January 12th 2002

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Articles from this issue:

Cover Story: Eyewitness in East Timor

Editorial: Population - time for a new approach

Canberra Observed: Howard understands ALP better than it knows itself

Straws in the Wind: Cries for help / Political terrorism / Opium of the children

Public policy and the family

Books: Demons and Democrats - Re-evaluating Labor's disastrous 'Splits'

Media - Selective indignation / Ideological consistency

US welfare cuts coming home to roost?

Trade: Debt will return to haunt us

The search for meaning

Books: Don't despair: 'The Skeptical Environmentalist', by Bjorn Lomborg

'Queen Victoria: A Personal History', by Christopher Hibbert

Books promotion page

welfare cuts coming home to roost?

by Bob Browning

News Weekly, January 12, 2002

America's record boom is running out of steam. Bob Browning wonders how well the country is prepared for the downturn.

The long-term consequences of the war against terrorism are yet to unfold. But in America some of the effects of the ideological war against "welfare as we knew it" are becoming evident.

Concern over the terrorist threat has pre-occupied public attention since September 11. But we should not forget that before the war against terrorism there was an American-led international campaign against the welfare state, in which Australian governments were also enthusiastic participants.

The policies Australians refer to as economic rationalism grew out of the Thatcherism and Reaganism that spread to and through international inter-government agencies like the IMF, WTO, OECD and G7.

Welfare, social security and other public sector programs needed changes to make them better meet contemporary social and economic conditions. But many of the changes that Anglo-American governments in particular wrought were radical changes along ideological economic lines. Political "dries" privatised public sectors extensively. User-pays, outsourcing, downsizing, cost-cutting, and other so-called market-oriented, free trade policies curtailed government intervention in pursuit of social justice and equitable distribution of wealth.

Governments, however, did not otherwise reduce their powers of intervention and redistribution. Rather they stengthened government powers to bolster "supply side" corporate and financial market interests. Growing the economy, according to the new ideological orthodoxy, would raise all boats. Social problems were best overcome by making people exercise personal responsible and become productive.

Now, due to the virtually worldwide recession, US unemployment has risen sharply. In October it made its biggest jump in five years, pushing 6 per cent. In New York where the terrorist attacks exacerbated the economic downturn, 80,000 jobs were lost in one month. As The New York Times commented (November 22, 2001):

"Even before September 11, an alarming number of Americans were lining up for emergency food assistance.

"Those seeking help included the jobless, a majority of whom do not qualify for unemployment benefits; working poor families that do not earn enough money to cover the cost of food as well as their other necessities, like rent and utilities; the elderly, including many men and women faced with the heartbreaking choice of paying for food or paying for medicine; immigrants ineligible for welfare or food stamps; and a wide range of individuals struggling with substance abuse, physical disabilities and mental illness".

Much of the welfare burden now falls on religious and other charity organisations which are beginning to plead their inability to cope with the accelerating plight of the jobless and working poor. "The demand for food is so high it's outstripping our ability across the system to replenish it," declared a spokesman for the US national network of non-profit food banks that provides 80 per cent of the food distributed by private charities.

Disappearing 'helping hand'

Worse is to come, according to Bob Herbert, one of America's national columnists. As jobless men and women continue to tumble out of the falling labour market, he says, they are looking around for a helping hand that is not there:

"Seldom in the last half-century has the US been so poorly prepared to assist individuals and families struggling with the effects of a recession. Example: the unemployment insurance system, which was established to ease the pain of temporary joblessness, covers less than 40 per cent of the people who are out of work.

"Example: the food stamp program, which was supposed to slam the door on hunger in the world's greatest nation (and which once served 90 per cent of eligible families), now serves just 60 per cent of the poverty-stricken folks who qualify for help".

When former President Clinton got his radical welfare reform bill passed "to end welfare as we knew it", millionaire senators cheered. The law set limits on the main welfare program, formerly known as Aid to Families with Dependent Children. From then on, no participant could have more than five years of benefits.

Senator Daniel Patrick Moynihan was one of the few to warn that the new law had dire implications for the nation's poorest families. Welfare cuts might look viable during the prolonged boom, but the test would come when the next downward business cycle inevitably arrived.

With the recession beginning to bite, the new time limits have already caused more than 120,000 US families to lose their benefits or have them reduced, according to the National Campaign for Jobs and Income Support. The NCJIS (New York Times, November 22, 2001) emphasised that the time limits of the new welfare system were hitting the working poor and the jobless at precisely the time when the labour markets were weakening and more families were experiencing trouble.

The stonehearted, whether they be economic fundamentalists, corporate lobbyists or hovering political opportunists, continue to argue for "tough love" welfare policy. Moral degeneration through welfare dependency must be avoided, they insist. Personal responsibility must be encouraged. National moral fibre must be protected. Tax cuts are the way to stimulate the economy, they say, not public spending.

Not all or even a sizeable minority of the needy are work-shy "dole bludgers". Department of Human Services director Dynetha Thornton told The New York Times (December 9, 2001) how some of her "welfare clients" were going to heroic lengths to work. One of the examples she gave was that of a number of mothers whose subsidies are threatened in counties where the unemployment rate had hit 10 per cent. She said these mothers with young children were being "picked up in vans at 3 a.m. for a ride to jobs in faraway chicken processing plants where they earn about $6 an hour, or $12,000 a year. With stops to deliver children to sitters, the trip takes three or four hours. The women still collect a welfare check [so far] because the pay does not lift them above the poverty line, and the state pays for their child care and the van, and gives them $5 a day for lunch and a $3,000 bonus for working for two years."

In the opinion of commentators like Herbert there is something very wrong in a society as affluent as the American superpower "when families have to choose between food and rent, or when parents have to forgo a meal so their children can eat, or when the elderly look wistfully at food on television - food they can't have because they spent their money on their medicine". The UK left-wing New Statesman (December 10, 2001) is more condemnatory:

"Over the past two decades, the US has perverted the international bodies we have into tools for the advancement of American business interests. This administration is dominated by the corporate sector; it believes that politics should be subordinate to economics.

"US policies on global warming, arms control, the UN, an international criminal court and world trade - to mention just a few - do not suggest a nation committed to building an ethical world order".

Mood change

A seemingly quick anti-terrorist victory abroad opens up the door to renewed interest in domestic issues, just as a recession weighs down on American voters.

President Bush may face the same situation his father encountered after his quick conduct of the war against Iraq, according to the Christian Science Monitor. White House Press Secretary during the first Bush administration, Marlin Fitzwater, told CSM (December 12, 2001) that the changing in tone of US domestic politics was not dissimilar from what he witnessed following the Gulf War. A former Clinton strategist James Carville agreed.

Although the American public currently thought Bush was doing a good job on the war against terrorism, he said, their approval did not necessarily translate into support for his domestic policies which are far from popular.

As the US mid-term election year approaches the Democratic Party is beginning to think along the lines it did during the Clinton presidential campaign against the previous President Bush: "It's the economy, stupid!"

Democratic strategists point to December polls claiming Americans are beginning to turn their attention to domestic issues.

As the terror emergency appears to subside, polls suggest that the US national mood is shifting back toward domestic issues ranging from Social Security reform to tax cuts. Once again, the economy and jobs are coming to dominate people's concerns.

Disillusioned political observers are likely to believe the polls will lead the Bush Administration to keep raising terrorist alerts to maintain its comparative political advantage. An interesting question for Australians is whether their government will follow that trend by emphasising the terrorist threat and linking it to asylum seekers and opposition policies?

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