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the economy

What’s Come Over America?

Is it tough love or genuine contempt for our fellow citizens?

It would seem that Americans have suddenly adopted a stern view of our own people as irresponsible and indolent and that we've decided to exact harsh measures, all at once, that are causing widespread economic hardship.

Congress stripped food stamps from the farm bill and the House wants to cutUpdate: The 5-year farm bill, just signed into law, trimmed the $40 billion proposed food stamp cutback to $8.6 billion

back the program by $40 billion across 10 years, estimated to bump 3.8 million families off the rolls.

House Republicans unanimously rejected an increase in the minimum wage last March leaving it over 30% below what it was in 1968. Pressure mounts to raise the hourly rate from $7.25 to $10.10, but the House seems obstinate, which will strand workers at the poverty level.

In their backlash against Obamacare, governors and legislatures in 24 states have chosen to spite themselves by refusing to expand Medicaid to over 4.9 million more of their people even though the federal government will pay 100% of the tab for the first two years and 90% thereafter (see map later).

Businesses are reducing workers to under 30 hours a week and hiring more part-timers so as to avoid the Affordable Care Act mandate that they provide health insurance for anyone working 30 or more hours.

Companies are converting employees to independent contractors for that same reason as well as to avoid paying for half of Social Security and Medicare and for other benefits mandated by law.

Sequestration has cut back government spending on social programs.

More states are considering or passing right to work laws that hurt or destroy the unions that give employees some say in their wages and benefits.

College students and recent graduates who want a job with desirable firms must first work for nothing as interns while somehow struggling with the heavy debt of student loans.

And on top of all that, Congress went home for Christmas recess having passed a budget that left out the renewal of long-term employment insurance for some 1.3 million now, and 4.9 million in total expected in 2014, affecting some 14 million when their families are counted.

they need not apply

Insidious practices have been at work to cause the serious problem of the long-term unemployed, defined as those unable to find work for 27 weeks or more. The economic collapse of five years ago has left behind a huge number still not employed as those weeks accumulate, but companies have not taken that into consideration. They shrink from hiring the long-terms because they have not found a job, thinking something must be amiss with their skills or their résumés, thus causing the problem to feed on itself. They prefer to hire someone who already has a job, which helps not at all. President Obama said it best in a December speech: “…life is a Catch-22. Companies won’t give their résumé an honest look because they’ve been laid off so long — but they’ve been laid off so long because companies won’t give their résumé an honest look”.

Companies have taken to checking credit reports of job candidates — creating double jeopardy, as if a poor score reflects on a person's conscientiousness, when it is the long term of unemployment that has caused the poor credit record.

stopgapThe Emergency Unemployment Compensation (EUC) program was enacted during the Bush administration in 2008 to help unemployed workers beyond the 26 weeks of support that states typically provide. Given the severity of the economic collapse, the EUC tacked on 73 weeks to extend the term to 99 weeks overall. Failure to renew means that benefits revert to the state cutoffs.

As a stopgap, a bill before Congress would extend benefits for three months until a longer-lived solution can be developed, and the Senate overcame a Republican filibuster, 60 to 37, with 6 of the opposition defecting so that the bill can go forward for a regular vote.

Republicans insist that the $6.4 billion cost of the extension — hard to notice in a $3.8 trillion budget — be paid for by spending cuts elsewhere. Speaking in the Senate, an angry Jeff Sessions of Alabama said, “this bill borrows every penny of it. Just a total violation of promised fiscal responsibility. It just is”.

That fiscal responsibility didn’t seem to matter earlier. Secretary of Labor Thomas Perez said on the PBS NewsHour, “When President Bush signed five extensions there were no strings attached …Historically there’s been an understanding that we call it emergency unemployment compensation for a reason, because people are in a state of emergency”. Majority Leader Harry Reid said on the Senate floor, “We have never had so many unemployed for such a long period of time. The long-term unemployed rate is twice as high as it was any other time we’ve allowed emergency benefits to end”.

The map shows in gray the states that have refused government funds to expand Medicaid and the number of people in each who could have been given medical care.

House Speaker John Boehner says that “another extension of temporary emergency unemployment benefits should not only be paid for but include something to help put people back to work. To date the president has offered no such plan”. He has a point. The White House could see expiration of EUC coming but put forth no broader plan to go with an extension, such as skills training, or relocation assistance to help families move to where jobs are more plentiful.


Others are opposed to an extension on any terms. Senator Rand Paul of Kentucky on Fox News said that the extension does “a disservice to these workers. When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy”.

This is the view that says the long-term unemployed are not looking for work hard enough, that the insurance amounts to the government “paying people to stay unemployed”, that when government cuts off benefits, the unemployed will search harder. The Wall Street Journal goes as far as to title an editorial "How to Keep Workers Unemployed".

There's some truth to that, but 7% unemployed means there are still three unemployed for every job opening, per Gene Sperling, the president’s economic adviser. When Walmart opened in D.C., there were 23,000 applications for 600 jobs. The mere 2.6% of applicants who will be accepted makes getting a job at Walmart harder than getting into Harvard, which accepts 6.1% of applicants.

Another belief is that the long-term employed have been turning away job offers that do not pay enough, holding out for something better. But even the conservative Weekly Standard says, “…it is quite hard to imagine that a significant number of workers who have been unemployed for 27 weeks or longer are engaged in a halfhearted job search because they don’t want to lose the leisure time their $300-a-week check allows” — the average that recipients get. They are not teenagers, or the extreme cases that Fox News searches out, such as the ”surfer dude” they found in California idling on $200 a week. Nearly two-thirds of the long-term unemployed are between the ages of 26 and 55, a third with children to feed and clothe.

Douglas Holtz-Eakin, economic adviser to George W. Bush, now president of American Action Forum, a conservative think tank, thinks the “best solution would be better strategies for more rapid economic growth…Patching things after the fact, which is really all unemployment insurance does, really doesn’t help”. It helps today’s unemployed, which long-term planning does not. It is the familiar Republican theme: jobs and growth and lofty rhetoric about “increasing economic mobility to further the conservative vision of a fluid, dynamic society, characterized by energy, filled with citizens working to realize their ambitions”.

Well, yes, but it must be said that not one Republican in the House or Senate voted for the 2009 stimulus and its $150 billion infrastructure package and Republicans have blocked every one of Obama’s jobs initiatives since. The president wants an infrastructure bank to repair the nation’s dilapidated roads and bridges. John Boehner responds to that with his familiar theme: “It’s easy to go out there and be Santa Claus and talk about all the things you want to give away but at some point somebody’s got to pay the bill”. It would make for “the best jobs program in America”, says Ed Rendell, who was Pennsylvania's governor in 2009, but funding requires an increase in the gas tax that has always been how we paid for roads, and which hasn’t been raised since 1993. But that’s a tax increase, and a tax increase won’t get anywhere in Boehner’s House. Back to gridlock and empty talk of jobs and growth.

wage freeze

The companion article, "What's Not To Like?", on this page lists the arguments why the minimum wage should not budge or the law even abolished — arguments that recur every time the subject arises — and links to this earlier piece, "Let's Permanently End Minimum Wage Stupidity", from last July which argues the opposite.

food fight

Some 48 million Americans rely on food stamps to feed their families at a cost to the federal government that approaches $80 billion a year. SNAP (the Supplemental Nutrition Assistance Program) now assists 15.2% of Americans compared to 8.8% in 2007 as we reported here in October.

The elimination of strict income and asset tests, making it easier to qualify, is one cause for the steep rise. But heard more often is that same belief that we saw with unemployment insurance, that government programs pay people not to work. Stephen Fincher, a Republican from Tennessee, justified his vote to drop food stamps from the farm bill by quoting the Bible — “The one who is unwilling to work shall not eat”. He thinks it is “not for Washington to steal” from us and give to others. Democrats delight in pointing to the $3.5 million in ”stolen” farm subsidies his farm properties have collected from the government since 1999.

Republicans want to impose work requirements (with no accompanying job training aid) that would drop able-bodied, childless adults from the food stamp rolls if they do not find at least a part time job within 90 days — a perversity that turns on its head being on food stamps because of not being able to find a job in these times of high unemployment.

The steep rise in recipients sparks suspicion among Republicans, while Democrats turn a blind eye to any possibility that there may be cheating. At the family level, the stakes are low. The average subsidy is $134 a month, or $4.39 per person to buy a full day's food. The average family runs out of the monthly refill on their electronic "EBT" card by day 17.

A New York Times piece this past December was titled “Food Stamp Fraud, Rare but Troubling” and pegged the amount at only 1%. What culprits there are do not cheat to put food on their family’s table; rather they are storefront operations that pay cash for those EBT cards, which is illegal.

But read a little further and what do we find?

“The amount of money lost to underground trafficking is estimated to be 1.3 percent annually. That is down from more than 4% in the 1990s when paper coupons had not yet been replaced by electronic benefit cards…Include erroneous payments to recipients because of errors on the part of the government or outright lying on applications, and the overall loss to the food stamp program is about 4.07 percent, according to the Department of Agriculture.

That’s not a lot? The Times then assures us that it is less than other government programs, that the Government Accountability Office has estimated that Medicare and Medicaid lose nearly 10% to fraud.

Are we meant to be reassured by these numbers of vanished taxpayer money?

Still, the combination of all these hard lines drawn against the American people in a still tough economy, and all at once, leaves us to wonder whether we have lost our moral bearings.

3 Comments for “What’s Come Over America?”

  1. Gene Hansen

    I find it curious that none of the guest writers list their names. This publication purports to have “independent” writers with NO political affiliation, yet this article is less than objective. He, or she, may claim to have no political affiliation, yet the flavor of this piece is bitterly partisan. Certainly not worthy of Edward R. Murrow. Michael Harrington presents a very logical counter-argument for the lopsided viewpoint of this author.

    • From Editors

      Mr, Hansen:

      Thank you for posting your comment.

      We do not sign our articles because we are a small group of just plain citizens who joined together in this project but whose unknown names would say nothing. So we decided to go ego-less.

      When we say “independent writers with no political affiliation”, that means we are not connected to any organization or political party, but it does not mean we have no opinions. In the instance of this article the point is that — all at once — there have been cutbacks in programs across the board before anything, such as what Mr. Harrington proposes, exists to take their place. Call it partisan, if you like, but that’s deserving of sharp criticism in our view.

  2. The idea that political polarization has caused us to lose our moral bearings is perhaps less convincing than this article implies. Economics and politics can both be conceptualized as the art and science of trade-offs under real constraints. In other words, if we choose to spend our resources on “this,” then we can’t also spend them on “that.” What is really at the core of these legislative battles that are supported on each side by a 50-50 electorate are the trade-offs between two opposing ideological beliefs.

    This article accurately posits one-side of this ideological debate (let’s call it Left), but fails to address the trade-offs, which results in an implied moral judgment against those who favor different trade-offs (let’s call them Right). However, we need to be more thorough, balanced, charitable, and truthful with our analysis. Without writing an equally long essay presenting an opposing view on each point, let’s just consider some of the empirical evidence to illustrate the counter-argument to the “caring” welfare state.

    Let’s take the case of anti-poverty programs. This writer assumes anti-poverty programs yield desired results, good results. The writer then leaps to the logical conclusion that more is better. Is this true?

    This year marks the 50th anniversary of America’s War on Poverty. Over that time the government spent more than $16 trillion to fight poverty. Yet today, 15 percent of Americans still live in poverty. That’s scarcely better than the 19 percent living in poverty at the time of Johnson’s speech. Nearly 22 percent of children live in poverty today. In 1964, it was 23 percent. Worse data comes in regarding the state of black families and out-of-wedlock births among all races at the lower income levels.

    Naturally, this also is a one-sided view, but after devoting so many resources to the problem, can we honestly say we have achieved our objectives? The above writer may admit no, but argue that without these programs poverty rates would be almost double, so we must double down on the policies. But this merely skirts the more important question: are we merely transforming poverty into dependence?

    I think all would agree that the objective should be a system of benefits that encourages people to work their way out of poverty, and an economy that does not result in so many people needing welfare in the first place. A recent news report argues thus:

    “The vast majority of current programs are focused on making poverty more comfortable – giving poor people more food, better shelter, health care, etc. – rather than giving people the tools that will help them escape poverty. As a result, we have been successful in reducing the worst privations of poverty. Few Americans live with out the basic necessities of life, yet neither do they rise out of poverty. Moreover, their children are also likely to be poor.

    “It would make sense therefore to shift our anti-poverty efforts from government programs that simply provide money or goods and services to those who are living in poverty, to efforts to create the conditions and incentives that will make it easier for people to escape poverty.”

    Now, one can disagree with this point of view, but it is NOT illegitimate or a sign of moral failing. On the contrary, dependency does not ennoble the human spirit or affirm basic human dignity. This fact is confirmed by any child struggling to imitate adults and proudly “do it myself.” From this POV, a social system that perpetuates dependency is not only not moral, it is immoral.

    In a democracy we will disagree with these interpretations and the logical implications, but we should be debating the trade-offs that define our differences, and are amenable to compromise, not the good character of our opposition.

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