The Economy Hub
1:18 AM EDT, August 10, 2013
You may not have noticed, but the entire United States Congress sleazed out of town at the beginning of August for a five-week vacation, leaving much of the economy in a shambles.
Let's take stock. The economy grew in the second quarter at a pitiful annual rate of 1.7%. The average workweek for all private nonfarm employees decreased last month from the month before, as did their average hourly earnings. Job growth has been middling at best.
What has been Washington's remedy for an economy that plainly needs another shot of fiscal stimulus? The automated austerity regime known as the sequester, a package of budget cuts cynically designed to fall heaviest on our most vulnerable communities — the penniless, the disabled, the homeless and the very young. True, the sequester caused an early crisis in air travel, when it seemed that enforced furloughs of air traffic controllers would bollix up flight schedules. Congress remedied that provision, but quick.
Almost everyone in Congress and the White House agrees that the sequester, which was crafted to end the 2011 debit-limit standoff, is pure insanity. House Majority Leader Eric Cantor (R-Va.) recently acknowledged on Fox News that the sequester was "not the best way to go about spending reductions." It was put in place, he said, "because Congress couldn't do the job it was supposed to a couple of years ago." In a recent interview, Sen. John McCain (R-Ariz.) called his support of the sequester "the worst vote I have cast in many years."
The product of a political culture in which intransigence is held up as the highest form of statesmanship, the sequester is policy designed to enshrine congressional incompetence into law.
It was a gun Congress held to its own head, designed to be so lethal that our lawmakers wouldn't dare to pull the trigger, the required across-the-board budget cuts being so draconian that Congress would have no option other than to reach agreement on a more measured response. No one told the trigger finger. So as of March 1, budget cuts totaling $85 billion this year alone went into effect.
So what's happened? It's fashionable to say that the dire predictions of economic damage from the sequester cuts haven't all come true, so things aren't that bad.
In the first place, the cuts will shave as much as 1.2% off gross domestic product — after inflation — through this year and next, according to the Congressional Budget Office. They'll cost as many as 1.6 million jobs over that time frame, the CBO says. That's not counting the damage that has occurred since March 1.
By the way, none of that damage affects members of Congress personally. Their salaries aren't cut by the sequester. For reference, rank-and-file senators and congressmen touch $174,000 annually, not including the millions in the agriculture subsidies they can vote for their own family farms. Take a bow, Rep. Doug LaMalfa (R-Richvale)!
The people who are affected reside mostly at the other end of the income scale — for example, people dependent on public housing assistance.
Because of the sequester, the Los Angeles County Housing Authority, which provides housing vouchers for 23,000 individuals and households, stopped issuing new vouchers when any slots came open. That was to absorb a 5% cut in federal funds imposed by Congress' inaction.
"We're unfortunately the homeless capital of the world," Sean Rogan, the agency's executive director, told me recently.
That may be a bit of an exaggeration, but it's not to L.A.'s credit — or the nation's — that it compares favorably to some Third World countries. The waiting list for vouchers at Rogan's agency is 65,000 names long, while only about 1,000 slots open by attrition each year.
The agency hopes to avoid having to take vouchers away from families that are currently housed, but that will happen only if its application for a $1.2-million emergency grant from the federal Department of Housing and Urban Development is approved.
Rogan is hopeful, but without that money some 1,800 families or elderly or disabled individuals may lose existing vouchers, which would put them at the mercy of Southern California's tight rental market, virtually guaranteeing that many will lose their shelter.
If the sequester continues into next year and forces an additional 5% budget cut, those losses will be inevitable, he says. And that comes on top of relentless budget cuts imposed by Congress over the last two years.
"The sequester was just piling on," Rogan said. "Those impacts are real."
Then there's Head Start. The sequester hit the Los Angeles County Office of Education, which oversees Head Start programs for 18,000 pre-schoolers, on July 1, forcing it to cut 900 slots for 3-year-olds who otherwise would be getting their first preparation for kindergarten.
But Head Start is more than an early education program — it's the hub of a social welfare structure that includes family outreach.
When the program is properly funded and operated, its teachers and social workers known as family advocates look out for family problems that demand help, such as unemployment, alcoholism and mental illness. Director Keesha Woods says that budget cuts mean family advocates' caseload may double to 150 — and obviously that's not counting the families that won't be covered at all because their children didn't get slotted in.
"When we start removing the ladders that allow families to climb out of poverty," Woods said, "then we are allowing the system to be perpetuated."
The other hole being torn in the safety net for vulnerable families is unemployment insurance. The sequester is gouging an average 15% out of the weekly checks for unemployed persons nationwide, according to calculations by the National Employment Law Project. The actual amount varies by how long a state waited to implement the cuts (the longer it held off, the deeper the cut) and how it has applied the reductions. The average cut is $43 a week to the national average benefit of $289.
"That's a bag of groceries," said Maurice Emsallem, the project's Oakland-based policy co-director.
In California, which has more people on unemployment than any other state, the reduction of 17.7% is applied to new applicants and those moving to the next tier of coverage — for example, moving from the first 10 weeks of benefits to the next 13 weeks. The reduction to the average weekly benefit of $303 comes to $54. If the sequester continues to the end of the year, the cuts will hit more than 500,000 people.
To any sensible person, all this would point to a serious social crisis, concentrated among the nation's most vulnerable populations — and that's not even counting the cuts documented across the country to Meals on Wheels, literacy education and federally funded scientific research.
So what was Congress up to in the weeks before it went on vacation? The House passed a dead-on-arrival measure repealing the Affordable Care Act (which of course benefits lower-income Americans) for the 40th time. The lawmakers debated a bill, introduced by the majestically useless Rep. Darrell Issa (R-Vista), to name all coastal waters out to the U.S. 200-mile jurisdictional limit after Ronald Reagan.
All the rest has been gridlock, grandstanding and gutter politics. There's some debate over whether this Congress has been the worst in history or merely one of the bottom two, but either way it's bad enough. For this they deserve a vacation that the average European would envy?
So the sequester stands, with very uncertain prospects for its being lifted in the fall. The 535 statesmen and stateswomen of Capitol Hill will be hitting the golf course and lazing on the beach while millions of their constituents worry about how to keep a roof over their heads and food on the table.
The test of a civilized society is that it looks out for its neediest members. With this Congress in place, we're failing that test.
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