Broadcast September 27, 2001
Federal Reserve Chairman Alan Greenspan has told Congress to wait and see what happens before enacting a stimulus package. Congress is heeding his advice. It shouldn't. A stimulus is needed right away.
Even before the September 11th terrorist attack, American consumers were in a deep funk. Personal savings rates were nearing a 70-year low, and debt was at record heights. Jobs were already disappearing. No wonder that, according to the Conference Board survey released this week, September marked the largest one-month drop in consumer confidence since October 1990, and almost all that survey was done before the terrorist attack.
As consumers pull back from spending and the economy falls into recession, the people hurt the most are those likely to lose their jobs first and have no cushion to fall back on. I'm talking about retail store clerks, restaurant workers, janitors, hotel cashiers and other low-wage service workers. It's estimated that more than 100,000 of them in New York City alone have lost or will soon lose their jobs directly as a result of the disaster.
But the jobs of millions more are now jeopardized, not to mention hundreds of thousands of blue-collar jobs now at risk. Most of these lower-wage workers have no health insurance and no savings to fall back on. And America's safety net has gaping holes. Welfare won't be available to many of them. Most won't even qualify for unemployment insurance because they haven't worked long enough in the same job, or they're part-time or contract workers.
Unemployment insurance now covers fewer than 40 percent of job losers. Congress should immediately add $30 billion to the unemployment insurance trust fund and instruct states that they can gain access to it if they widen eligibility during this economic emergency to cover anyone who's lost a job. Next, cut payroll taxes by half, starting now and continuing for 12 calendar months. There's no better way to get additional cash into the hands of lower-wage workers because most pay more payroll tax than income tax.
Finally, restore some funding for people about to be dropped from the welfare rolls. Otherwise, millions of needy Americans face a future with neither jobs nor social aid.
These may not sound like wartime measures, but they are. Not only will they help boost consumer confidence and thus strengthen the economy, they'll also help the people who are hurting the most in this downturn and thereby demonstrate that we're all in this together.