"if executives and directors on Wall Street and in Detroit deserve a safety net, why should American families be left out in the cold?"

Robert Reich makes a mistake:

"Monday, January 05, 2009

Stimulate the Economy by Mending Our Safety Nets

Lots of talk this week about the proposed stimulus. One high priority ought to be the most vulnerable members of our society. The safety net created in the 1930s to protect Americans from extreme poverty is in tatters. Now that we’re in the worst downturn since the Depression, that safety net needs mending. This should be a key part of any stimulus plan.( WRONG. WE SHOULD DO IT, BUT IT IS NOT A STIMULUS. IT SHOULD BE DONE IN ORDER TO HELP OUR CITIZENS GET THROUGH THIS DOWNTURN. MAKING IT PART OF THE STIMULUS ADDS ANOTHER LAYER OF JUSTIFICATION THAT THE SOCIAL SAFETY NET DOESN'T NEED. )

Unemployment insurance, for example, was created in 1935, when most people who lost jobs had held those full time positions for some years. But most people who are losing jobs now have not been in them all that long. Typically, the last ones hired are the first fired. And many job losers have only worked part time.

Either way, they don’t qualify for unemployment benefits. In fact, fewer than 40 percent of people now losing their jobs qualify. So a necessary step toward mending our safety net is to get unemployment benefits to everyone who loses a job. And if it's a part-time job, partial benefits.( FINE )

Or take welfare. Remember it? It was also started in the depths of the Depression. We officially abolished it in 1996, during the strongest job-creating recovery in memory. We substituted a new law that gives people a maximum of 60 months in their lifetimes to get aid for themsleves and their kids. Over the last dozen years, as more and more people hit that 60 month limit, the nation's welfare rolls naturally declined -- even though the percent of families in poverty stayed roughly the same, just under 10 percent.

But now that we're in a Mini-Depression, many more families are moving toward poverty. So that 60 month limit should be lifted, at least until the economy turns up again.( FINE )

Food stamps are another strand of the safety net. As of September, 2008, a record 31.5 million Americans were receiving them. That's roughly 10.3 percent of the population, each receiving $100 per month per family member. These numbers can be expected to rise considerably in 2009 and 2010. The current economic emergency is putting many more Americans at risk. Food stamp allocations should be increased. ( FINE )

Finally, let's make the Child Tax Credit fully refundable( WE'RE REALLY JUST GIVING THEM MONEY. BUT IT'S FINE. ). Right now, it's not fully refundable to low-income families who don't pay enough income taxes to qualify. As a result, an estimated 10.6 million children were ineligible for it in 2007, and an additional 11 million received less than the full amount.

Giving American families more economic security during this meltdown isn't just fair. It's also good policy, because the money they get to buy goods and services keeps other people in jobs. In fact, strengthening our national safety net is one of the fastest and most direct ways to stimulate the economy. ( IT WILL HELP, BUT THAT'S NOT THE JUSTIFICATION. )

And, after all, if executives and directors on Wall Street and in Detroit deserve( HAVE ) a safety net, why should American families be left out in the cold?"

As I've said, the Social Safety Net is not part of the stimulus.

"The program is an automatic stabilizer for the economy, as benefit payments automatically rise when the economy slows. "

From Alan B. Krueger this morning in the NY Times "Reforming Unemployment Benefits" :

"In addition to extending benefits, several other potential reforms to U.I. deserve attention. "

1) Make employers with worse layoff records pay more.
2) Help underfunded state programs
3) Raise tax base cap
4) Base extension on state problems with employment
5) Raise benefits in certain states

Here's my response:

“Unemployment Insurance would be a more effective stabilizer for the economy if benefits were automatically extended in a state based on the conditions on the ground.”

You might also want to target any stimulus money to such regions as well.

— Don the libertarian Democrat

Roubini On A Stimulus

Via Greg Mankiw again, Roubini on a stimulus package:

"Since the private sector is not spending, and since the first fiscal stimulus plan (tax rebates for households and tax incentives to firms) failed miserably as households and firms are saving rather than spending and investing, it is necessary now to boost public consumption of goods and services via a massive spending program (a $300 billion fiscal stimulus).

The federal government should have a plan to immediately spend on infrastructure and new green technologies; also unemployment benefits should be sharply increased, together with targeted tax rebates only for lower income households at risk; and federal block grants should be given to state and local government to boost their infrastructure spending (roads, sewer systems, etc.).

If the private sector does not spend and/or cannot spend, old-fashioned traditional Keynesian spending by the government is necessary. It is true that we already have large and growing budget deficits; but $300 billion of public works is more effective and productive than spending $700 billion to buy toxic assets."

Add this to Reich, Summers, Obama, Kuttner, and Krugman.