Congress has passed a landmark economic recovery package. We thank Maine’s congressional delegation for the key role it played in securing its passage. Sens. Susan Collins and Olympia Snowe should be commended for, once again, putting partisan loyalties aside and working hard to create policies that they believe are genuinely best for Maine and the nation. Thanks also to Reps. Mike Michaud and Chellie Pingree for their strong support of this legislation that will be critical in helping Maine people weather this economic storm.
Now the focus turns to Augusta and other state capitals to make it work. Their challenge is to make sure that these new dollars get into the economy quickly to get it moving again. But it is greater than that. For this stimulus package to be truly successful, we also must use these new tools to lay the groundwork for a future where our communities are strengthened and prosperity is more widely shared. No small task.
Maine is expected to receive more than a $1 billion for state and local programs and millions more through tax credits for low- and middle-income families. These funds will reach every corner of our economy and touch all of our lives. Nearly 15,000 jobs will be created. While this legislation alone can’t be expected to completely reverse the deep economic crisis we face, there is no doubt that it is a major step forward.
To date the discussion has focused on the first and most urgent challenge — giving our economy the jolt it needs to start moving again. As Congress debated this bill, proposals were measured, accepted or rejected by how effectively they could get money into the hands of people most likely to spend it, and spend it quickly. Wisely, a significant part of the package is targeted to people with low and moderate incomes. We know from experience that these households spend most of their income immediately on things such as rent or mortgage payments, filling their gas tanks to get to work, and buying food at their local grocery store.
As these families spend their new dollars, these funds cycle around in the economy, creating stimulus. In other words, they go to work immediately creating demand for goods and services protecting existing jobs and spurring the creation of new ones. Moody’s economy.com gives the Supplemental Nutrition Assistance Program (formerly the Food Stamp Program) one of the highest marks for creating stimulus as it turns each new $1 spent in the community into $1.73 worth of increased economic activity.
Now we face a second great challenge — one that is equally urgent and one that the economic recovery act can help us address. It is widely recognized that we are living in a time of unprecedented income inequality. Since the late 1980s, Mainers with the highest incomes have seen incomes rise 14 times faster than those at the other end of the income scale. Between 2001 and 2007, average hourly wages for the bottom 30 percent of workers actually declined by almost 3 percent after adjusting for inflation. Children are directly affected by this growing income inequality. In 2007 one in seven Maine children lived in poverty, a higher percentage than five years before in 2003. These are the challenges in front of us today.
The stimulus package gives Maine the tools that can and must be used to protect our neighbors who are living in or near poverty from slipping deeper into economic crisis. Just as the roads and bridges that we will rebuild are essential to our economic growth, investment in our social infrastructure — health care, education and training, child care — is equally important. All of our communities are weakened when the economy loses the productive value that each person could bring if only they had the needed skills, or health care to control a chronic illness or child care to be able to go to work. The stimulus package gives Maine the opportunity to invest in these services; to invest in its people so that we can come out of the other side of this recession ready to succeed. These are the investments that will stabilize our families, our communities and our economy for many years to come.
This is a moment of unparalleled opportunity. As the governor and the Legislature work quickly to turn these new dollars into opportunities for Maine, we hope that they will use them to make investments that will promote widely shared prosperity for all.
Ana Hicks is senior policy analyst at Maine Equal Justice Partners.