America's Two-Headed Dog: Layoffs and Cuts to Social Programs

In Greek mythology, Orthrus is a nasty two-headed dog that is captured and tamed by Oedipus, the dude who killed his father and nailed his mother. That gives you a basic understanding of the unhealthy mindset of Orthrus, the dog that could only be tamed by an incestuous murderer.

America is now wrestling with its own real-life Orthrus in the shape of mass layoffs and simultaneous cuts to social welfare programs. It seems like common sense that the government should increase social spending when people are losing their jobs, but Republicans and Blue Dog Democrats don't see it that way.

Americans lost 467,000 more jobs in June, and the unemployment rate jumped up to 9.5 percent. The New York Times interviewed labor secretary Hilda Solis about why the unemployment rate is already much higher despite President Obama's $787 billion stimulus plan. Solis explained that "much of the stimulus money was moving slowly, with construction projects in particular requiring time-consuming government permits."

In the meantime, unemployed Americans will need some kind of safety net to support them through this economic depression. Unfortunately, the opposite is happening in many states where the government is cutting social programs. Arizona, which faced a $1.6 billion budget gap this year, has been among the hardest hit, according to NPR. "Funding was trimmed for food banks, community health centers and home health care for the elderly. Monthly payments for foster care parents were reduced, and more than 1,100 children with chronic or disabling conditions were dropped from the state Children's Rehabilitative Services program."

The economic collapse of California has been widely reported, and the unemployed will feel the budgetary squeeze along with the rest of the state's residents. Except, in the case of the poor, "feeling the squeeze" doesn't mean having to get rid of HBO or Showtime. It means having to sacrifice meals or visits to the doctor.

NPR reports that about 1,000 low-income adults in Rhode Island have been dropped from the state health insurance program. Linda Katz of the Poverty Institute at Rhode Island College says 3,000 more needy families are losing cash assistance, and many of them have no job prospects in the current economy.

In fact, more than three-fourths of states are making spending cuts according to the Center on Budget and Policy Priorities, one of the nation's premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low and moderate-income families and individuals. Most of the cuts took place at the beginning of this month.

Dental and vision services for many Medicaid recipients in California and Michigan will be eliminated. Hundreds of thousands of people with disabilities in those states and in New Mexico will experience cuts in aid. Reimbursement rates for some health care providers and human services agencies will decline July 1 in Minnesota, Utah, Washington, and Wyoming. In coming months, public university tuition will rise at double-digit percentage rates in Florida, Washington, and elsewhere -- and school districts will absorb cuts in state aid.

And this doesn't even include proposed cuts that many states still are discussing. Eighteen states haven't enacted their budgets for the upcoming fiscal year, including: Arizona, Illinois, Massachusetts, New Jersey, and North Carolina, all of which are almost certain to enact further cuts.

CBPP stresses that cuts to social services hurt the overall economy because when states cut spending, they lay off employees, cancel contracts, reduce payments to businesses and nonprofits that also provide services, and ultimately cut benefit payments to individuals. All of those actions remove "demand" from the economy (half of the crucial "supply and demand" formula). The result is cyclical: rising unemployment means less money enters the economy, and state budget cuts cause more unemployment, which then continues to worsen the economy.

A way to alleviate this dangerous trend of unemployment and vanishing state support is to raise taxes. In fact, CBPP reports that at least 24 states in 2009 are addressing their budget shortfalls in part by increasing taxes, but of course Republicans and Blue Dog Democrats will burn this solution at the stake.

An example of tax-squashing zealotry taking precedence over the well-being of constituents occurred when some Republican Governors refused federal aid while the poor and unemployed residents of their states suffered. Those Republicans that rejected federal assistance include South Carolina's Mark Sanford, who probably didn't understand the dire need of his constituents because he abandoned his state for weeks at a time to plow his not-wife in Argentina.

Governor Bobby Jindal also rejected $90 million that would have helped 25,000 Louisiana residents. Jindal explained his actions by saying that accepting the money would raise taxes on small businesses, but as Think Progress points out, it's not clear why participating in the expanded unemployment insurance program would result in tax increases for business. The recovery package would have funded the state's unemployment expansion for three years, and after that the state could have phased out the program if they chose to do so.

Such gelatinous logic is the spine of the "Taxes = Bad" argument. The Republican economic model always magically erases the "Suffering Americans." Those people don't exist. In the minds of people like John Boehner, America is still experiencing 1950-style job stability and economic growth, which incidentally occurred because the minimum wage was pretty high for the times. Since we're still in 1950 America, all people need to do is work hard, save money, and they too can buy a house on minimum wage.

But that's not reality. The truth is the economy sucks, people are losing their jobs, minimum wage has been stagnant for decades, and unemployed Americans need government assistance until the economy recovers, and they can't rely on the Republican's Underwear Gnome economic model:

Cut Taxes + _________ = JOBS!! BEAUTIFUL JOBS!!

While raising taxes is kryptonite to politicians, CBPP points out that tax increases can be less detrimental to state economies than budget cuts because some of the tax increases affect upper-income households which are likely to result in less saving rather than less consumption. Basically, a $100 monthly budget cut hurts a Wall Street CEO a lot less than a single mother.

A surefire way to increase and prolong suffering is to follow the Republican two-headed monster model of cutting social spending during a recession. Really, it's just stupid.

Cross-posted from Allison Kilkenny's blog. Also available on Facebook and Twitter.

Follow Allison Kilkenny on Twitter: www.twitter.com/allisonkilkenny

Comments

[Guitarsandmore]

stop funds for military + nationalize banks + fund social programs = quality of life and jobs.

Social programs = 2 trillion for new infrastructure, 1 trillion for health care, 1 trillion for green economy.

[lynnwinter]

What's left out of the debate is the fact that many of these social welfare cuts are actually federal civil rights violations, and that the states have already received new federal grant money to pay for them.

According to the ARRA website, by March 31 the states had received more than $15 billion in federal grants to be dedicated to medicaid programs. In order to get that money, the states could not have "eliminated coverage for home- and community-based waiver care that costs more than institutional care" since July 1, 2008.

Since the nineties, reports have been published around the country showing that home and community based care services are always a cheaper alternative, program-wide, than institutio­nalization­.

The DHS Office for Civil Rights is now investigating whether such "home-and-­community-­based" services medicaid cuts are violations of the civil rights of individuals with disabilities. Similar civil rights complaints are pending in six states.

So what have the states spent the $15 billion on? Here in Hawaii, the "home-and-­community-­based" program was cut by 65% - $14 million. Hawaii has already received more than $70 million in ARRA medicaid grant funds. But services are still being cut.

The GAO recently called for oversight of what's happening with the ARRA funds once they go to the states.

Apparently that's where the "transparency" stops. And kids who need those services in order to stay home with their loving families and caregivers are being threatened with institutio­nalization­.

It's barbaric.

[lexic0n]

Taxation may be the "right" answer in praxis, but it is always wrong ethically and morally. Neither man nor government can forcibly take what one has earned through their labor and give it to another who has not.

The issue of what then to do is complicated and open to much debate. But the simple moral principle that forcible theft of private property is always wrong cannot be simply "got around" by claiming more "practical" considerations.

[allpeopleunite]

Neither the Dems nor the Repoublicans are capable of enacting lasting change in America, change that benefits the working class and protects our hard won gains. What is needed is a mass party of labour, independent of the capitalist classes which control the government!

[Joseph A. Palermo - Huffpost Blogger]

http://www.huffingtonpost.com/joseph-a-palermo/arnold-schwarzenegger-and_b_223658.html

[iridium53]

What we're fast learning about the Obama / Axelrod mindset is that, for them, coming off the bench and scoring 10 points in the game is the same as winning - they got their personal stats buffed a bit.
No passing, no helping others, just personal stats.

It's not enough.

Obama and the Democrats - Pelosi and Reid - passed a stimulus bill earlier this year. Just not much stimulus in it. Jobs continue to be lost at an alarming record-breaking rate. Those individuals who are in trouble are not being helped by the stimulus. And, social support mechanisms for the poor are wholly inadequate.

Obama may not be responsible for the initial creation of the problem, no question that Bush and the Republicans were. However, further damages are ongoing. And, but for the lack of action on the Obama administration's part, these increased damages would be better ameliorated. The cause of the ongoing additional damage from lack of proper care is Obama's and the Democrats.

It is time the Obama Administration stepped up and took the necessary additional actions. For instance, instead of just allocating money, get the contracts going and jobs working. It's nice that Joe Biden gets a government paid vacation to see his son, but perhaps he should be working to actually do something for the American people.

[stell]

I couldn't agree with you more. The only good thing about the stimulus was the extension of unemployment benefits. Aside from that it has been disastrous. What good is the stimulus when the economy will have rebounded when it actually kicks in? Well, it stimulates the Democrats' midterm election prospects.