Black Economists Address National Budget Crisis on Capitol Hill

By Hazel Trice Edney

margaret_simms WASHINGTON (TriceEdneyWire.com) – The repetitious gloom and doom monthly unemployment reports, coupled with pending budget cuts that could further damage Black communities sparked the Congressional Black Caucus to form a panel of high-powered Black economists for advice and answers on how Congress should proceed with fair economic recovery.

“We in the Congressional Black Caucus are very concerned about the impacts of any budget cuts on African-Americans,” said U. S. Rep. Maxine Waters in opening remarks at the Jan. 28 Capitol Hill hearings that lasted more than four hours. Waters is ranking member of the subcommittee on Capital Markets and Government Sponsored Enterprises.

Waters quoted the Center for Responsible Lending estimates that the foreclosure crisis will result in African-American communities losing about $193 billion in wealth through 2012.

“We know that the foreclosure crisis is driven by dual challenges: predatory products and a deep jobs crisis,” she said. “Unfortunately, African-Americans are more highly impacted on both of these fronts, as they were more likely to receive high-cost, subprime mortgages, and are about 85 percent more likely to be unemployed.”

The panel, 'Surviving the Recession and Accelerating the Recovery”, included an all-star lineup of Black economists and financial experts who sometimes debated, but mostly agreed on remedies.

Algernon Austin of the Economic Policy Institute pointed out the government’s failures to invest in education and infrastructure as ways to remedy joblessness: “Currently, there are over 14 million Americans who would like to work but cannot find work. This is the most important immediate problem facing the country. African-American workers make up 20 percent of the unemployed although black workers only make up 12 percent of the American labor force.”

According to Austin, the United States is currently failing to make the necessary investments in education, infrastructure, and research and development and is literally falling apart in these areas. He suggests:

Increase investments in early childhood education so that all disadvantaged children attend high quality pre-kindergarten.
Increase the quality of teachers serving disadvantaged children throughout their educational careers.
Increase the number of teachers serving disadvantaged students so that these students attend classes with a low student-to-teacher ratio.

For infrastructure investments, Austin suggests:

Repair, replace, and upgrade our deficient roads, bridges, water systems, power grids, and sewers.
Repair, replace, upgrade and expand our public transportation systems.
Modernize our school infrastructure so that all our students have access to 21^st century technology and instructional resources.

William Darity Jr. of Duke University believes he has the remedy for insuring permanent full employment. He believes the answer is a federal government job guarantee program for all adult citizens.

“The government should insure that the opportunity to work for decent pay is a citizenship right for all Americans,” Darity said. “The federal government should establish a National Investment Employment Corps offering all citizens 18 years of age and above an employment guarantee at a minimum salary of $20,000 with $10,000 in benefits, including medical coverage and retirement support. An upper bound estimate of the expense of the program could be established by putting all 15 million persons unemployed at the peak levels of unemployment at the current crisis at a mean salary of $40,000, inclusive of materials and equipment per worker, with $10,000 in benefits.”

Darity says the jobs would be created by states and municipalities which would take inventory of their needs. Jobs could include:

The construction, staffing and provision of high quality preschools.
Computer repair, upgrade and maintenance, sanitation workers.
Flood and other disaster service workers in hospitals and schools.
The extension, repair and maintenance of the public transportation infrastructure, including roads, bridges, and dams.

Margaret C. Simms of the Urban Institute agreed with other economists that the federal debt must be reduced by reducing the federal deficit. The question, she said, is how to do both without sacrificing crucial programs.

Her suggestions:

Modify Social Security programs by increasing the contribution cap to 90 percent of earnings, schedule future rate increases, and treat all supplemental retirement annuities like 401Ks. “That would allow for better benefits for vulnerable populations,” she said.
Reduce domestic discretionary programs through selective combinations of reductions and block granting of programs that go to state and local governments, based on program objectives and effectiveness measures.

Darrell J. Gaskin, Phd. of Johns Hopkins School of Public Health had basic advice for the Congress: “Don’t be ‘penny wise and pound foolish’.”

He highlighted three areas where Congress should be careful when addressing the budget deficit:

We should not renege on our obligation to care for poor and vulnerable persons in our society.
We should not forsake our responsibility to care for our elderly and disabled citizens.
We should not neglect our investment in the public health infrastructure that we all benefit from and is necessary to ensure our communities are healthy.

Gaskin explains further, “These federal programs established in Roosevelt’s New Deal and Johnson’s Great Society demonstrates the compassion our nation has for ‘the least of these’ and separates us as sheep from the goats. At a time when the nation is recovering from the deepest recession in our lifetime, it is unwise to cut spending and raise taxes. However, if we must cut spending, the last thing we should cut is the nation’s safety net at a time when more Americans rely on that safety net for their very survival.”

The three-hour hearing was over-run with advice for the White House and Congress. Other participants included:

Darrick Hamilton, Milano School of Urban Policy, who said, “Private action alone is insufficient to address these racial disparities, the most efficient way would be carefully targeted race based policies,” or bolder policies if race-based polices are “politically unfeasible”;

Bill Spriggs, assistant secretary of labor and former Howard University Department of Economics who said, $500 million granted for Trade Adjustment Grant Assistance for Community Colleges “will be critical to helping vulnerable communities and to economic competiveness”;

Donna Sims Wilson of New York–based M.R. Beal & Co., said, “There is opportunity for minority wealth creation through TARP” (Troubled Assets Relief Program), known as the bailout of bank and financial institutions;

Lisa Mensah, of the Aspen Institute, who said “American needs a savings and investments” program; and

Jim Carr of the National Community Reinvestment Coalition, who said Congress should “enact changes to bankruptcy [laws] that would allow bankruptcy judges to create home modifications suitable for both investor and homeowner.”

CBC Chair Emanuel Cleaver II (D-Mo.) on behalf of the CBC’s Commission on the Budget Deficit, Economic Crisis, and Wealth Creation, said the economists were empaneled “in light of the deficit reduction recommendations made by the National Commission on Fiscal Responsibility and Reform.” He said, “We are concerned that some of these measures will directly impact and harm our communities.”

He concluded that “a glaring omission from various debt reports is a thoughtful analysis of how their recommendations will affect the nation’s most economically vulnerable populations. Recognizing this, the Congressional Black Caucus has formed its own debt commission to focus on the recession – particularly on communities of color – as well as approaches to deficit reduction and their implications for vulnerable populations and the nation at large.”