c/o Public Citizens for Children and Youth

Seven Benjamin Franklin Parkway

Philadelphia, Pa  19103

 

Senator Robert Casey                                        Senator Arlen Specter

Washington, DC 20510                                      Washington, DC 20510

VIA FACSIMILE                                             VIA FACSIMILE

 

 

Dear Senators Specter and Casey:

 

We urge your immediate leadership to improve upon the economic stimulus plan brokered between leaders in the U.S. House and President Bush. 

 

This initial plan is quite worthy with regard to its inclusion of rebate relief for low and moderate income families and we support these provisions. 

 

The rebate provisions meet this test by assuring that millions of families, including those who earned at least $3,000 in 2007, will receive at least a partial rebate check even if they have no positive tax liability.  Pennsylvania families can be expected to allocate these rebate dollars not for luxuries but rather the boost in the family check book will help put food on the table, fuel in the family car, and to mitigate rising interest rates on home mortgages and ballooning health care costs.

 

We, the undersigned, are concerned that the stimulus package is lacking in several key areas. The absence of extended unemployment insurance (UI) and increased Food Stamp benefits minimizes the plan’s impact to stimulate the economy and help families deal with the economic slowdown . 

 

Economists project that for every $1 increase in Unemployment Insurance (UI) there would be $1.64 infused into the economy.  Increases in Food Stamp benefits would provide a tremendous return on investment as well:  $1.73 for every dollar. Comparatively, for every dollar spent in bonus depreciation benefits for business triggers just $.27 for the economy. 

 

Unfortunately, the U.S. House plan has ignored such projections as well as the guidance of the Federal Reserve Chairman and the Director of the Congressional Budget Office (CBO).  Both have indicated that “policies aimed at lower-income households tend to have greater stimulative effects.” 

 

Therefore, we urge your leadership to ensure that the Senate advances stimulus legislation that does the following:

 

• Extends Unemployment Insurance (UI) assuring that Pennsylvania families that have exhausted their twenty-six weeks of UI benefits will not face an abrupt end to benefits at a time that unemployment is projected to rise.  In 2007, the number of Pennsylvania workers left jobless as a result of large-scale business cutbacks placed the Commonwealth among the five highest in the nation with 108,128 Pennsylvanians impacted. Furthermore, in December an additional 32,000 Pennsylvanians joined the ranks of the unemployed.

 

• Increases food stamp benefits assuring that families will be better able to put food on their table and make food purchases that will support jobs at local businesses.  Last fall, the USDA reported that hunger was an unfortunate factor in more than 162,000 Pennsylvania households. This is a 14 percent increase over the previous year and the largest total recorded for Pennsylvania since the USDA began collecting food security data in 1995.  CBO reported last week that nearly all benefits went to the “87 percent of food stamp households that were in poverty and over half of all benefits went to the 39 percent of food stamp households whose income was less than or equal to half of the poverty line.”  CBO also noted that food stamps are “spent extremely rapidly.”

 

Also, we can not overlook that a credible stimulus package must better insulate state and local government budgets against tough economic realities.

 

A sluggish economy generally results in greater demand for government services.  For example, we can expect greater demand for health care services from programs including Medicaid and SCHIP.  Without fiscal relief for the states, Pennsylvanians access to health care and other services may be jeopardized.  Given the complexities and fiscal insecurities states are facing, we urge inclusion of the following in a final stimulus plan:

 

·        Increase the share of Medicaid paid by the federal government (the FMAP, or federal Medicaid matching percentage) temporarily and link states’ ability to receive the enhanced FMAP to a condition that they not reduce Medicaid eligibility.

• Provide states with a flexible block grant based on population to insulate the states against continued effects of a sluggish economy and an unprecedented housing crisis.

 

An effective stimulus plan must be timely, temporary and targeted.  The current stimulus plan is a step in the right direction, however, more must be done to help ensure that the economy is stimulated and the residents of the Commonwealth, particularly those of moderate means who are most likely to be impacted, can ride out the economic storm. 

 

We thank you, in advance, for your continued leadership for Pennsylvania’s children, families and communities. 

 

Sincerely,