Thursday, July 21, 2011

Increasing Poverty is Conterproductive to Reducing Deficit

America is facing one of the greatest economic challenges in its proud history. Today, the federal government is more than $14 trillion in debt, one in seven Americans are in poverty, including one in four children under five. Unemployment over the last two years has remained around 9%, with 14 million people currently out of work, and economic experts project that the rate will remain high for years to come unless Washington stops playing political games with the economy.

There is bipartisan agreement in Washington that spending cuts and an increase in revenue will reduce the deficit and lead to economic growth. Sadly, our nation’s leaders seem to be confused about where these cuts ought to be made. In the final budget approved for last year, cuts were made to effective job-creating investment programs like CSBG that are essential for economic growth. What’s worse for Americans is that Washington is dead-set on adding further cuts to CSBG in next year’s budget. All Americans will feel the depressing financial consequences of these cuts as cutting effective CSBG programs will lead to rising unemployment rates and more Americans living in poverty.

As cited in the July 8, 2011 letter from leaders of prominent national religious, civil rights, charitable, economic research, and low-income advocacy organizations to the leadership in Congress and the White House, the major bipartisan deficit reduction packages over the past twenty five years have followed the proven principle that deficit reduction should be achieved in a way that does not increase poverty because increased poverty depresses the economy. In its report from December 2010, the bipartisan National Commission on Fiscal Responsibility stated. "We must ensure that our nation has a robust, affordable, fair, and sustainable safety net. Benefits should be focused on those who need them the most." The 1985 and 1987 Gramm-Rudman-Hollings laws, the 1990 Budget Enforcement Act, the 1993 deficit reduction package, and the 1997 Balanced Budget Act all exempted core low-income programs from automatic spending cuts.

In addition, the 1990, 1993, and 1997 deficit reduction packages, which improved the Earned Income Tax Credit, strengthened the SNAP program, and created the Children's Health Insurance Program, show that expanding effective low-income assistance programs, such as the Community Service Block Grant (CSBG), is consistent with overall deficit reduction and the most effective path towards sustainable economic growth for America. The benefits are spent right away for household economic needs, such as rent, food, and utilities. As cited in the New York Times article of July 10, 2011, “Economy Faces a Jolt as Benefits Checks Run Out,” Wayne Vroman, an economist at the Urban Institute, estimated in a study for the U.S. Labor Department that every $1 paid in jobless benefits generated as much as $2 in the economy. It’s time for us to let Washington know that CSBGs are effective programs that create jobs, stimulate economic growth, and reduce the deficit. It's time for us to contact the White House and Congress and demand that they commit to protecting the American economy. We need to urge our national leaders to act responsibly!