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We're Doing a Heckuva Job Helping Those Devastated by the Economic Meltdown

Like the levees in New Orleans after Hurricane Katrina, the safety net is failing Americans battered by the 'Great Recession' of 2008-2009.
 
 
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The levees failed residents of New Orleans when Katrina battered their city. The safety net is failing Americans battered by the most recent Category 5 storm—the "Great Recession" of 2008-2009.

Category 5 storms are catastrophic: communities are ravaged; security is stolen; lives are lost. For millions of Americans, the Great Recession is just such a storm.

Unemployment is in the double digits; poverty and hunger are at record-high levels; foreclosures and homelessness are still climbing. The middle class is shrinking and many blacks, Latinos, single mothers and children are experiencing a full-blown economic depression. With such devastating conditions, our nation once again finds itself unprepared to face the ravages of an unnatural disaster.

Katrina exposed our nation's inability to respond to the plight of many of our most vulnerable citizens in a time of great need. This recession has exposed our nation's inability to respond to the profound needs of a growing number of Americans falling precipitously through a badly tattered safety net.

The Institute for Policy Studies (where one of us works), the Center for Community Change, Jobs With Justice and Legal Momentum have co-authored a new study outlining the tragic state of our nation's safety net. In "Battered by the Storm: How the Safety Net is Failing Americans and How to Fix It," we find that while the Obama administration's 2009 Recovery Act has provided some responsiveness, particularly with the Supplemental Nutrition Assistance Program (food stamps) and Unemployment Insurance extensions, our safety net has far too many holes to keep millions of us out of poverty, particularly during this extended period of high unemployment.

We have a national social assistance program, the Temporary Assistance to Needy Families (TANF), that’s supposed to be our nation’s last line of defense against falling into the depths of poverty. Yet this program is so deeply inadequate that by 2008, the number of needy children receiving TANF fell to only 22 percent. Under the pre-“welfare reform” system of Aid to Families with Dependent Children (AFDC) in 1995, 62 percent of poor children were benefiting. Eligibility criteria are set at sub-poverty levels in some states, making poor children ineligible, and barriers such as lack of childcare and lack of access to employment have further kept poor children from receiving desperately needed economic assistance that a system such as TANF should provide.

Most Americans' sense of well-being is tied to their jobs. With unemployment and underemployment at over 17 percent, higher among black, Latino and women-maintained household populations, the fall from middle class to poverty is often quick and painful. America’s children suffer the most. Almost one in five children in the United States lives in poverty; almost one in four suffered from inadequate access to food last year. These numbers are on the rise without an end in sight.

And although two safety net programs in particular, food stamps and unemployment insurance, have proven fairly responsive during the recession, what does this mean in practical terms? About 57 percent of unemployed workers currently receive unemployment compensation thanks to the Recovery Act and congressional extensions. But the amounts are typically less than half of the wages they were receiving and many are suffering from the devastating loss of work-related health benefits.

Although the SNAP program, commonly known as food stamps, has responded fairly well to growing need by reaching more households, the average monthly benefit per person is only about $100. How can our children be happy, healthy, and adequately nourished on that?

There are solutions. We can begin to repair the safety net immediately, saving millions from lives of despair. We can simultaneously begin to implement longer-term structural changes that can eventually make obsolete the need for a safety net in this country.

The first step is an emergency relief package. We propose a roughly $400 billion relief package that will:

  • Create 1 million new public-sector jobs;
  • Cover the gaping state and local fiscal deficits;
  • Maintain existing jobs;
  • Bolster inadequate safety net programs like TANF and SNAP;
  • Extend and expand Unemployment Insurance and COBRA.

There are innovative ways to keep homeowners in homes threatened with foreclosure by allowing them to rent. Low-income families facing homelessness can be protected when landlords go into foreclosure by funding a national housing trust fund that can provide desperately needed affordable housing.

Such an emergency relief package is a necessity and it will have positive effects on the economy enabling a more robust recovery. We simply can’t afford not to do it.

The Institute for Policy Studies even suggests ways to pay for the package that involve progressive tax reforms. For example, we could raise up to $150 billion for new jobs simply by putting a penny tax on every $4 of stock trading transactions. We could save our economy and curb the reckless casino mentality that got us here in the first place.

Ultimately we need to reverse the trends of the past 30 years that have reduced wages, increased poverty, and grossly expanded the income gap between the rich and the rest of us in this country.

Such solutions would at least entail policies aimed at generating:

  • Full employment;
  • Affordable quality universal healthcare;
  • Childcare assistance for all who need it;
  • Increased access to affordable housing;
  • High-quality education from pre-school through college;
  • Reform of discriminatory and unjust law enforcement policies;
  • Paths to citizenship; and
  • Full enforcement of anti-discrimination laws at all levels of government.

Unless we act immediately to stop the bleeding and simultaneously begin the longer-term work of reversing the devastating trends of increasing poverty in this country, Katrina and the Great Recession will be only two of countless Category 5 storms that will leave our families, our communities and our nation tattered for generations to come.

Karen Dolan is a fellow at the Institute for Policy Studies in Washington D.C. and a contributor to Foreign Policy In Focus. She directs the Institute's Cities for Progress project. Diana Pearce is director of the Center for Women's Welfare at the Univ. of Washington's School of Social Work.