Mobilizing Capital for Individuals and Communities

The Senate struggled to approve a $15 billion jobs bill and has yet to enact additional fiscal relief for the states, but lawmakers continue to approve trillions of dollars for wars and defense appropriations.  In fact, ignoring the almost $1 trillion spent on the Iraq and Afghanistan wars, military spending has grown 41 percent since 1998.  If progressive leaders intend to reduce long-term deficits and ensure a robust economic recovery, cutting inefficient and costly areas of the defense budget should be a top priority.

This Dispatch will emphasize that there is no crisis in most state retirement systems, even according to the numbers of the researchers demanding state leaders take unneeded action to cut the incomes of retirees.  And despite the hype from a few carefully selected anecdotes of retirees gaming pension systems, the reality is that the overwhelming number of public employees receive pretty bare-bones benefits, in some cases not enough even to keep them out of poverty.

In an effort to stimulate local economic growth and free up credit markets, New Mexico Sen. Tim Keller and Rep. Brian Egolf introduced HB66, which would require the state to give preference to community banks and credit unions to manage the state's general fund operating cash depository account.  Currently, Bank of America holds the $1.4 billion account. 

As we described last week in State Job Creation Strategies Part I: Finding the Money and Investing in Human Capital and Physical Infrastructure, competing globally for jobs starts with policy makers instituting fundamental investments in education, human capital and physical infrastructure that make their state a productive environment for economic innovation. The next step, as this Dispatch will describe, is helping the private sector leverage opportunities for job creation and technological innovation. 

As this Dispatch will highlight, the first step is to fund jobs that support long-term economic competitiveness, notably by investing in people and physical infrastructure.  While the economic climate for profit-making business opportunities is more limited, investments in education, health care, transit and energy efficiency can create immediate jobs while strengthening building blocks for long-term growth.

There will be 2.4 million foreclosures in 2009 along with 9 million foreclosures between 2009-2012, according to the Center for Responsible Lending (CRL).  CRL also estimates that 69 million homes will lose property value because of nearby foreclosures for a total property value loss of $502 billion.  As part of our Multi-State Shared Agenda, the Progressive States Network is working with its partners and leading experts to promote reforms to stem the foreclosure crisis and put in place reforms to discourage predatory lending practices in the future. 

Yesterday, the U.S. House Banking Committee defeated amendments that would have gutted provisions in law to restore state powers to protect consumers of national banks.  Instead, the Committee approved compromise language that, while not as expansive in the protection of state legislation as the Obama administration had urged, is still a significant victory overall against large financial interests.  By a vote of 29-38, the committee defeated a proposed amendment by Rep. Jeb Hensarling (R-Texas) that would have preempted all state regulation of national financial institutions.

The context of this call is that, in the wake of the financial meltdown that engulfed the country last year largely caused by fraud and predatory lending, Congress is now debating the Consumer Financial Protection Agency Act (CFPA Act, H 3126). The act would create a consumer product protection agency for financial products analogous to the Consumer Product Safety Board.

As the economic downturn progresses, American workers are facing a disturbing rise in employers using credit ratings to determine job worthiness.  According to a 2006 survey by the Society for Human Resource Management, the number of firms using credit histories to screen applicants rose from 25% in 1998 to 43% despite such inquiries often being discriminatory and even illegal. 

Whether out of circumstance or an emerging trend, where state authority was at issue, this term the U.S. Supreme Court overwhelmingly deferred to state decision makers-- a significant reveral from last year.