As President Barack Obama begins his term of office, AARP Segunda Juventud examines how the changes heralded by the new White House leadership will impact older Hispanics. Part VII: The Economic Stimulus Package
President Obama’s massive stimulus package will pour roughly $787 billion into social programs, infrastructure, health care, and technology in an attempt to curb taxes while bolstering businesses, generating jobs, and stabilizing neighborhoods threatened by foreclosures and an unraveling real estate market.
Major Hispanic groups support the effort chiefly because it will increase spending on an array of social programs—from food stamps to Medicaid—that help low-income and elderly Latinos. The groups also hope the package’s $150 billion for building roads, bridges, and other construction will help stem the rising unemployment rate that in February was 10.9 percent for Hispanics, compared to 8.1 percent for all Americans.
But how much relief will the measure, the American Recovery and Reinvestment Act of 2009, deliver directly to working families and individuals? Unlike the 2008 stimulus—which paid taxpayers up to $600 for individuals and $1,200 for married couples, with additional payments for families with children—this year’s stimulus package focuses on revving up the economy and generating jobs, with individual relief coming in the form of tax breaks, health care subsidies, and increased unemployment benefits.
Representative Nydia Velázquez, D-NY, one of the stimulus plan’s strongest supporters in Congress, points out that if the act’s goal of saving or creating 3.5 million jobs is met, working families and individuals will benefit. “Only if we get people back to work and help them afford their basic needs will spending start up again and our economy begin to recover,” says Velázquez.
This rings especially true for Hispanics, who are more likely than most other Americans to have lost their jobs or homes in the downturn. In fact, more than 75 percent of Hispanics surveyed in December 2008 by the Pew Hispanic Center said their personal finances were in either fair or poor shape. Nearly one in 10 Latino homeowners said they either missed a mortgage payment or couldn’t make full payment, and six in 10 reported foreclosures in their neighborhoods. Nearly half said they delayed or canceled plans to purchase a car or some other major purchase.
Hispanics 55 and older are in even greater financial straits: 16 percent said they owed much more than they could afford in credit card and other types of debts. Those older Hispanics are also more pessimistic than younger Latinos that their financial situation will improve.
Useless Spending or Incredibly Necessary?
In signing the stimulus into law on February 17, Obama said his administration had “inherited an economic crisis as deep and as dire as any since the Great Depression”—deep and dire enough to move Congress to act swiftly, although the measure’s gargantuan cost and scope generated bitterly partisan debate. Only three Republicans, all in the Senate, voted for the plan. The GOP derided the stimulus as wasteful, useless spending.
The House Republican Conference claims the package will advance a Democratic agenda but do little to rev up the economy. Questionable allotments include $50 million for the National Endowment of the Arts, $200 million for AmeriCorps and other “paid” volunteer programs, $198 million to compensate certain Filipino World War II veterans, and $210 million to modify and upgrade local fire stations. The GOP wants to spur economic growth primarily through tax breaks instead of massive spending.
“We need a bill that creates jobs, and the best way to do that is by encouraging investment and letting Americans and small businesses keep more of what they earn,” says House Republican Leader John Boehner of Ohio.
But David Ferreira, vice president for public relations for the U.S. Hispanic Chamber of Commerce, defends how the stimulus billions will be spent, saying much of it is “incredibly necessary.” Besides the social programs and construction, he says, the creation of a new Small Business Administration loan program will be especially beneficial to Hispanic businesses. In all, he says, “We’re going to monitor [the stimulus package] to make sure disadvantaged communities get the relief they need.”
Like Ferreira, a legion of local officials, interest groups, and lobbyists will watch how the stimulus plan is implemented.
“We like some pieces of it,” says National Council of La Raza (NCLR) policy analyst Catherine Singley. Tax breaks to individuals, which will boost a typical family’s paycheck by about $13 a week beginning in June through the end of the year, and expanded tax credits for families with more than three children will help Hispanics, she says. So will the plan’s $100–a-month boost in unemployment benefits.
Laid-off workers will also benefit from a provision of the stimulus package (supported by AARP) that subsidizes COBRA, a program that allows workers who lose their jobs to keep their health care coverage by paying the total full premium.
The stimulus will pay a 65 percent subsidy toward COBRA group health insurance premiums for certain laid-off employees and their families for up to nine months—half of the 18-month benefit period. The act will also provide money to states that want to extend unemployment taxes to part-time workers and don’t already do so.
Some Relief for Communities, Retirees
Singley says the package’s $2 billion neighborhood stabilization fund, which allows nonprofits to buy up foreclosed properties and put them back on the market, will also aid Latino communities. In addition, the stimulus provides modest increases to dozens of small programs that help older Latinos.
Among them is a $120 million boost to the Senior Community Service Employment Program, which targets minorities 55 and older. The community-based program subsidizes employers who hire and train older workers for an average of 20 hours a week.
The measure also increases the budget for elderly nutrition programs by nearly $100 million and provides billions of dollars for health information technology and Medicaid and Medicare incentives to encourage doctors and hospitals to share computerized information about their patients.
Another measure (also applauded by AARP) is a retiree tax break. Social Security and Supplemental Security Income (SSI) recipients, retired and disabled veterans, and railroad retirees will get a one-time payment of $250, trimmed from $450 in the original plan, that will be sent starting in late May to those who had been eligible for benefits from November 2008 through January 2009. Older Hispanics will also benefit from expanded Medicaid and Medicare programs under the stimulus.
But the plan will do little to help them grow recession-shrunken savings and retirement accounts, says Mike Periu, financial analyst and editor of DINEROyCREDITO.com. Periu says not enough stimulus money will go directly to the pockets of consumers to give the consumers and markets confidence—one of President Obama’s hopes for the plan—or to save plunging 401(k) and other retirement accounts.
“The key thing that retirees have to take away from all of this is that they have to adjust their expectations of what retirement is,” Periu says. “Many will have to look at other options: part-time work, freelancing, or postponing retirement.”
Good Intentions, But Questions Linger
“We like the intention of the package,” the NCLR’s Singley says. “Where we have questions is if it’s going to move the needle on Hispanic unemployment.”
Some stimulus programs aimed at increasing employment, she says, aren’t targeted enough to reach workers who have trouble speaking English. And the billions of dollars that will be going to construction projects may bypass Hispanic firms that have little experience in government contracting.
“We’re afraid the money is going out so quickly among traditional channels to the usual suspects that Latinos will be locked out,” Singley explains.
Ferreira says the Hispanic Chamber of Commerce shares that concern. “Unfortunately, there’s a lot of good ol’ boy mentality in contracting,” he says.
A Light at the End of the Tunnel?
Many recession-wracked Latinos are hopeful—albeit wary—of the stimulus bill’s real impact.
“Something had to be done,” says Augusto J. Gil, 43, who owns a real estate development firm in Miami with his father, Augusto Gil, 74. In business since 1968, the Gils, who emigrated from Cuba about 40 years ago, have seen their company thrive. But in the past year, the recession has cost the firm millions of dollars.
The younger Gil has mixed feelings about Obama’s stimulus plan. He worries it will cost taxpayers money in the long run but believes his subcontractors will benefit from the bill’s funding for new construction work. He also hopes an increase in construction in Miami will generate demand for the homes and offices his company builds. Still, he says, “right now there’s no light at the end of the tunnel.”
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