Dec 31, 2012

Fiscal cliff: America goes to the brink, but millions already fell into poverty

Whatever the outcome of the political haggling, Congress has failed the 50 million Americans below the bread line

The one comfort of government incompetence is that it is never a surprise: it is, if anything, a starting point for the public's expectations of Washington.

Still, even that certainty doesn't pay the bills, and that is a problem for 2.1 million Americans who have been out of work for more than 27 weeks and will be cut off from unemployment insurance tonight. No matter what happens, the fiscal cliff talks have been a failure: Congress will not achieve a "grand bargain" to save Americans from the brunt of ill-considered, sweeping tax hikes and government spending cuts.

That's why we'd be better off talking about the "fiscal conscience", the era of which seems to be coming to a sharp end tonight. Unemployment is the American crisis you hear about; poverty is the one you don't. And what the fiscal cliff covers up is what will be the slow transition of the US unemployment problem into a serious poverty problem.

The biggest failure of the fiscal conscience is the disregard for those unemployed Americans. Some of those 2.1 million Americans who stand to lose their benefits tonight only started collecting unemployment in July. Those who have been out of work for more than six months make up 40% of all the unemployed people in America.

The predicament of the long-term unemployed only has a passing relationship to the fiscal cliff. There happens to be no one in the government who can put their hand up and protect the unemployed. As Congress goes about wrecking confidence in the economy, there are other agencies that can pick up some of the slack.

The Treasury Department is finding room to avoid the debt ceiling. The Internal Revenue Service has said it will hold off on imposing tax increases. The Defense Department has promised it will do what it can to delay cuts.

But the unemployed have no one to protect their benefits. There is no agency to buy them some time: they are at the mercy of congressional bickering.

Nothing new. For the unemployed, the fiscal cliff is the final boot on the neck of their prospects, not the first time they've been knocked down by an aggressive Congress. Congress has been chipping away at unemployment benefits for well over a year. 

Lawmakers in Washington have been pretending to pass "extensions" to unemployment benefits, but what they have really been doing is cutting them. From 2009 to 2011, when nearly one-sixth of the country was out of work, some Americans could receive 99 weeks of unemployment insurance. This year, Congress cut that maximum down to 73 weeks and, with the help of some states, put further barriers to unemployment insurance, including drug tests and national job search requirements. 

This would make sense if unemployment insurance were taking money out of the pockets of other, worthier programs; but it's not. American taxpayers and employers pay for unemployment insurance through taxes imposed on every paycheck. When the economy is good, and few people are unemployed, the government collects a surplus, because many people are paying the unemployment tax but few are collecting it.

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