11 January 2011

The Verdict Is In: Stimulus Funding Kept Rising Poverty at Bay

If there was ever any doubt that the American Recovery and Reinvestment Act (ARRA) had a positive impact on the economy and those facing grave economic insecurity, a new report indicates that those doubts can now officially be put to rest.

Recent analysis of data from the US Census Bureau shows that thanks to the temporary expansion of our social safety net under ARRA, more than 4.5 million people were kept out of poverty in 2009 -- making ARRA, "one of the single most effective pieces of antipoverty legislation in decades," according to the Center on Budget and Policy Priorities.

For those who struggled most profoundly through this economic crisis -- including women and people of color, who were disproportionately affected by the tanking economy -- we now know these funds irrefutably made a difference, putting more money in the pockets of everyday Americans to keep them above the poverty line and providing vital connections to much needed social services and work supports (think child care, early education, health care and the like). But despite the major wins that ARRA achieved, its effects may end up being short-lived -- thanks to the "natural" expiry of ARRA funds and Conservative efforts to block spending on these important services going forward.

You may remember that in December, Congress rejected an omnibus appropriations bill that would have preserved funding at near ARRA levels for programs like childcare and early Head Start. As a result, tens of thousands of low-income children previously covered by these programs will soon have no place to turn, and their parents will no longer have a safe, affordable place to leave them while they work -- putting the economic security of thousands of families at risk. Many other vital services -- including health care and other critical benefits -- are now also in jeopardy, and millions more people may be forced into poverty as a result.

CBPP's analysis found that ARRA funds played a critical role in keeping US poverty figures essentially flat in 2009 -- a major accomplishment given the deep recession and "very high" unemployment figures nationwide (in 2008, before the Act was put in place, poverty rose from 13.2 percent to 14.3, by comparison). Though ARRA is only one piece of the broader safety net offering protections to struggling individuals, families and communities, the funds have clearly made their mark in offsetting economic contraction. By CBPP's calculations, ARRA funds impacted:
  • 1.3 million people through extensions and expansions of federal unemployment benefits;
  • 1.5 million people through improvements in the Child Tax Credit and Earned Income Tax Credit;
  • nearly 1 million people through the law’s new Making Work Pay tax credit; and
  • 700,000 people through an increase in benefit levels for the SNAP program (previously called food stamps).
Remember: those aren't just numbers. They are real people -- many of them women and people of color -- who were given the opportunity to put food on the table, pay their bills, look for work, and, yes, stimulate the economy as a direct result of ARRA funding. Not to mention the many organizations that were able to turn stimulus money into better opportunities for all kinds of people. For example, in Connecticut, Ms. Foundation grantee All Our Kin used ARRA funding from the Department of Social Services to train 20 local communities in the use of CT's Infant/Toddler Guidelines, which seek to improve the quality of child care in the state. Because of that grant, each community will now be able to deliver coaching and consultation services to 20 local providers, predominately women -- for a total of 400 family child care providers trained statewide.

Stories like those make the fact that these funds are now drying up all the more catastrophic. It's true enough that ARRA funds were always conceived of as a temporary measure: they were a one-time, $787 billion injection of cash into the economy, intended to create jobs, spur economic growth, and expire on September 30, 2010. But it is also true that government leaders had an opportunity, back in December, to learn from the successes of ARRA and refuse to turn their backs on the thousands of families helped along by the government's investment in them; they had an opportunity to find ways to stimulate economic growth by investing not just in business and big earners (see Bush tax cuts), but also in the so called "little people" people who actually make our economy work.

Astonishingly, at least in the case of the omnibus bill, they chose very pointedly not to do that -- and the burden of that decision will fall, disastrously enough, right on the backs of America's working families.

It's not yet clear how states and the federal government plan to fill these gaps in funding, but what's certain is that allowing women and families to fall between the cracks on this one cannot be the solution. Knowing that the ARRA funds had a real and positive impact on capping poverty should be enough to convince us that what we need is more, not less, investment in the well-being of all people in the US to get our economy back on track. Whether our political leaders can now find a way to come together and make that happen is another question entirely.

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