Washington's Debt Panic and the Real Social Debt in America

In the wake of the Congressional Supercommittee's collapse, we finally have consensus on both sides of the aisle: the lawmakers orchestrating the partisan drama are, behind the scenes, happy to collaborate on destroying economic security for all but the wealthiest Americans.

Though the debt hysteria made good political theater, the main immediate impact on the budget is simply to prolong the sense of doom hovering over struggling households. The budget problem those families face isn't some theoretical future debt crisis but the possibility of losing unemployment checks when a year-end legislative deadline hits.

Federally funded unemployment benefits, which conservatives dismiss as a fluffy cushion for shiftless poor, have been a lifeline for some 17 million Americans in the past three years. In addition to helping individual households pay their bills, the benefits have had a ripple effect on cities and towns battered by an anemic job market, "contributing nearly $180 billion in hard cash to those communities struggling with severe unemployment," according to a report issued in October by the National Employment Law Project.

In January alone, 1.8 million workers who currently receive federal unemployment insurance or would have begun to receive it will be cut off if Congress does not renew the program before it expires on December 31st.... Nearly 650,000 workers in 33 states and the District of Columbia will face an immediate "hard" cut-off of their benefits in January, after struggling to find work and pay their bills for over a year in most cases. There is no phase-out allowing these workers to collect the remainder of their final 13 to 20 weeks of benefits.

Those numbers of course didn't get much airtime as Supercommittee lawmakers grandstanded by slinging around proposed cuts to social programs and tax breaks for the rich. But if deficit-obsessed lawmakers actually examined the impact of unmployment insurance and other endangered assistance programs, they might start to understand how poverty and inequality is entrenched in America today.

Without unemployment benefits, absolute poverty would engulf a much larger share of the 99 percent. According to NELP, were it not for this assistance,

the increase in the number of Americans in poverty would have more than doubled, from 2.6 million to 5.8 million people. To put these figures in perspective, the number of people protected against destitution has increased nearly sevenfold since 2007 thanks to the unemployment program.

And if people couldn't fall back on meager unemployment payments, their communities, including those cities where people have taken to the streets to express their anger and desperation, would be suffering even more. Those benefits were immediately funneled into local businesses, helping prop up local economies. An unemployment check might be a family's last line of defense against the poor health, disruptions in education, and long-term instability that are associated with severe poverty.

Yet unemployment benefits and other public programs cover just a tiny fraction of the massive social deficits that have plagued the country's poor, even before this recession hit. An analysis of household economic security by Wider Opportunities for Women found that about 45 percent of Americans are now "unable to cover their basic expenses." Even a large portion of households with two income earners fail to make ends meet. The economic inequality is further polarized along racial lines: "a startling 77 percent of African American and Hispanic children, are living in families without economic security."

Following the manufactured "failure" of the Supercommittee's vicious deficit-slashing agenda, we're looking at more fiscal limbo and bad tidings for the year to come as the unemployment insurance deadline looms.

Maybe over the holiday break, lawmakers will get a glimpse of the real world outside the Beltway, and see that the nation's real debt lies not in Washington's fiscal projections but in the economic injustice that robs millions of the most basic dignity.

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