Norton Sees Danger to D.C. and Larger National Economy without Stimulus to Americans (9/22/08)

Norton Sees Danger to D.C. and Larger National Economy without Stimulus for Jobs and

Assistance to Americans Already Feeling the Effects of the Wall Street Collapse

September 22, 2008

Washington, D.C. - Congresswoman Eleanor Holmes Norton (D.C.) today said that she saw no alternative to ongoing government action, given where we are, to stabilize Wall Street, particularly considering that retirement funds, savings and homes are in the same jeopardy as high rollers from the meltdown and that the national and global economies are increasingly at risk. But, she said that, "it would be unconscionable for Congress to go home without also taking action to bolster the larger part of the economy that could collapse on the American people while we are gone." Norton noted that the District's economy, which usually remains more insulated than most from recession, already is badly slipping because of poor receipts from downtown property taxes. She said that the quick, steep jump to the latest 6 % unemployment rate is evidence that the credit crunch is keeping Main Street businesses and the corporate sector where people work from borrowing and is resulting in excessive layoffs and retraction in the larger economy now. The Congresswoman called for a stimulus package to put money directly into the economy. She said ready-to-go transportation and infrastructure projects that always fuel jobs in many sectors as they ripple throughout the economy and other direct assistance to those already feeling the effects with, for example unemployment and food stamps extension, is clearly necessary. The assistance must be targeted to spending that must occur in this country to assure the benefit is not only to recipients but to the U.S. economy, Norton emphasized.

"Wall Street's firestorm is burning throughout the larger economy in unemployment, a halt in job creation, continuing foreclosures, delinquencies in mortgage, rent and energy payments, and penalties for withdrawal from retirement funds," Norton said. The threat to the economy and the need for rapid bipartisan authorization will probably limit Congressional action on needed regulations and transparency until hearings when Congress returns, perhaps in a lame duck session. However, before leaving there must be some vital safeguards as well as a separate bill for a stimulus package that can be drawn from the existing work of the Transportation and Infrastructure Committee on which the Congresswoman serves, she said. "It would be disgraceful if the bill before Congress did not, for example, at least forestall a rush to take large payouts at taxpayer expense," Norton said, and she hoped that hearings by the Committee on Oversight and Government Reform, on which she also serves, can develop some limits consistent with the emergency.

Norton said that Wall Street was not being rescued without penalties naturally imposed by the market place but that it will seem so to the public "if all Congress does is approve unprecedented authority for Treasury to buy billions in troubled debt from the private sector." She said a reading of the history of the 1930s, to which this crisis has been compared, shows that Roosevelt stabilized the economy, but for years the bread lines and acute suffering of citizens continued. The economy did not, itself, turn upward until the Democrats lost the fear of government, directly stimulating the larger economy and Keynesian economics was born. "If action taken to stabilize the collapse of Wall Street didn't trickle down during the 1930's, acting today to shore up the top of the economy is even less likely to work, considering the complexity of today's securities now spread worldwide that are incapable of precise identification." The Congresswoman said that Treasury Secretary Henry Paulson, and the Federal Reserve had caught Wall Street before it completely collapsed. Comparable preventative actions are equally necessary to help Americans rapidly losing jobs, retirement funds, and savings that are outside the set of remedies in Treasury's portfolio.