AARP Calls on Congressional Leaders to Pass Second Stimulus

 

 

 

 

November 17, 2008

 

Contact: Danielle Holland 202-434-2560 dholland@aarp.org

 

AARP CEO Bill Novelli sent a letter to Senate and House leaders today encouraging bipartisan efforts to pass a strong second economic stimulus package, urging them to act quickly to help bring financial relief to the millions of Americans who continue to struggle during this uncertain economic time. On behalf of AARP’s 40 million members, he called on Congressional leaders to extend unemployment insurance benefits for those Americans who continued to look for work but are unable to find employment. Novelli also urged Congress to temporarily increase federal funding to states for Medicaid; to help homeowners avoid foreclosure; and to offer retirees and those nearing retirement some much needed flexibility in managing their retirement savings.

 

Excerpts from Novelli’s letter to Congressional leaders follow:

 

“On behalf of AARP’s nearly 40 million members, we write to lend our strong support for a second economic stimulus package.”

 

“There are almost 1.3 million workers aged 55 and older who are currently unemployed, and over the past twelve months, workers aged 55 and older have experienced a 52% rise in unemployment. Data indicate when older, longer-tenured workers lose employment, it takes them longer to find the next job, and they may be more likely than younger workers to exhaust their unemployment benefits before finding a new job.”

 

 “By covering one out of every six Americans, Medicaid is a cornerstone of our nation’s entire health care system and economy.  A temporary increase in federal funding to states for Medicaid is a powerful economic stimulus tool that will boost local economies and help prevent our economic crisis from getting worse.”

 

“The stimulus bill should allow for judicial modification of home loans – allowing bankruptcy judges to modify home loans for primary mortgage debt, as they can already do for any other form of securitized debt, including investment properties, vacation homes, and yachts.”

 

“Temporarily making minimum withdrawals optional, rather than mandatory -- beginning immediately -- would help give older individuals some much needed financial flexibility as they struggle to manage their finances during this difficult economic time.”

 

“AARP is encouraged by the fact that most of these proposals have been included in previous stimulus efforts put forth by Congressional leadership this past year, and we are especially optimistic that these solutions will be enacted in the near future.”

 

A complete copy of Novelli’s letter follows.  For more information, contact AARP Media Relations.

 

Majority Leader Harry Reid                                          Minority Leader Mitch McConnell                                U.S. Senate                                                                  Washington, DC

 

Speaker Nancy Pelosi

Minority Leader John Boehner

U.S. House of Representatives

Washington, DC                                                          

 

On behalf of AARP’s over 40 million members, we write to lend our strong support for a second economic stimulus package. 

Acknowledging poor economic conditions, AARP urged earlier this year in letters dated January 24, and July 22, that Congress and the White House enact measures that would extend unemployment insurance for millions of jobless workers, maintain Medicaid services through an enhanced match in the Federal Medicaid Assistance Percentage (FMAP), increase funding for energy assistance, and temporarily enhance the Food Stamps program. We have also in separate letters dated June 17, and September 22, urged assistance for homeowners threatened by the current foreclosure crisis. Finally, we have most recently urged Treasury Secretary Paulson in a letter dated October 29, to provide relief to retirees who have suffered substantial losses in retirement savings because of the recent market turmoil. 

Given the extraordinary decline the economy has experienced recently, we renew our call for enactment of a second stimulus package that includes the elements of relief we have urged throughout this year.

Unemployment Insurance – Since the beginning of this year, 1.2 million jobs have been lost, and the unemployment rate is now the highest it has been in 14 years. Last month, 800,000 jobless workers exhausted their unemployment insurance benefits. Just over half of AARP’s members are in the workforce and are vulnerable to widespread job loss. There are almost 1.3 million workers aged 55 and older who are currently unemployed, and over the past twelve months, workers aged 55 and older have experienced a 52% rise in unemployment. 

 

Earlier this year, a temporary extension of unemployment insurance benefits was enacted, allowing workers as many as 13 additional weeks of Federal benefits if they had exhausted their regular unemployment benefits before finding a new job. Authorizing an additional extension of benefits is warranted for those who continue to look for work but are unable to find employment. An additional extension of unemployment benefits is especially critical for older Americans. Data indicate when older, longer-tenured workers lose employment, it takes them longer to find the next job, and they may be more likely than younger workers to exhaust their unemployment benefits before finding a new job.

 

Helping States and Struggling Families with Health Care Costs – The current economic crisis is forcing many states to consider cuts to Medicaid, our nation’s health care safety net.  Such cuts would deny care to people who cannot afford health insurance and essential long-term care services, especially those that help keep them out of nursing homes.  Medicaid cuts also would worsen the economic crisis and drive up health care costs in the long term, because Medicaid does much more than help the poor pay for care. Medicaid is essential for millions of middle-class families who rapidly deplete lifetime savings when they need costly long term care.  And, by covering one out of every six Americans, Medicaid is a cornerstone of our nation’s entire health care system and economy. 

 

A temporary increase in federal funding to states for Medicaid is a powerful economic stimulus tool that will boost local economies and help prevent our economic crisis from getting worse.  That’s because Medicaid brings federals dollars directly into local communities – for every Medicaid dollar a state spends, or avoids cutting, it generates between $1 and $3 in matching federal dollars. That money then flows through local economies, supporting jobs, providing income for workers and generating tax revenue for state and local governments.

 

Retirement Savings – Currently, Americans aged 70 ½ and over are required to take minimum distributions no later than December 31 from their retirement accounts based on the fair market value of their account on the last day of the previous year.  Given the overall decline in the stock market, this requirement could force older Americans to make a choice between taking a withdrawal that was calculated based on much higher values in retirement accounts or facing a high tax penalty. Temporarily making minimum withdrawals optional, rather than mandatory -- beginning immediately -- would help give older individuals some much needed financial flexibility as they struggle to manage their finances during this difficult economic time. If the Treasury Department does not exercise authority to make these minimum withdrawals optional soon, many older individuals will be forced to take action before the end of this year. We urge Congress to take immediate steps to assure retirees aged 70½ and older will not be penalized for distributions this year.

 

We also urge relief for retirees who have already taken minimum distributions, as well as those who do not have the option to delay withdrawals and who find it necessary in these difficult economic times to withdraw funds from retirement accounts to meet daily living expenses. Retirement savings losses over the past 12 months have been staggering. Reasonable estimates suggest that inflation-adjusted losses in defined contribution and individual retirement accounts between September 30, 2007, and October 16, 2008, may have reached $2.3 trillion, or 27 percent. Older individuals have disproportionately experienced these losses, and many do not have the luxury to wait for a market rebound. We believe that fairness dictates that we provide relief for individuals who have no other recourse than to use their greatly diminished retirement savings to meet current living expenses.

Housing Assistance – The stimulus bill should include key measures to help homeowners avoid foreclosure so they can continue to pay off their debt while remaining in their homes.  The foreclosure crisis has not only affected first-time homebuyers, but many older homeowners as well.  A recent AARP Public Policy Institute study found that, in the last six months of 2007, nearly 700,000 homeowners age 50 or older were either delinquent in their mortgage payments or in foreclosure, representing 28 percent of all delinquencies and foreclosures of primary mortgages during that period.  The study found a high correlation – roughly twice the national rate – between older homeowners with little or no equity in a home and likelihood of foreclosure.  In 2006, some 2.3 million households headed by persons age 50 or older had less than 20 percent equity in their homes.  Since then, housing prices have fallen a further 20 percent and are expected to fall further next year.  Greater numbers of older homeowners will face possible default or foreclosure in the coming year.

The stimulus bill should allow for judicial modification of home loans – allowing bankruptcy judges to modify home loans for primary mortgage debt, as they can already do for any other form of securitized debt, including investment properties, vacation homes, and yachts.  In addition, the stimulus should include a foreclosure deferral period for struggling borrowers who continue to make a good-faith effort to pay off their mortgage debt, and to offer time for such borrowers to work with their mortgage servicers to modify their existing loans or refinance into new loans (including through the Hope for Homeowners program).

Energy Assistance – Congress should substantially increase funding for the Weatherization Assistance Program (WAP) to $1 billion.   The additional WAP funding would quadruple the number of homes receiving weatherization assistance, create new jobs and reduce monthly energy bills for lower income households.  Weatherization is a proven economic engine for training technicians in skills needed to develop a “green collar” building efficiency workforce.  These efficiencies reduce overall energy consumption while lowering household energy costs and improving air quality.  

Food Stamps – In the past year, the cost of food has increased dramatically. During this time of rising costs for basic necessities, the price of medicine and health care for fixed and low income seniors forces unacceptable choices. Including a temporary increase in Food Stamps allotment as part of the stimulus package would help ensure an adequate nutrition safety net is available for many of the most vulnerable.

 

AARP is encouraged by the fact that most of these proposals have been included in previous stimulus efforts put forth by Congressional leadership this past year, and we are especially optimistic that these solutions will be enacted in the near future, given that many are also supported by President-elect Obama. We urge you to pass legislation as soon as possible to provide assistance to people of all ages hardest hit by current economic conditions. If you have any further questions, feel free to call me, or please have your staff contact Cristina Martin Firvida at 202-434-6194.