Raleigh News and Observer, January 31, 2008: More food stamps, unemployment aid

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Louisa Warren and Mandy Ableidinger

RALEIGH – With the economy crumbling, the Bush administration and Congress are hastily assembling an economic stimulus package in hopes of fending off a recession. The House on Tuesday overwhelmingly approved a plan that centers on tax rebates, and the Senate is pulling together a slightly different plan.

Working North Carolinians desperately need timely relief to help ease the pressures of rising food costs, health insurance and gas prices, but the news from Washington is less than encouraging. The proposals fail to include both of the most economically effective stimulus measures — a short-term increase in food stamp benefits and a temporary extension of unemployment insurance.

These are the measures that would reach those who need extra cash in their pockets the most — the same folks most likely to spend that cash quickly, triggering higher demand and revitalizing the flagging economy.

Bottom line, an effective stimulus package is one that pumps money into the economy quickly. Previous recessions have proven that the biggest bang for the buck comes from temporarily increasing food stamp benefits and extending unemployment insurance.

The reason for this is straightforward: Both benefits result in quick spending that ripples into the rest of the economy. The two measures together stimulate about twice as much economic activity as they would cost.

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NORTH CAROLINIANS NEED A WELL-CRAFTED ECONOMIC STIMULUS PLAN that provides temporary aid to help weather the downturn. But working families in our state are facing significant hunger and unemployment challenges that require longer-term fixes than stimulus can provide.

Poverty in North Carolina has increased dramatically in the past 10 years, and now one in seven Tar Heels lives below the official poverty line (a family of four making at or below $21,200 annually). That does not even include those just above the poverty line struggling to get by on modest means.

Food insecurity is on the rise, with food stamp participation jumping 73.6 percent from 2001 to 2006, and private food pantries and food banks facing higher demand for assistance. In 2007, nearly 900,000 North Carolinians on average were receiving food stamps in any given month.

Wake County Urban Ministries has reported a 20 percent to 30 percent increase in families requesting assistance just since December. As one longtime DSS county employee reminded us, an increased food stamp caseload coupled with surging demand at food pantries is an early barometer of a struggling economy.

Meanwhile, unemployment in North Carolina has risen since 2006-07, and the time that people are out of work has increased. In the next six months, over 48,000 North Carolinians will exhaust their unemployment insurance benefits and be forced to make ends meet on no income.

What the flurry of numbers indicates is that many workers are struggling to take care of their families’ most basic needs. An economic stimulus package that includes food stamp and unemployment insurance measures is critical, but so are two federal efforts that could go much further in addressing some of the longer-term challenges North Carolina is facing.

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CURRENTLY, THE FARM BILL IS STILL UNDER NEGOTIATION, with the House and Senate each having passed its own version. Among a litany of other items, the bill includes funding for the food stamp program. As Congress hammers out the final compromise of the Farm Bill, the conferees need to retain the Senate’s larger increases to nutrition programs but adopt the House bill’s plan to make those improvements permanent.

Pending legislation would help strengthen North Carolina’s unemployment insurance system as well. The Unemployment Insurance Modernization Act would distribute federal funds to state unemployment insurance programs and reward states that implement certain worker-friendly policies. Because North Carolina already has implemented many such policies, the state stands to receive up to $219.9 million in new federal funds.

We may be facing economic challenges in the Tar Heel state, but we’re not lacking for real solutions. An effective economic stimulus package now, coupled with a strong Farm Bill nutrition program and reforms to our unemployment insurance program, can provide relief for the thousands of working families hardest hit by the recent downturn. Help them, and our economy will thank us.

(Louisa Warren is a senior policy advocate with the North Carolina Justice Center. Mandy Ableidinger is the director of budget and policy analysis with Action for Children North Carolina.)

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