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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Kicking the Unemployed When They Are Down

This item by Ed Kilgore was originally published on June 10, 2011.
Recent highly publicized national jobs reports showing private-sector gains being offset by public-sector losses have drawn attention to the macroeconomic costs of the austerity program already underway among state and local governments, and gaining steam in Washington. But the effect on the most vulnerable Americans–particularly those out of work–is rarely examined in any systematic way.
At The American Prospect, Kat Aaron has put together a useful if depressing summary of actual or impending cutbacks (most initiated by the states, some by Congress) in key services for the unemployed and others suffering from economic trauma. These include unemployment insurance, job retraining services, and family income supports. In some cases, federal funds added by the 2009 stimulus package are running out. In others, the safety net is being deliberately shredded.
A recent report from the Center for Budget and Policy Priorities notes that the most important family income support program, TANF (the “reformed” welfare block grant first established in 1996) is becoming an object of deep cuts in many states, precisely at the time it is most needed:

States are implementing some of the harshest cuts in recent history for many of the nation’s most vulnerable families with children who are receiving assistance through the federal Temporary Assistance for Needy Families (TANF) block grant. The cuts will affect 700,000 low-income families that include 1.3 million children; these families represent over one-third of all low-income families receiving TANF nationwide.
A number of states are cutting cash assistance deeply or ending it entirely for many families that already live far below the poverty line, including many families with physical or mental health issues or other challenges. Numerous states also are cutting child care and other work-related assistance that will make it harder for many poor parents who are fortunate enough to have jobs to retain them.

This is perverse precisely because such programs were once widely understood as “counter-cyclical”–designed to temporarily expand in tough economic times. Not any more, says CPBB:

To be effective, a safety net must be able to expand when the need for assistance rises and to contract when need declines. The TANF block grant is failing this test, for several reasons: Congress has level-funded TANF since its creation, with no adjustment for inflation or other factors over the past 15 years; federal funding no longer increases when the economy weakens and poverty climbs; and states — facing serious budget shortfalls — have shifted TANF funds to other purposes and have cut the TANF matching funds they provide.

This retrenchment, mind you, is what’s already happening, and does not reflect the future blood-letting implied by congressional Republican demands for major new cuts in federal-state safety net programs–most famously Medicaid, which virtually all GOPers want to convert into a block grant in which services are no longer assured.
If, as appears increasingly likely, the sluggish economy stays sluggish for longer than originally expected, and both the federal government and states continue to pursue Hoover-like policies of attacking budget deficits with spending cuts as their top priority, it’s going to get even uglier down at the level of real-life people trying to survive. If you are unlucky enough to live in one of those states where governors and legislators are proudly hell-bent on making inadequate safety-net services even more inadequate or abolishing them altogether, it’s a grim road ahead.

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