U.S. Sen. Charles E. Schumer told a Westchester County business audience last week he believes the economy will recover in one to two years if Congress and the Obama administration do “the right thing” with a second economic stimulus package.
Speaking to a Westchester County Association breakfast audience at tightly secured MasterCard Worldwide headquarters in Purchase, the state”™s senior senator from Brooklyn outlined four steps needed “to get us out of this mess.” They include restoring confidence in the markets; finding a floor for falling housing prices to encourage renewed real estate investment; implementing a major federal economic program to avoid long-term deflation and creating a new regulatory structure for the financial sector “that is strong, unitary and quiet.”
“I don”™t think this is a five- or 10-year problem,” Schumer said. “I think it”™s a one- to two-year problem if we do the right thing ”“ and maybe even less.”
The senator said a second economic stimulus plan being considered by Congress could bring “hundreds of millions of dollars” to New York state and spare businesses and homeowners more property tax hikes while easing pressures on the state budget.
On the day of Schumer”™s Westchester visit Nov. 24, State Comptroller Thomas P. DiNapoli reported the financial crisis could cost the state and New York City 225,000 jobs and $6.5 billion in tax revenue from the securities industry over the next two years. The state might need federal assistance to close the projected budget gaps, he said. Â
Schumer said the primary focus of the stimulus package will be on infrastructure, including expanding and improving highways, technology and sewer and water systems. He said infrastructure funding could help Westchester address its flooding problems and pollution from sewage back-ups in deteriorated systems on the Sound Shore.
Also on Nov. 24, the Westchester County Board of Legislators scheduled a public hearing on the county”™s proposed consent order with the state Department of Environmental Conservation to reduce nitrogen from sewage drained into the Long Island Sound. Approximately $235 million in bonding is needed to fund the design and construction of improvements to the New Rochelle and Mamaroneck sewage treatment plants.
By creating jobs on infrastructure projects, “This is the old-fashioned way of priming the pump,” Schumer said.
“One of the dumbest things we can do right now is to raise local taxes.” Instead, federal funds “could be a real shot in the arm and it would be significant dollars,” he said.
The senator said Westchester, with its advanced economy and intelligent work force, could take advantage too of federal plans to create “green jobs”™ through business incentives for alternative energy development and environmentally friendly technologies.
Schumer noted the county”™s and nation”™s rising unemployment rates and a “dismal” record of job creation over the last eight years of the Bush administration. In Westchester, unemployment rose to 4.9 percent in October, up from 3.5 percent a year earlier. The national unemployment rate reached 6.5 percent this month, the highest since March 1994. The U.S. economy has lost 1.2 million jobs this year, with almost half of the losses in the last three months.  Â
The federal stimulus plan should include funding to states and counties to help offset Medicaid costs. Schumer said Westchester government expects to spend about $197 million on Medicaid next year, up $2.4 million from this year and accounting for 11 percent of the county budget.
To free up choked-off credit for small businesses, Schumer said the stimulus plan would provide funding to help businesses more easily obtain U.S. Small Business Administration (SBA) loans. The funds also would temporarily eliminate fees charged to borrowers and lenders in the SBA programs.
Schumer, in a prepared statement accompanying his speech, noted the financial markets crisis has affected SBA lending too. In October, the number of loans under SBA”™s largest loan program dropped by more than 50 percent nationwide compared to the same month last year, he said.
To reverse the tide of foreclosures nationwide, Schumer said the stimulus package will give more funding to the Federal Housing Administration and restore the federal Community Development Block Grant program to help neighborhoods with abandoned homes. Federal funds also will assist families facing foreclosure and renters in need of housing as a result of foreclosure, he said.  Â
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“If we can do these things, we can help not only the country but help Westchester, help the county and get our economy back on track,” the senator said.
Schumer agreed the stimulus package will increase the federal debt. But if Congress does not act, the debt will be even greater as tax revenues to the federal government dramatically decline, he said.
He said a major stimulus program is needed to avert spiraling deflation of the kind that seized the nation through eight years of the Great Depression. “The risk of deflation, where prices just fall, is really our nightmare,” he said. “If you get into this deflation, there”™s no way to get out of it quickly.”
Schumer said new leadership in the Obama administration “will be non-ideological, moderate but problem-solving,” with a roll-up-the-sleeves approach to restoring the economy.
