The Common Good
July 2011

The Safety Net Frays

by Elizabeth Palmberg | July 2011

Morally and economically, it's wrong for federal budget makers to go after the poor.

In the past two years, the social safety net has helped more Americans than any time in a generation. So why are so many people trying to tear it to shreds?

The recession brought on by Wall Street's casino speculation has pounded Main Street hard; unemployment has hovered near double digits for two years. Ordinary people are searching for jobs day after day, week after week. At a national hiring day in April, McDonald’s got more than a million job applicants, and rejected more than nine-tenths of them.

The House of Representatives' budget, which would cut Medicare, Medicaid, food stamps, foreign food aid, health-care reform, and unemployment benefits -- while sparing military spending and giving tax breaks to wealthy corporations and individuals -- would be a moral disaster for every American. It's clear (even to rampaging liberals such as the economists at Goldman Sachs) that the proposed federal budget cuts would be a drag on the economy as it digs out of the hole caused by the recession.

During the Bush years, Congress handed out big tax breaks to the rich -- cuts that originally had an expiration date so legislators could avoid talking about their long-range budget folly. Congress and the Bush administration also green-lighted a $1.2 trillion bender of unneeded wars, a splurge that will keep on spending, due to our responsibilities to veterans.

Now Congress is shocked -- shocked! -- to discover that deficit spending has been going on, and is pointing fingers at the scapegoats that seem least likely to fight back. Introducing his slash-and-burn budget, Rep. Paul Ryan predicted that without such gutting, America's safety net was in danger of becoming "a hammock." A hammock? News flash: This is mass unemployment, not a siesta. Food stamps, for example, are a safety net that people use for a limited period -- nine months, on average -- to feed their families while they get through what is often the worst economic time of their lives.

It's worth mentioning that, when the U.S. is not in a recession, the Federal Reserve intentionally aims to keep unemployment above a certain level, in order to fend off excessive inflation. You read that right: The government makes sure that at least 3 to 5 percent of Americans seeking work at any given time are unemployed. It's not necessarily crazy for it to do this, but it is crazy to scapegoat the poor afterward.

This is particularly true because, for three decades in the U.S., the rich have been getting richer and the poor poorer. This is no accident; it's from years of trade agreements that ship working-class jobs overseas, government policies that let union-busting employers break the law with only a slap on the wrist, and tax and contracting giveaways to big business. Redistribution? You're soaking in it -- the kind of redistribution that shifts still more wealth to the wealthiest. The House's proposed budget is just the latest and most shameless installment.

Last year, Manhattan hedge fund manager John Paulson took home $4.9 billion in pay. Before the crash, Paulson helped inflate the housing bubble by designing junk mortgage-backed securities for Goldman Sachs -- and then profited from the pop by betting that those very securities would fail. Yet instead of being run out of business, last year he made about a billion and a half more than the federal food stamp program spent in all of New York City.

The economic evidence is clear: Inequality this stark kills jobs. When people in the middle and working class make a decent income, their purchases fuel the real economy. When all the wealth is pumped to the top few percent, they pour money into dangerously volatile speculation.

The moral evidence is clear: It's wrong to make false implications that people are poor and unemployed because they are shiftless, and that the level of national shiftlessness inexplicably doubled about the time the housing bubble popped. And it's wrong to intentionally target the most vulnerable in society. None of us knows when we might need that social safety net -- and all of us are lessened when we yank it out from beneath our fellow human beings.

Elizabeth Palmberg is an associate editor of Sojourners.

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