Bailing on Poverty and Ordinary Americans

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The Nation

Bailing on Poverty and Ordinary Americans

by
Katrina vanden Heuvel and Greg Kaufmann

At a moment when the media is focused on the drama surrounding the failed bailout legislation, too little attention is being paid to the real struggles of ordinary people and the human costs of our inequitable economy. The bailout's fate shouldn't stand in the way of the broader economic stimulus package that is desperately needed. Though there was an effort by Democrats to make sure that at least a few of the biggest challenges people are facing are addressed before Congress recesses this week, an obstructionist GOP makes that now seem out of reach and sight. highly.

As Congressman David Obey put it, "We are trying to find discreet ways of making life a little less miserable for people who have been hit hard by the consequences of the economic chaos that has swept over the country."

On Friday, at the request of Senator Edward Kennedy, the US Congress Joint Economic Committee held a hearing on the fight against poverty in America - or, some might say, the need for a renewed fight against poverty in America.

There is a strong connection between this bailout and any progressive proposals such as cutting poverty in half over the next ten years. As panel witness Angela Glover Blackwell, founder of PolicyLink and co-chair of the Center for American Progress Task Force on Poverty said following the hearing, "I know that we have to deal with this meltdown... but I do worry that it's going to cut right into the money that we've been trying to get to focus on dealing with poverty and other urgent issues... As we are thinking about how to save Wall Street, we need to think about how to put in ... requirements - that we deal with the foreclosure crisis, that we deal with the issue of poverty in America, and that we don't take from a needy source in order to give to an irresponsible source. I am very worried that without an outcry from the American people that we are just going to see this money go without the safeguards that are needed...."

There was broad agreement on the panel that the priorities of the past 8 years have increased the urgency of a long-term commitment and new vision to reduce the number of people in poverty and help people cope with current economic distresstoo. David Cicilline, Mayor of Providence, said: "We are seeing as a result of reductions in investments in education, and in childcare, and in community development block grants - in all the things that support strong communities, strong neighbors, strong families - the consequences, frankly of the past number of years.... The challenges that American families are facing in cities all across this nation need to be addressed, particularly in the areas of housing, healthcare, and educational opportunity."

But those long-term challenges are taking a back seat to the immediate crisis: more and more people who can't afford food, heat, or shelter; people who find themselves living in poverty ($19,971 for a family of four) - or on the brink of poverty - for the first time in their lives.

In the short-run, the panelists said there is an urgent need for infrastructure investment - creating jobs immediately while also beginning to address the reprehensible neglect of our roads, bridges and mass transit, schools and levees, drinking water and wastewater systems. Also, an increase in funding for food stamps - which go to those in greatest need and are pumped directly into the economy. The witnesses argued for full-funding of the Low Income Heating Energy Assistance Program (LIHEAP) to avert a potential catastrophe this winter as people can no longer afford to heat their homes or are forced to choose between fuel, medicine, and other necessities. There was a consensus on the need for an increase in the community development block grant program which has been cut under the Bush Administration, and which would immediately be put into job training, after-school and other programs that are vital to struggling cities and families. Tax reforms are needed to expand the Child Tax Credit and Earned Income Tax Credit to reward work and help lift working people out of poverty. Finally, unemployment insurance needs to be extended. New York Congressman and leading Progressive Caucus member, Maurice Hinchey, spoke eloquently on the impact of 600,000 jobs lost thus far in 2008 - including 61,000 manufacturing jobs out of a total 84,000 jobs lost in August; 9.4 million Americans are unemployed, with almost 2 million no longer eligible for unemployment insurance.

So what is Congress doing to address those who are struggling the most today?

LIHEAP funding was approved on Saturday because it was attached to the Continuing Resolution bill - a $600 billion appropriation bill that keeps the government operating through March 2008. Also, a child tax credit was approved in separate Senate and House tax legislation that would benefit 13 million low-income children by lowering the threshold for credit from $12,050 to $8,500, and increasing the amount of credit available from the current maximum of $1000 per child. However, there are no assurances that the Senate and House will iron-out their differences in the bills. Already, it is reported that there are discussions of delaying the child tax credit provision until 2010. So, while we've seen ferocious debates about out a trillion dollars for Wall Street, and Republicans and John McCain work to make Bush tax cuts to the wealthy permanent and even expand them, low-income families in a down economy can't even count on this minimal relief.

And the picture gets worse from there. Beyond LIHEAP and the child tax credit - the latter of which is no sure thing - who knows?

The Republicans filibustered the $56 billion economic stimulus package in the Senate on Friday. It would have provided a temporary increase in food stamps by 10 percent at a time when rising food costs are hitting lower-income people harder than anyone, formerly middle-class people are relying on them for the first time, and food banks are facing record demand and shortages; extended unemployment by 7 or13 weeks - depending on a state's unemployment rate - at a cost of $6 billion over 10 years; spent $10.8 billion on infrastructure, including building and repairing highways, bridges, mass transit, airports, and Amtrak, creating 384,000 jobs; $500 million for the COPS program to hire 6,500 police officers; $600 million for clean water systems that would create 24,000 jobs; $2 billion for school construction that would create 32,300 jobs; $500 million to address some of the construction backlog for the Corps of Engineers for flood control, navigation, shore protection, and environmental restoration projects - providing construction jobs around the nation. Additionally, the package included $19.6 billion to increase the Federal share of Medicaid costs by four percent, helping twenty-nine states that currently face a $52 billion shortfall in their FY 2009 budgets, resulting in cuts in needed health care, education, and other programs.

After the GOP filibuster in the Senate, the House passed its $60.7 billion stimulus package. It was similar to the Senate bill but "more focused on spending that would have an immediate impact on job creation," according to the Washington Post. CongressDaily reported that the Bush Administration would veto it and was particularly critical of the infrastructure investment spending, saying it wouldn't create jobs in the short-term because the projects need years of planning. But Democrats argued that the projects are ready to go, creating high-paying jobs immediately and benefiting the economy in the long-term as well.

There were reports that the Senate might take up the House package but that looks really doubtful. ABC News reported that Democrats might - though it's highly unlikely at this stage- attach it to a renegotiated bailout bill and pick-up the votes needed for approval by the House from within the Democratic party.

What is most alarming about the difficulty of getting these spending proposals approved is that the resources - which address some of the most urgent needs at this moment - are a drop in the bucket compared to what is truly required over the long haul to rebuild our infrastructure, invest in green jobs and technology, make quality healthcare affordable and accessible, provide educational opportunities and childcare, and make sure people who work are paid a decent wage and benefits. For example, according to the Federal Highway Administration, $131.7 billion and $9.4 billion are needed every year over the next 20 years just to repair deficient roads and bridges, respectively.

So where does that leave 37 million people living below the poverty line? Or 90 million - 1 out of 3 Americans - living with incomes below 200 percent of the poverty line? Or 47 million Americans lacking health insurance? Without a serious shift in priorities, or a more equitable way to pay for the Wall Street bailout such as Senator Bernie Sanders' proposal for a 10 percent surtax on couples with an income over $1 million a year or $500,000 for single taxpayers, raising $300 billion in revenues over 5 years, it leaves the most desperate citizens and progressive advocates like Blackwell extremely worried. It's also clear that real change will not happen without a filibuster-proof Democratic majority in the Senate - because no benefit for lower-income and the middle-class is too important to get by the Grand Obstructionist Party.

Katrina vanden Heuvel is the editor and publisher of The Nation. Greg Kaufmann is a freelance writer residing in his disenfranchised hometown of Washington, DC.

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