Michigan Members ask Congressional Leadership to Consider State's Economic Needs
Letter
Michigan Members Ask Congressional Leadership to Consider State's Economic Needs
Michigan Senators Carl Levin (D-MI) and Debbie Stabenow (D) along with Representatives John D. Dingell (D-MI), Dale E. Kildee (D-MI), Carolyn Cheeks Kilpatrick (D-MI), Sander Levin (D-MI) and Bart Stupak (D-MI) sent the following letter to House and Senate Leadership this evening:
The Honorable Harry Reid The Honorable Nancy Pelosi
Majority Leader Speaker
United States Senate United States House of Representatives
Washington, D.C. 20510 Washington, D.C. 20515
The Honorable Mitch McConnell The Honorable John Boehner
Minority Leader Minority Leader
United States Senate United States House of Representatives
Washington, DC 20510 Washington, DC 20515
Dear Majority Leader Reid, Speaker Pelosi, Leader McConnell, and Leader Boehner,
The specter of a worsening national economy demands swift and well reasoned action and we commend you on having reached a compromise on an immediate stimulus package. However, we understand there may be further changes made and an additional second measure is being contemplated. As members of a delegation whose state, Michigan, continues to be affected disproportionately by domestic and global economic forces, we feel it is imperative to share with you our suggestions for measures to be included in any additional steps.
We have been encouraged by the bi-partisan and swift nature of current discussions. Michigan, however, has very special needs and as a result we feel compelled to ask that as you move forward in discussions of additional steps, you keep the concerns of Michigan in mind. In particular, we are concerned that an extension of unemployment benefits and an increase in Medicaid funding are not included in the current package. We strongly encourage you to consider these issues as you move forward with further negotiations.
Michigan's unemployment rate of 7.5 percent leads the nation because we are at the center of the national manufacturing jobs crisis. As you know, since 2001 our nation has lost nearly three million manufacturing jobs. Michigan's median household income has decreased by 11.9 percent since 2000 and the State has lost over 350,000 jobs. At the same time, healthcare premiums rose 42.4 percent in Michigan and college tuition rose nearly 30 percent. Our State is currently undergoing a transformation never before seen in our lifetimes and while we are confident about our future, we know that Michigan and other states affected by the manufacturing jobs crisis cannot address these issues alone. They need a strong partner in the federal government.
Immediate Needs
Extension of Unemployment Insurance Benefits
Given the decrease in nationwide job creation and the growth of state unemployment rates we strongly encourage you to support an emergency extension of unemployment compensation. We believe the program should begin immediately, without a trigger, because long-term unemployment is already nearly double what it was in the last recession and because unemployment insurance is a proven vehicle to get money into the hands of people who need it and will spend it to stimulate the economy. We support a framework that would provide an extension of 20 weeks, to be followed by 13 additional weeks for high unemployment states. Additionally, we suggest that the level of unemployment compensation be increased, so that displaced workers are better able to cope with increased fuel costs this winter.
Healthcare
Steadily increasing healthcare costs place America's manufacturing base at a competitive disadvantage. For example, the domestic automobile industry provides healthcare benefits to over two million Americans at an annual cost of nearly $10 billion. Similarly, Medicaid expenditures by states stretch their already finite resources thinner. In order to protect states' fiscal condition, we support a uniform increase in the Federal Medical Assistance Percentage (FMAP), similar to that approved by Congress in 2003. An increase of this nature is one of the simplest, fastest, and best ways to provide stimulus to states.
Housing
In Michigan, mortgages in delinquency have increased from 114,400 in the third quarter of 2005 to 164,800 in the third quarter of 2007. According to a recent report published by the Joint Economic Committee, the number of subprime foreclosures in Michigan will total 65,600 between third quarter 2007 and the end of 2009. The mortgage crisis has made it more difficult for individuals, particularly those with low incomes, to stay in their homes or to obtain access to housing. Furthermore, the increase in foreclosure rates has led to declining home values in many communities. The House of Representatives responded to this by passing legislation, the National Affordable Housing Trust Fund Act of 2007 (H.R. 2895), designed to assist these homebuyers and communities. This legislation would provide between $800 million and $1 billion in grants to state and local governments for the creation, rehabilitation, or financial support for rental housing as well as down payment and closing cost assistance for first-time homebuyers without increasing government spending. The need for this legislation has become more urgent as the economic situation worsens, and making this legislation part of the stimulus package would provide much needed assistance to communities, of which there are many in Michigan, that have been hardest hit by this crisis.
In addition, swift action is needed to assist the over two million homeowners who, as a result of this crisis, are otherwise predicted to face foreclosure over the next year. When families lose their homes to foreclosure, the emotional and economic consequences on a personal level are devastating. As neighborhoods become scarred by vacant and abandoned properties, the consequences on a community level are dire, far-reaching and potentially irreversible. Increased and targeted federal assistance, such as block grants or increasing caps on tax-exempt bonds for use by state and local governments for this purpose, is critical to prevent a further deepening of this current foreclosure crisis.
Infrastructure
Investment in schools, roads, water and sewer projects, and other public infrastructure projects that are ready to go will put people to work and build or repair needed capital assets while pumping up the economy. Short-term infrastructure initiatives that will have a more immediate impact should be considered for inclusion in a stimulus package. This includes advancing $3-5 billion for ready-to-go highway/transit projects for the FY 2008 construction season; directing some federal general funds to transportation and water projects and waiving non-federal match for states and local governments to expedite projects and to help states with budget shortfalls. In the longer term, an increase in funding for EPA's Clean Water and Drinking Water State Revolving Fund is important for upgrading Michigan's aging infrastructure and improving the economic climate.
Bonus Depreciation
We also encourage you to provide a 50 percent first year depreciation deduction ("bonus depreciation") to stimulate investment in the U.S. economy. Additionally, since businesses that are not currently profitable do not benefit from bonus depreciation, provide these businesses an election to forgo application of the 50 percent bonus depreciation provision (for investments that otherwise would qualify for bonus depreciation) and allow them to accelerate utilization of existing R&D and AMT (regardless of present-law limitations) to the extent of the tax benefit otherwise provided by bonus depreciation. Allowing taxpayers to recover these accumulated credits now by making new capital investments will ensure the intended economic benefits of the bonus depreciation provisions are fully realized.
Forward-Thinking
We also believe that in addition to stimulating the economy, we must have a strategy to create good paying jobs and prepare a workforce in transition. As such, we reiterate our support for the following measures as some of the top priorities for Congress.
Healthcare
* Health Information Technologies and Generic Prescription Drugs. Increased investment in health information technology has the potential to streamline the U.S. healthcare system, thereby reducing overall healthcare costs. Similarly, we continue to support the increased use of generic equivalents of brand-name prescription drugs. This would improve the ability of middle- and lower-class Americans to afford prescription drugs, while at the same time saving the country hundreds of millions of dollars in healthcare costs.
* Catastrophic Healthcare. The small percentage of the population needing catastrophic coverage generates the bulk of U.S. healthcare costs. To reduce such costs, we suggest that the tax code be amended to allow the federal government to pay for 50 percent of catastrophic healthcare costs above a certain threshold for all workers with company-provided coverage and employed by manufacturers that operate in the United States.
Support for Advanced Technologies and Manufacturing
Support for the development and production of advanced technologies is key to the American manufacturing industry's ability to compete globally. Such technologies also would aid in weaning our country from its dependence on foreign oil.
* Grants and Initiatives for Advanced Technologies. We need to strengthen and enhance the Technology Innovation Program (TIP), the American Competitiveness Initiative (ACI), and the Manufacturing Extension Partnership (MEP). Moreover, we recommend that joint industry-government research and development on advanced batteries, clean diesel, and hybrid technologies be increased via grants and loan programs. Due to the precarious financial situation of certain manufacturing companies, we would submit that these loans be repayable with unclaimed tax credits. Lastly, further development of the nation's alternative fuels infrastructure is paramount to the greater penetration of such technologies into the U.S. market.
* Promotion of Advanced Technologies. We strongly support measures that would provide manufacturers with assistance to re-tool or expand existing facilities to produce advanced technology vehicles and their component parts. In particular, this can readily be accomplished by immediately funding programs authorized in The Energy Independence and Security Act of 2007. A sensible complement to this would be an increase in the amount and extension of the current consumer tax credit for the purchase of advanced technology vehicles. Moreover, a permanent extension of the research and development tax credit, which expired in 2007, would assist greatly in industry efforts to make more fuel-efficient vehicles available for consumers domestically and abroad.
Trade
* Trade Adjustment Assistance. The House approved a complete overhaul of this important training program last fall. It is imperative that we expand the program to cover more workers and enhance the training to enable workers impacted by globalization to transition from one career to another.
* Trade Enforcement. We must create a more level playing field for U.S. businesses and workers by enforcing trade agreements, ending the unfair trading practices of other nations, including currency manipulation, and knocking down unfair trade barriers that discriminate against U.S. goods in foreign markets.
Workforce Investment Act
Provide a targeted temporary funding increase for job training programs in the Workforce Investment Act (WIA) which provides increased flexibility for state and local officials to establish broad-based labor market systems using federal job training funds for adults, dislocated workers and youth. The law mandates coordination among a range of federal job training programs, including the Employment Service, adult education and literacy programs, welfare-to-work, vocational education and vocational rehabilitation. The WIA's goal is to provide workforce development services to employers and workers through a universally accessible, information-driven, one-stop career center system.
Again, we fully support your efforts to bring about quick stimulus for the national economy. We hope that this is just a first step of many that focus on the needs of middle income families, the national manufacturing jobs crisis, and the need to create good paying jobs and support workers in transition.
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