Prevent the economy from sliding back

The Umpqua Post
August 11, 2010By Janet Bauer

If the bus you were riding in fell into a ditch, you'd want all hands on deck to push it out, put it back on the road and get it moving again. You'd want everybody pushing until you succeeded, with nobody leaving the job early. The same goes for our collective bus, the nation's economy.

Unfortunately, just as the economy has begun to show signs of growth, Congress is letting two effective investments in the Recovery Act that have been helping to muscle the economy out of its ditch expire. These are the funds that help states provide Medicaid services and Temporary Assistance for Needy Families (TANF).

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Congress must quickly extend the emergency funding for Medicaid and TANF. Failure to do so will harm not only families struggling to make ends meet but also those in the private and public sectors whose jobs depend on such funding. Indeed, congressional inaction raises the odds that our economic bus will roll back into the ditch, creating a dreaded double-dip recession.

State and local governments share with the federal government the costs of providing health services for the lowest-income Americans through the Medicaid program. Because the economic downturn dramatically increased demand for Medicaid while also reducing states’ fiscal ability to meet those demands, the Recovery Act directed the federal government to temporarily shoulder a larger share of Medicaid costs.

Absent congressional action, the additional federal funds for Medicaid will expire at the end of 2010. That would choke off federal dollars that have helped boost Oregon’s economy. To put it in perspective, the six-month extension of Medicaid emergency funds most recently considered by Congress would have sent as much as $156 million to Oregon.

Emergency Medicaid funds help maintain health services for vulnerable Oregonians and also preserve many private sector jobs. Most of these funds, after all, go to the many doctors, nurses, receptionists, janitors, home health providers and others working in hospitals, clinics, nursing homes and other private enterprises in Oregon’s health care system.

Federal dollars that have been helping states fund TANF services, an important part of the nation’s safety net and a gateway to work for the very poor, are expiring even sooner. TANF provides time-limited, small amounts of cash assistance, paired with work activity requirements, mostly to single-parent families. It also offers job training and childcare assistance to help parents of dependent children obtain work and remain employed.

Because of the economic havoc wrought by the Great Recession, Oregon and the nation have seen the demand for TANF rise sharply. But with its battered finances, Oregon lacked the resources to respond adequately to that elevated need.

The Recovery Act helped address that need by offering states emergency TANF funds, pumping tens of millions of dollars into Oregon’s economy.

Those dollars ripple through the economy, creating a bigger impact than the original sum. TANF puts money in the hands of people who spend it quickly and locally to meet their basic needs. The money they spend at the grocery store, gas station or other establishments enables those businesses to retain their existing employees or hire more workers. Those workers in turn are able to maintain their own spending in the community.

In addition, the child care assistance that TANF provides creates jobs for providers, who themselves typically depend on the income to make ends meet.

So far, Congress has not mustered the votes to extend the emergency Medicaid and TANF funds, but hope remains that it will.

Congress recently extended unemployment insurance benefits that protect those who’ve lost their jobs. Like Medicaid and TANF funds, unemployment benefits are some of the strongest hands helping to push the economic bus back on track.

Likewise, Congress should extend the funds for Medicaid and TANF. They are vitally important for helping move our economy forward.

Janet Bauer is a policy analyst with the Oregon Center for Public Policy.

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