Welfare and the politics of poverty

Great recap of the welfare reform travesty – in which Clinton admits that the poorest families in the U.S. are worse off after welfare reform. Also describes how state control, combined with fiscal downturns, pulled money away from the poor.

The federal budget, battleground

So much to say about Obama’s budget, the geek in me actually wants to read the entire plan, but I have this pesky dissertation to finish instead.

Budgets are inherently redistributive documents, in one direction or another. Obama’s proposal is being characterized as a bold effort to redistribute the benefits of the recovery to the middle-class. It may be that, at least in part, but that could mean a lot of different things to different people.

One sentence that caught my eye is that Obama has left out “any pretense of trying to address the main drivers of the long-term debt – Social Security and Medicare.” And that he has outlined an ambitious set of goals rather than remaining “hemmed in… because of politics and balance sheets.” I’m not entirely sure what the NYT is getting at (that fixation on “entitlement” programs and debt is responsible for the absence to date of bold budgetary goals? what’s changed?).

I look forward to these debates if indeed the (or any!) Democrats really stand up for the idea that government can do good, but that government has recently been redistributing wealth from the bottom and middle to the top. There’s a lot of deconstructing to do of the term “middle-class” and of “redistribution.” The government is always in the business of spreading wealth, the question is who wields the butter knife.

Read: In Budget, Obama’s Unfettered Case for Spreading the Wealth – NYTimes.com.

Bailing on Detroit – Jamie Peck

Jamie Peck, Geography professor at The University of British Columbia, has written quite a bit about neoliberalism, what he calls “austerity urbanism” and the ongoing saga of Detroit’s finances. He has an insightful blog post on how terms like bailout, responsibility, and federalism are serving to seal Detroit’s fate as a sinking ship, forced to go under in the name of civic individualism, while the state and federal government stand by and watch.

These arguments are perfectly consistent with the conservative legal doctrine of fiscal federalism, where not only “each level of government,” but in effect each unit of government, must “internalize both the costs and the benefits of its activities.”[8]  This is the antithesis, effectively, of Keynesian redistribution, with its compensatory fiscal transfers and anti-cyclical stabilizers.  In contrast, the neoliberal version of fiscal federalism holds that cities, suburbs, and local-government entities must always be free to opt out, as in the logic of small-government suburbanism,[9] but they must never, in any circumstances, be “bailed out.”  This disaggregated, go-it-alone world is a world ruled by fiscal discipline, imposed across different tiers of government and between neighbors; (in)solvency duly becomes, rightfully, a local matter.  The new fiscal landscape can be crudely divided between free-riding, low-tax suburbs on the one hand, and indebted (or even bankrupt) cities on the other.  In the morality plays of austerity urbanism,[10]“irresponsibility” is perversely conferred on the latter, not the former.

Read the rest here: Bailing on Detroit | cities@manchester.

And check out many other great entries at cities@manchester

To Pay for Infrastructure Repairs, Obama Seeks Tax Changes

ST. PAUL, Minn. — Caught between a gridlocked Congress and a Highway Trust Fund that will soon be broke, President Obama on Wednesday urged lawmakers to overhaul corporate and business taxes to pay for repairing and replacing the nation’s aging roads, rails, bridges and tunnels.

New legislation to pay for transportation projects is an urgent priority for both parties because the highway fund is nearing insolvency. Anthony R. Foxx, the transportation secretary, has said the fund could begin “bouncing checks” by this summer. That would force a halt to construction projects around the country, officials have said, and could undermine as many as 700,000 jobs.

The president’s proposal, which he first suggested in a speech last summer in Chattanooga, Tenn., would eliminate business and corporate tax loopholes to finance a four-year, $302 billion transportation bill. White House officials declined to be specific, but said they would try to eliminate incentives for companies to ship jobs overseas.

Read: To Pay for Infrastructure Repairs, Obama Seeks Tax Changes – NYTimes.com.

Woops!

Fed Misread Crisis in 2008, Records Show - NYTimes.com

The New York Times gets transcripts of conversations between the economists responsible for guiding the U.S. economy past the financial crisis, and failing.

The hundreds of pages of transcripts, based on recordings made at the time, reveal the ignorance of Fed officials about economic conditions during the climactic months of the financial crisis. Officials repeatedly fretted about overstimulating the economy, only to realize time and again that they needed to redouble efforts to contain the crisis.

Some of this stuff just gets to depressing to read in its various reiterations, but I did anyway (in no small part because my 7-year-old saw the photo of Geithner, Bernanke, and Paulson on the front of our paper and asked what the story was about.) The fumbling, the over-confidence, the ingrained reluctance to believe that the system could be failing, and the apparent aversion to stimulus (even after things got worse) are all laid out in phone calls and emails.

By the end of the year, the Fed had cut interest rates nearly to zero and started to buy mortgage bonds in a further effort to stimulate the housing market and the broader economy. More than five years later, it is still pursuing both policies even as the economic recovery remains incomplete.Some Fed officials have argued that the Fed was blind in 2008 because it relied, like everyone else, on a standard set of economic indicators.As late as August 2008, “there were no clear signs that many financial firms were about to fail catastrophically,” Mr. Bullard said in a November presentation in Arkansas that the St. Louis Fed recirculated on Friday. “There was a reasonable case that the U.S. could continue to ‘muddle through.’ ”

Read: Fed Misread Crisis in 2008, Records Show – NYTimes.com.

What Washington Gives New York – Added Strain on the Social Safety Net – NYTimes.com

New York City’s commitment to preserving a social safety net is quietly heroic. When the federal government began slashing last March, officials with the Department of Housing Preservation and Development drained their reserves to keep building housing. They also preserved the rental vouchers that stand between tens of thousands of Lucy Delgados and homelessness.

But the protective tarp gets pulled tauter and tauter. “Some tenants face having to move to smaller apartments, and what they pay monthly on rent could go from 30 to 40 percent of their income,” the housing commissioner, RuthAnne Visnauskas, says. “It’s harsh, and a lot of people are unhappy, including us.”

Read: What Washington Gives New York – Added Strain on the Social Safety Net – NYTimes.com.

Here Is Every Foreign Country That Gets More Federal Aid Than Detroit – Next City

There’s a lot to say about these kind of comparisons (do we really want to get people to pit struggling cities against (in some cases) struggling countries?) but the raw numbers are interesting. Even more interesting would be a historical comparison of federal aid to Detroit and other U.S. cities (spoiler alert!).

I

Here Is Every Foreign Country That Gets More Federal Aid Than Detroit – Next City

Here Is Every Foreign Country That Gets More Federal Aid Than Detroit – Next City.

Off the deep end

The “fiscal cliff” is one of my least favorite metaphors for an actual policy-making disaster. As the precipice nears, state governments are, naturally, starting to panic (California has its very own fiscal cliff also coming in January 2013, if a key ballot measure fails).

NBCNews.com has a story on this panic: “States are closely linked to what the federal government does. There’s a severe correlation between the two that gets left unnoticed.” And cities of course, are closely linked to both state and federal policies, both because laid-off state employees live in cities, and because when states panic (as California is doing now), they often try to trim budgets in anticipation, and at this point that trimming often cuts into programs that cities need.

Races for state political office often hinge on candidates’ plans for dealing with a fall off the fiscal cliff, so that austerity policies became topics for debate, and “sensible” state policy, even before the crisis becomes anything more than a high-stakes game of chicken.

The fiscal cliff is not the inevitable outcome of a very real recession; it is a policy moment created by a set of political choices, and will be remedied by a political compromise. Everyone knows that. Obviously, the question of how the federal budget gets balanced is an important question, and not easy to predict. But the metaphor of the cliff gives a whiff of natural disaster, of an inevitable slide toward fiscal crisis rather than a politics of slowly strangling government at all levels.

Read NBCNews: State budgets in jeopardy as nation nears fiscal cliff – Bottom Line.

Deep cuts to the federal safety net, continued

As we head into the home stretch of the presidential election, Congress is working on the budget. Much of the work is now being done in committees, and over the next months we’ll see a lot of extreme Republican proposals, Democratic pledges to halt them, and all the politics that precedes an actual budget.

But the direction of the Republicans, particularly in the House, is clear: the safety net is up for grabs. Food stamps are part of the country’s agriculture policy, so they are competing with farm subsidies for whatever cuts come from the agriculture committee. Not surprisingly, the committee proposed dramatic cuts to SNAP (the food stamp program), and those were promptly approved by the congressional panel working on the full budget cut proposal.

Safety net programs have been steadily underfunded, and devolved to state and local governments, over the past two decades. The impacts of those cuts on local governments, who are left struggling with rising need for such programs, are already being deeply felt.

Read: House Panel Okays $33 Billion in Food Stamp Cuts – NYTimes.com.

A Cruel Republican Budget – NYTimes.com

Apparently undaunted by news that the UK, Europe’s biggest embracer of “austerity,” is expected to recover more slowly than any other OECD country except Italy, House Republicans propose a punitive budget:

The budget, developed by Representative Paul Ryan of Wisconsin, would cut $3.3 trillion from low-income programs over 10 years, according to the Center on Budget and Policy Priorities, even more than the $2.9 trillion in Mr. Ryan’s first disastrous budget last year.

“It’s an excellent piece of work,” Mr. Romney said. (Rick Santorum said it didn’t cut enough.)

via A Cruel Republican Budget – NYTimes.com.