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Federal Recovery Efforts Saved 8.5 Million Jobs, Stopped Depression

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Federal Recovery Efforts Saved 8.5 Million Jobs, Stopped Depression

Progressive Federalism
When big bank speculation crashed the economy, millions were driven into unemployment. But, according to a new study by two leading economists, the combination of the Troubled Asset Relief Program loans to banks, loosening of the money supply, and federal stimulus funds for states and individuals, helped stop a far worse potential full-out Depression that would have left an additional 8.5 million Americans without jobs on top of the 8 million who have lost their jobs since the recession started-- what would have been a nearly doubling of the job loss due to the economic crisis.

NJ Privatization Panel Report Pushes Ideology Rather than Facts

Tax and Budget Reform
Since he took office earlier this year, New Jersey Gov. Chris Christie has waged an ideological war on state employees and programs, and advocated for unsustainable and costly privatization schemes. Even in light of overwhelming public opposition to privatization and the significant pitfalls associated with these types of initiatives, the Governor established a privatization task force by executive order in early April, seeking to identify $50 million in savings.

Wage Theft by Employers Surging in Wage of Arizona’s Anti-Immigrant Law, Even as Judge Blocks Implementation of Key Provisions

Wage Standards and Workplace Freedom
The Arizona Interfaith Alliance for Worker Justice, a worker center in Phoenix, has seen a “huge spike” in wage theft -- violations of minimum wage laws -- since the passage of SB 1070, Arizona’s anti-immigrant law. "Employers are even more brazen in their mistreatment of workers," said Executive Director Trina Zelle in an interview with In These Times. "Increasingly, 'Go ahead, try and make me pay you' is the response workers hear when they confront their employers over unpaid wages."
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Federal Recovery Efforts Saved 8.5 Million Jobs, Stopped Depression

Progressive Federalism * NATHAN NEWMAN

When big bank speculation crashed the economy, millions were driven into unemployment. But, according to a new study by two leading economists, the combination of the Troubled Asset Relief Program (TARP) loans to banks, loosening of the money supply, and federal stimulus funds for states and individuals, helped stop a far worse potential full-out Depression that would have left an additional 8.5 million Americans without jobs on top of the 8 million who have lost their jobs since the recession started-- what would have been a nearly doubling of the job loss due to the economic crisis.

The study was written by the bipartisan team of Alan Blinder, a former Vice-Chair of the Federal Reserve, and Mark Zandi, a former McCain economic advisor and head of Moody Analytics. One thing the authors emphasize is the sheer magnitude of the economic collapse faced by the Obama Administration as it came into office: In early 2009, "Real GDP was falling at about a 6% annual rate, and monthly job losses averaged close to 750,000." While the lost jobs have not been regained, the economy was stabilized and GDP growth of nearly 3% began. As the authors note:

The stimulus has done what it was supposed to do: end the Great Recession and spur recovery. We do not believe it a coincidence that the turn­around from recession to recovery occurred last summer, just as the ARRA [federal stimulus plan] was providing its maximum economic benefit.

To put the cataclysm faced by the Obama administration in perspective, the economists estimate that the direct budgetary costs of the recession plus lost revenue due to the economic collapse added up to $2.35 trillion, or about 16 percent of G.D.P. By comparison, the savings and loan crisis of the 1980s cost only about $350 billion in today’s dollars.

Federal Support of the States Decisive for Economic Stabilization: With state revenues plunging due to the recession, the authors specifically highlight the importance of recovery funds that went to the states to forestall job-destroying budget cuts. The authors emphasize that "[s]tate and local government aid is another especially potent form of stimulus with a large multiplier," creating economic growth for every dollar spent.

Unfortunately, the federal spending for the states mostly just counterbalanced revenue losses at the state level, meaning the federal aid was a "defensive stimulus" that "saves jobs rather than creates them." The federal government needed to commit to a much larger job creation program to really counterbalance the revenue losses at the state level.

TARP Bank Bailout Program More Successful, Less Costly Than Media Hype: One unique aspect of this report is its focus on quantifying the jobs saved by TARP and related programs to restore credit in the financial industry. The authors estimate that "the financial-rescue policies are credited with saving almost 5 million jobs." And while headlines blared that TARP would cost $700 billion, in fact, most of the money spent was in the form of loans and equity investments, part of which have been repaid. In the end, the authors estimate that the TARP program will end up costing taxpayers less than $100 billion.

The economic success of TARP and related programs in saving jobs should not obscure the fact that the money used could have done even more to improve corporate responsibility in the financial industry. Analysts like Dean Baker at the Center on Economic and Policy Research have rightly criticized the fact that companies like Goldman Sachs received billions of financial rescue dollars without being required to restrict executive compensation or take many other actions in the public interest. This all emphasizes the need for both the recently passed financial reform law as well as federal and state revenue increases targetting those who benefited from successful recovery programs to help fund job creation for those who still need help.

A Success Despite Program Limits: Still, as Blinder and Zandi argue, the financial rescue package helped to "restore stability to the financial system and to end the freefall in housing and auto markets" just as the ARRA recovery plan saved jobs throughout the economy. 8.5 million jobs saved is only a start in light of the almost 15 million Americans that still face unemployment, but that success was critical in avoiding a Despression that would have turned a challenging budget and jobs situation into a completely catastrophic one.

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NJ Privatization Panel Report Pushes Ideology Rather than Facts

Tax and Budget Reform * ALTAF RAHAMATULLA

Since he took office earlier this year, New Jersey Gov. Chris Christie has waged an ideological war on state employees and programs, and advocated for unsustainable and costly privatization schemes. Even in light of overwhelming public opposition to privatization and the significant pitfalls associated with these types of initiatives, the Governor established a privatization task force by executive order in early April, seeking to identify $50 million in savings.

The panel, composed of lobbyists, business interests, and pro-privatization advocates, issued its recommendations earlier this month. The report proposes privatizing programs across the board, including toll booth collections, preschools, state parks, prison food services, bus routes, and car emission inspections. However, the report's conclusions unabashedly promote conservative ideological desires in place of hard data or rigorous research. For instance, a recent In The Public Interest article points out:

The report's extravagant cost-saving claims are unsupported by any detailed data (the tables are littered with 'TBD'- cost savings 'to be determined'), and the scarce figures provided raise more questions than they answer... On p.15 the report claims the state can save $3.2 million by privatizing its One Stop Career Centers, then on p. 31 says 'direct state spending' on the program 'is $3.2 million annually.' Are we to believe the private sector will run these centers for free?

The report has been roundly criticized by several sources, from environmental groups to elected officials. New Jersey Senate President Steve Sweeney reflects, "[c]ertainly state government needs to operate in a more cost-effective way, but our history with privatization is dotted with instances where we’ve had to go back and spend more just to clean up mistakes. We cannot rush into privatizing just for privatization’s sake." The state’s troubled history with privatization is well-documented. For instance, the state has dealt with the Motor Vehicles Commission distributing contracts to politically connected vendors in the 1980s, millions of dollars wasted on contractors for vehicle inspections, the imprudent implementation of the E-Z Pass toll system that was fraught with high cost and delays due to private contractors, and currently, the mismanagement of over 200 lease agreements and contracts with private vendors operating on public land.

That privatization continues to move forward despite such a poor track record reflects pure ideology that the private market delivers the most efficient outcomes, even without demonstrable results. As Progressive States Network has previously detailed, legislative action to limit privatization is necessary to safeguard against the loss of accountability and public revenue that these misguided schemes often produce.

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Wage Theft by Employers Surging in Wage of Arizona’s Anti-Immigrant Law, Even as Judge Blocks Implementation of Key Provisions

Wage Standards and Workplace Freedom * SUMAN RAGHUNATHAN

The Arizona Interfaith Alliance for Worker Justice, a worker center in Phoenix, has seen a “huge spike” in wage theft -- violations of minimum wage laws -- since the passage of SB 1070, Arizona’s anti-immigrant law. "Employers are even more brazen in their mistreatment of workers," said Executive Director Trina Zelle in an interview with In These Times. "Increasingly, 'Go ahead, try and make me pay you' is the response workers hear when they confront their employers over unpaid wages."

Workers' rights organizers report that the law's passage in April has already begun to drive immigrant workers even further underground, effectively silencing them in the face of rampant workplace rights violations. The irony is that this makes undocumented immigrants an even more attractive workforce for unscrupulous employers, who know they can illegally underpay them without fear of those employees reporting them or taking them to court. “If we ever hope to bring immigrant workers out of the shadows in which they’ve been laboring,” says Kim Bobo, Executive Director of Interfaith Worker Justice, “we need to forcefully oppose anti-immigrant legislation and stand up for both comprehensive immigration reform and vigorous enforcement of the nation’s labor laws.”

Progressive States Network's model legislation for wage law enforcement outlines how wage enforcement campaigns can counter anti-immigrant rhetoric by raising wage standards for all workers and uniting native and immigrant communities to oppose unscrupulous employers.

Judge Strikes Down Worst Provisions of SB 1070: Yesterday, a federal judge struck down key provisions of SB 1070 as likely violating federal law or being unconstitutional, reinvigorating hope among immigrant communities that state anti-immigrant laws will fail to gain traction. Key provisions that were blocked include:

  • Requiring police officers to investigate the immigration status of individuals they stop who they suspect are undocumented;
  • Mandatory detention of individuals who are arrested if they cannot verify they are authorized to be in the U.S.;
  • Imposing state criminal penalties on non-citizens who fail to register with the Department of Homeland Security or failing to carry registration documents;
  • Warrantless arrests of individuals who are deemed by state or local police officers to be "removable" from the U.S.; and,
  • State statutes that make it a crime for alleged undocumented immigrants to work.

The initial court injunction will be followed by a full hearing to determine whether these provisions, as well as the law's other troubling components, will be permanently struck down. The ruling echoes numerous other legal decisions that struck down broad state anti-immigrant laws - and should serve as a warning to other states that enacting copycat legislation similar to Arizona's will lead to costly legal proceedings and, as discussed above, only serve to empower unscrupulous employers to violate wage laws.

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Research Roundup

Long-Term Dangers and Effects of the Great Recession:

  • The Recession Generation: Preventing Long-term Damage from Child Poverty and Young Adult Joblessness - Fear that without immediate action the effects of the Great Recession will linger for years and cause lasting damage to children and young adults. This report by the Coalition on Human Needs urges expansion of federal spending on job creation targeting low-income communities, state aid to cover rising Medicaid and education costs, expansions of job training funds, child care support and nutrition assistance for families facing lost income.
  • How the Great Recession Has Changed Life in America - 30 months after it began, the Pew Research Center finds that the Great Recession has led to a downsizing of Americans’ expectations about their retirements and their children’s future and a new frugality in their spending and borrowing habits. 55% of the U.S. labor force have experienced some work-related hardship -- be it a spell of unemployment, a cut in pay, a reduction in hours or an involuntary move to part-time work -- with Blacks, Hispanics and young adults bearing a disproportionate share of the job losses.

More Affordable Insurance for Employers and Individuals Under Federal Health Care Law:

  • A Helping Hand for Small Businesses - Families USA and Small Business Majority released this report highlighting how the federal health care reform law helps small employers and their workers obtain high quality, affordable coverage, particularly finding that 4 million small businesses with be eligible to receive tax credits for to help buy insurance for their workers in 2010.
  • Reducing Health Insurance Tax Credits Would Jeopardize Market Reforms and Cost Controls - With opponents of the federal health reform law calling for scaling back tax credits for working families to afford health insurance, this report by the Center on Budget and Policy Priorities emphasizes that such action would undercut the effectiveness of the proposed health insurance exchanges and hurt insurance market reforms designed to control costs in the health care system.

Anaylzing the Right-Wing Legal Theories Aimed Against Progressive Policy:

  • Doomed to Repeat History: The Right Re-embraces Lunatic Legal Arguments - With America’s right now trying to revive discredited theories of the Constitution that once blocked child labor laws, this memo from the Center for American Progress outlines how conservatives are over-reading the Tenth Amendment and twisting legal analysis to try to attack progressive policy. Ironically, as this memo notes, a supposedly populist movement is actually demanding that an unelected Supreme Court step into to block decisions by elected officials to impose a conservative agenda on the nation.
  • Are State Challenges to the Legality of the Patient Protection and Affordable Care Act Likely to Succeed? - In analyzing whether individuals or states have a strong constitutional argument against national health reform, this Urban Institute brief finds that the legal challenges are weak at best and unlikely to affect the law’s provisions.

Better, Not Smaller: What Americans Want From Their Federal Government - With public confidence in government is at an all-time low, this major new survey commissioned by the Center for American Progress finds that clear majorities of Americans still want more government action on energy, poverty and education, but want them done more efficiently. Rather than a rejetions of "big government", Americans are demanding a priority on programs that work, better evaluation and transparency on programs and agencies, and better use of technology to improve management of government.

2010 Kids Count Data Book - According to this annual report by the Annie E. Casey Foundation, improvements in child well-being that began in the late 1990s stalled in the years just before the current economic downturn. The report also emphasizes how poor data collection is on the status of children and urges increases in the sample size and frequency of surveys of social and economic well-being in the American population.

Please email us leads on good research at research@progressivestates.org

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Steps Forward

CO: Ritter Touts Number of Kids Added to State Health Coverage

MD: State to Save $829 Million Under National Health Care Reform: Number of Uninsured in State to Be Reduced by Half

NJ: Law Firms that Employ Municipal Court Judges Are Banned from Making Political Contributions


Steps Back

MO: Report Shows Statewide Dropouts Decrease

TN: Tennesseans Favor Arizona-Style Immigration Law, Poll Suggests

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Full Resources from this Dispatch

Federal Recovery Efforts Saved 8.5 Million Jobs, Stopped Depression

Alan Blinder and Mark Zandi - How U.S. Policy Ended the Great Recession
Dean Baker - Goldman Sach's Golden Parachute

NJ Privatization Panel Report Pushes Ideology Rather than Facts

Food & Water Watch - Has Water Privatization Gone Too Far in New Jersey?
In The Public Interest - NJ Privatization Report Claims Savings without Evidence
The New Jersey Privatization Task Force - Report to Governor Chris Christie
Progressive States Network - Critics Resisting New Jersey Governor's Push for Further Privatization
Progressive States Network - New Jersey Voters Reject Privatization
The Star-Ledger - NJ Environmental Groups Slam State for Mismanaging Private Vendors at State Parks
The Star-Ledger - NJ Democrats Criticize Christie Administration Report Suggesting Privatization

Wage Theft by Employers Surging in Wage of Arizona’s Anti-Immigrant Law, Even as Judge Blocks Implementation of Key Provisions

Working In These Times - ‘Go Ahead, Try and Make Me Pay You’: Wage Theft and SB 1070
Progressive States Network - Promoting Wage Law Enforcement Policies in 2010
Interfaith Worker Justice - Thou Shalt Not Steal - A Toolkit on Wage Theft
American Civil Liberties Union (ACLU) - Court Blocks Implementation of Key Sections of Arizona's Racial Profiling Law
National Employment Law Project (NELP) - Enforcement of Workplace Standards
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The Stateside Dispatch is written and edited by:

Nathan Newman, Executive Director
Nora Ranney, Legislative Director
Marisol Thomer, Outreach Director
Fabiola Carrion, Broadband and Green Jobs Policy Specialist
Cristina Francisco-McGuire, Election Reform Policy Specialist
Tim Judson, Workers' Rights Policy Specialist
Enzo Pastore, Health Care Policy Specialist
Suman Raghunathan, Immigration Policy Specialist
Altaf Rahamatulla, Tax and Budget Policy Specialist
Julie Bero, Outreach and Administrative Specialist
Mike Maiorini, Online Technology Manager
Charles Monaco, Press and New Media Specialist
Ben Secord, Outreach Specialist

Please shoot us an email at dispatch@progressivestates.org if you have feedback, tips, suggestions, cricisms, or nominations for any of our sidebar features.

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