Supporting the Poor Stimulates the Economy
by Adam Taylor
Sadly, the debate around the economic recovery and stimulus package has often been characterized by the politics of the past rather than the politics of the future. Ideology too often trumps sound economics and recent experience. In the fight against poverty, the current recession and economic crisis provides one of those rare moments when targeted efforts to lift up low-income Americans also provide the greatest stimulus to the economy. Lower-income Americans are most likely to spend money into the economy, which will help to kick-start greater demand for goods and services. This economic reality seems to have escaped some members of Congress. I would argue that supporting vulnerable Americans would still be necessary and worthwhile for moral reasons, even if it wasnít likely to stimulate the economy. However, this represents one of those rare moments when the moral coincides with the pragmatic and prudent.
It is easy to get lost in the details of a more than $800 billion spending and tax package. It is also difficult to know who to trust and what to believe in the midst of such a whirlwind of conflicting and often misleading information in the media and political realm. I have come to trust the analysis and perspective of the Center on Budget and Policy Priorities on matters related to the economy and the budget. The Center shares our concern and conviction that budgets are moral documents and that the health of our economy is best measured by how the weak and the vulnerable are faring. The Centerís analysis is also disciplined by sound data and by what will produce results. The Centerís Chad Stone provides an excellent summary of the economics behind the American Recovery and Reinvestment Act, arguing:
Contrary to what some critics say, the economic recovery package working its way through Congress by and large is focused on the task at hand, which is to provide a needed boost to an economy that is in the midst of a long and deep recession. Much of the criticism of the package reflects a misunderstanding of how stimulus works and why the measures in the package will be effective as stimulus. Ironically, these misunderstandings create the danger that Congress may cut back effective stimulative measures and replace them with other measures that would make the package less effective.
While acknowledging that the package isnít perfect, he makes a compelling case around why it will create jobs, is focused on the task at hand, should emphasize targeted spending rather than tax cuts, and is temporary with little impact on long-term deficits. The debate reminds me of the warning of Hosea 4:6 that the ďpeople are destroyed for lack of knowledge.Ē
Adam Taylor is senior policy director for Sojourners.