Being Broke

by NycWeboy

categories: Activism, Bailout, Children, Cities, Federal, Government, Guest Bloggers, Health & Healthcare, Inequality, Jobs & Unemployment, Social Programs, States, stimulus, The Economy

Published June 07, 2009 @ 09:05AM PT

And so, as I try to put the furniture back where it was, and wake up a couple of sleeping party guests, we can return this site to Leigh pretty much as we found it (along with a note promising to replace the broken lamp). Since Greg and Diane and I couldn't apparently solve the poverty problem in a week, there will still be plenty for Red to write about.

Just to get Leigh started, I'll hand it back to her with a pressing issue Diane touched on yesterday - the growing sense that our economic crisis has become a state-level problem, bankrupting state budgets, and causing them to cut services... often to the neediest populations, at just the worst moment.

California has, of course, become the headliner on this topic, with an enormous budget crisis that appears almost unsolvable. It's a crisis that, as far as I can tell, has felled three Governors so far, wrecked the ability of the state's legislature to get anything done, and possibly ruined the Republican party forever. As long as Republicans had a glimmer of hope of winning California's electoral votes (another legacy of Ronald Reagan), they had a much stronger map to victory in presidential contests. Since the Clinton years, that hope has largelysunk, with each successive development making things that much worse for the state party, and the national one.

The problem in California is, in many ways, anomalous to the rest of the country... yet instructive all the same; California has a huge tax base problem, caused in large measure by Proposition 13, the tax fighting measure of the seventies that simultaneously made it impossible to raise taxes, and at the same time froze property tax rates for many homeowners, making it impossible for localities to raise additional revenue on the current tax base. Then too, California is suffering under the enormous weight of the foreclosure crisis, leading the nation in bad loans, seized property, and fallen home values, married to and adding fuel to a general business downturn.

It's not surprising, then, that California's lawmakers, in Sacramento and DC have made noises about some form of "state bailout." And California may lead the way by miles, but it is not alone: across the country, rising demands for services and falling revenues have created stark budget crises in nearly every state (including, oddly, Alaska, where falling oil prices have hurt that state's ability to coast on oil company profits).

Much hand-wringing is already under way about threats - especially from Sacramento lawmakers - that enormous amounts of government services will have to be cut, including children's health insurance, school funding, and welfare programs of all sorts. Some of this, indeed, is very real, very painful, and does indeed have enormous implications.

Some of it, however, is sabre rattling; state officials are using threats to cut programs for the poor to force Congress and President Obama to act to prop up state budgeting. The Stimulus Bill, in fact, did a great deal of this, adding money to Medicaid, S-CHIP, unemployment benefits and food stamps.  That money, however, has crashed headlong into lost state-level funds that were supposed to already be in place, but have evaporated with lost tax revenues from businesses and individuals as the eocnomic downturn has deepened. (I suppose now is not the time to point out that sunny predicitons of recovery in the next few months... are probably more dreamy than reality).

Can the Federal Government really bail out the states? Largely, it seems unlikely; the needs are just too widespread, and we are, though no one wants to face it, running out of money.  Ben Bernanke's common-sense appeal to Congress to cut deficit spending was a reminder that even our government faces some limits, and we are starting to reach them.  We cannot print money endlessly, sell bonds to foreign investors forever... and not expect other consequences. There is also a longer term question of setting precedents - both state and federal officials need to understand what limits there are, and how to work within them. If e want states to take care of specific problems -like kids' health - then the right mechanism is more money targeted at that specific goal... not a generalized blank check.

In the short run, I think it's a terrible time for activists to become discouraged; now more than ever we need people who see a problem, roll up their sleeves, and get to work. If we can't count on government... then we'll have to help each other. In the long run, I think we have to agitate, forcefully for policies that work to help those of us who most need help first - people below the poverty line, people who need assistance to survive. We need to revive the sense of a common good, that we will do best when all of us have a chance.

But there's a reality staring all of us in the face - as a nation... we're broke. We overspent and now we have to deal with the wreckage of excessive debt and bad credit. And it's awful. But we can't avoid it, and we can't wish it away. So let's dive in and start doing... something.

(photo of Big Money from thievingjoker, used under a Creative Commons license from Flickr)