Social Safety Nets and California's Budget Crisis

No one disagrees that we are in a severe recession. The more affluent among us will be inconvenienced at best, but I fear that in the stampede to balance the budget, California will eliminate or reduce many of the public assistance programs serving as social safety nets for children, the poor, and the sick and the elderly. Such programs include public housing, hunger and nutrition programs, childcare and child support, etc.

Safety nets are designed to keep the down-and-out afloat during an economic slump. Families, local communities, and charities will be insufficient to take up the slack for lost or reduced publicly-funded programs. And a long term recession or worse could create a lost generation of people stuck in unemployment lines for so long that they become unemployable. Look what happened to Japan's "lost" or "suffering" generation.

For over 100 years America's social safety net has expanded dramatically. At the turn of the last century, Americans still viewed themselves as "rugged individualists." The family, the community, and charities formed the basis of the social safety net at that time. This all changed in response to the Great Depression of the 1930s. President Franklin D. Roosevelt's New Deal began by establishing Social Security in 1935 and a modern day federal welfare program began with a small program called Aid to Dependent Children. During the Johnson administration in the 1960s, Medicare, Medicaid, public housing, and other programs were established.

Much of America's welfare programs remained largely unchanged until 1996, when a Republican Congress passed, and President Clinton signed, a sweeping welfare reform law that is still the subject of much controversy in public policy circles.

The latest data (2005)** shows that the top 300,000 Americans collectively had as much income as the bottom 150 million. Per person, the top group received 440 times as much as the average person earned in the bottom half. With the rapidly growing unemployment, I suspect the 2010 census will show that this gap has widened even further. But these are just numbers. We've heard the reports of executives of failed corporations receiving millions of dollars in compensation juxtaposed with daily articles about people facing home foreclosures, loss of benefits, pay reductions, and layoffs. And I bet each of you know friends or acquaintances who are in a precarious financial situation.

Clearly, budget cuts are necessary. But tax increases should be seriously considered to ensure a continuation of a social safety net. It is time for our politicians and the public to step back and carefully consider the short and long term consequences of the proposed budget cuts.

www.nytimes.com/2007/03/29/business/29tax.html