January 25, 2008 -- "The latest rounds of buyout offers for autoworkers are only the most recent sign that Michigan’s economy needs an active administration in Washington that will fight for American jobs. For too long, the federal government has stood idle as Michigan’s unemployment rate has soared, three million manufacturing jobs have been lost, and working families have felt the squeeze of rising costs of energy, health care and food.

Now it appears that the economic downturn is spreading across the nation. For the first time since the 2001 recession, Congress and the President are moving on short-term measures to boost the economy, including some form of tax rebate designed to put money in the hands of consumers who will spend it and fuel growth and jobs. Michigan citizens can benefit from the immediate economic stimulus that is under consideration, but our state needs more than just this kind of short-term infusion.

There are several things that Washington needs to do for states with a large manufacturing sector to get back on track. First, we can strengthen safety net programs, especially unemployment insurance. Second, we can protect families from losing their homes by taking steps to help at-risk homeowners. And third, we can target federal spending on infrastructure, advanced technology and redevelopment projects that will create jobs.

Safety net programs, including unemployment insurance, home heating assistance and food stamps, play a critical role even in good economic times. When the economy is struggling, hard working citizens who lose their jobs and can’t afford basic necessities like food and heat require additional protections. Investing in the safety net will also channel money to people who will spend it immediately because they have no cash to spare, benefiting local economies very quickly through increased consumer spending.

After losing 400,000 jobs in recent years, Michigan has the highest unemployment rate in the nation. About 145,000 Michigan residents have exhausted their unemployment benefits and can’t find jobs. Between now and June, 72,000 more people will face the same difficult situation. I have cosponsored a bill that would extend unemployment insurance by 20 weeks for all states and add an additional 13 weeks for high unemployment states like Michigan. This bill would also add $50 a week to unemployment benefits. Extending unemployment insurance during times of recession is nothing new. In the past 30 years, the Congress has acted three times to establish temporary extended unemployment benefits, each time during a recession. Studies indicate that extending unemployment insurance during tough times provides the best return of economic benefits compared to other stimulus options, and this money can be distributed within weeks. Extending unemployment insurance is essential to provide much-needed support to those who have lost their jobs and are struggling to re-enter the job market.

Even families who have held on to their jobs are falling victim to increasing prices of energy and other goods. I have proposed to fully fund the Low Income Home Energy Assistance Program so that no Michigan family has to choose between putting food on the table and paying their energy bill. Additionally, we can help struggling families and spur consumer spending by increasing the food stamp benefit, which has not come close to keeping up with inflation.

We also need to confront housing foreclosures. More than 89,000 Michigan home loans are currently in foreclosure and over 40,000 subprime loans have scheduled rate increases this year. Many families are at risk of losing their homes, with devastating consequences. Beyond the personal impact, rampant foreclosures can decimate communities. I support providing federal assistance, such as block grants or tax-free bonds, so that state and local agencies can help homeowners affordably refinance. These steps can prevent further deepening of the foreclosure crisis, keep families in their homes, and protect neighborhoods from blight, which results from large numbers of vacant houses.

Our long-term economic growth requires investments by the federal government to create jobs and help our businesses grow and compete. Infrastructure and advanced technology should be our top priorities. Businesses that are successful are more inclined to hire new workers and expand. In Michigan, we know that success for many of our industries requires good roads, safe bridges, and harbors that are dredged to promote dependable shipping. Immediate federal spending on infrastructure and dredging projects can put people to work and lay the foundation for future growth.

Investments in advanced technology can have similar long-term benefits. For example, developing the next-generation advanced batteries for hybrid cars could lead to enormous growth of our auto industry. I have proposed public-private partnerships for research and development of a host of technologies that offer much potential for job-creation.

No state is struggling more than Michigan in this tough economy. Michigan families and workers deserve action from the federal government to address short-term and long-term economic challenges. A strong short-term stimulus package should be the first order of business in Washington, and Congress and the President need to act quickly on a bipartisan basis."

Source: Senator Carl Levin

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