Holes Have Grown In Nation's Safety Net
THE nation's economic and social ``safety net'' has developed some large holes. As a result, more of those left jobless in the current United States recession could tumble through the gaps in the various government income support programs.
``There is a lot less economic security than there was'' in the 1981-82 recession, says Lawrence Mishel, director of research at the Economic Policy Institute, a Washington think tank.
Markley Roberts, an economist with the AFL-CIO, notes that closing some of the holes in the safety net ``is not only a question of compassion for the people who are out of work. It is a matter of the health of the economy.''
In establishing the present social welfare system in the 1930s and subsequent decades, the government's goal was not only to help individuals in economic trouble. The programs were meant to maintain total personal income sufficiently to soften recessions. People receiving unemployment insurance, food stamps, welfare payments, participating in paid training programs, or other government assistance are more likely to continue some spending for goods and services than those relying completely on savings or other assets to feed, house, and clothe themselves.
``These programs support consumer buying power and it is good for the country,'' Mr. Roberts says.
Weaknesses in the safety net include:
The federal and state governments have allowed the unemployment insurance program to shrivel rather than boost taxes to sustain it. As a result, barely one-third of the jobless are now receiving unemployment insurance checks. That compares with about half in 1982 and three-quarters in the 1975 recession.
On a nationwide basis, welfare benefits have lost some 39 percent of their value, after inflation, since 1970. State governments, hard-pressed financially, have not boosted Aid to Families with Dependent Children sufficiently to keep up with inflation - with the exception of California and Maine. In the median state, a three-person family (mother and two children) got $288 a month in July 1980 and $364 a month last January, both in current dollars. After about 30 percent inflation in the 1980s, a typical welfare-aided family is worse off today than 10 years ago.
Moreover, eligibility standards for those seeking welfare have been tightened directly or indirectly in the past decade.
``The state safety net system is in its weakest condition in a number of years entering a recession,'' says Isaac Shapiro, a research analyst at the Center on Budget and Policy Priorities in Washington, D.C.
As a result of the combination of a weakened safety net and recession, more people are likely to become homeless in the next year or so, warns Bard Shollenberger, director of government affairs at the American Public Welfare Association. Moreover, more families will be seeking emergency assistance or general relief from state governments. More individuals will be looking to private voluntary groups for assistance.
Mr. Shapiro estimates that if unemployment rises 2 million or 3 million in this recession (it rose 4.6 million from 1979 to 1982), the number of poor will increase 3 million or 4 million.
Many states will find it financially difficult to finance their share of increasing welfare and unemployment benefits.
At the federal level, any recession-related increase in the cost of unemployment benefits, welfare, food stamps, etc., can occur under last October's budget agreement between President Bush and Congress without triggering any consequences. But if Congress wants to mend the safety net - say to extend unemployment benefits by 13 weeks as in previous recessions, it would have to seek budget cuts to offset any boost in expenditures.
However, such cuts or sequestrations could be avoided under the Budget Enforcement Act if (1) the president declares a need for emergency appropriations, (2) the Congressional Budget Office (CBO) notifies the majority leaders in both houses that the economy has grown at less than a 1 percent annual rate for two quarters (perhaps possible next April), or (3) the CBO or the Office of Management and Budget project less than 0 percent growth for two consecutive quarters. In each case, Congress and the president must agree on any action under that act.