to bail out AIG ($12.9 billion of which14 went straight to Goldman Sachs), you realize that this amount alone would be more than enough to close the 2010 bud get gap in every state in the Union. Toss in the $45 billion15 we gave to now-making-a-profit Bank of America and the $45 billion16 we gave to now-making-a-profit Citigroup, and we would be well on the way to ensuring that no state’s vital services are cut through 2011.
But instead that money has gone to the banks without any fundamental reform of the system, without any strings attached or edicts about how much they have to lend to help the real economy recover—or, indeed, without even having to tell us what they did with our money.
All across the country, the fiscal ax is falling. The devastation is in the details:
• California is eliminating CalWORKS17, a financial assistance program for families in need, a cut that will affect 1.4 million people, two-thirds of whom are children. This plan would also cut state subsidies for child care, affecting 142,000 children.
• Minnesota has eliminated a program18 that provides health care to 21,500 low-income employed adults with no children.
• Rhode Island has cut health insurance for 1,000 low-income families.
• Maine has cut education grants and funding for homeless shelters.
• Utah has cut Medicaid for physical and occupational therapies, as well as for speech and hearing ser vices.
• Michigan, Nevada, California, and Utah have eliminated coverage of dental and vision services for those receiving Medicaid.
• Alabama has canceled services that allow 1,100 seniors to stay in their own homes instead of being sent to nursing facilities.
• Georgia has cut $112 million from an initiative designed to reduce the gap in funding between wealthy and poor school districts.
• Arizona has cut cash assistance grants for 38,500 low-income families.
• Virginia has decreased payments for people with mental retardation, mental health issues, and problems with substance abuse.
• Illinois has cut funding for child welfare and youth services programs.
• Connecticut has cut programs that help prevent child abuse and provide legal services for foster children.
• Massachusetts is making cuts in Head Start, universal pre-K programs, and services to prepare special-needs children for school.
Keep in mind, all these services are being cut at a time when more and more people are finding themselves in need of them. It’s a perfect storm of middle-class suffering.
And yet the human consequences of the financial collapse are largely missing from our national debate. I’m referring especially to the people who had steady jobs; people with college degrees; people who were paying their bills, saving for retirement, doing the right thing—and who have, in many instances, lost everything. The daily miseries being visited upon them are unfolding across the country.
So why is there no sense of urgency coming out of Washington?
Perhaps the reason can19 be found in the stunning results of a study conducted by Northeastern University’s Center for Labor Market Studies that broke down the unemployment rate by household income. Unemployment for those making $150,000 a year, the study found, was only 3 percent in the last quarter of 2009. The rate for those in the middle income range was 9 percent—not far off the national average. The rate for those in the bottom 10 percent of income was a staggering 31 percent.
These numbers, according to20 the Wall Street Journal’s Robert Frank, “raise questions about the theory behind what is informally known as ‘trickle down’ economics, since full employment at the top doesn’t seem to be translating into more jobs below.”
In fact, these numbers do more than raise questions—they also supply the answers.
Does anyone believe that the sense of urgency coming out of Washington wouldn’t be wildly different if the unemployment rate for the top 10 percent of income earners was 31 percent? If one-third of television news producers, pundits, bankers, and lobbyists were unemployed, would the measures proposed by the White House and Congress still be as anemic? Of course not—the sense of national emergency would be so great you’d hear air-raid sirens howling.
Instead we get policy Band-Aids—timid moves that will do little to abate a crisis that threatens to change the very fabric of our society. For much of our history, America was known for its promise of upward mobility. That promise has been called into question over the past three decades, and an extended run of high unemployment could be its death knell.
“These are the kinds21 of jobless rates that push families already struggling on meager incomes into destitution,” wrote New York Times columnist Bob Herbert. “And such gruesome gaps in the condition of groups at the top and bottom of the economic ladder are unmistakable signs of impending societal instability. This is dangerous stuff.”
The lack of urgency we are seeing in Washington—and the lack of focus on real people—is stunning considering that the consequences of our failed financial system are everywhere you look. Putting flesh and blood on the cold, hard statistics means putting the spotlight on the people whose lives were turned upside down as a result of our out-of-control financial system.
Ron Bednar and Mary McCurnin of Rancho Cordova, California, are a loving couple that got divorced last year, not because their relationship wasn’t working but because it was the only way to make ends meet. Due to unemployment and a bankruptcy caused by a prolonged illness, they found themselves with only $300 in the bank. By getting divorced, McCurnin was able to collect Social Security widow’s benefits from her first husband, who died in 1989. “We literally live from week to week,” she says.
Kimberly Rios of North East, Mary land, sold her wedding ring on Craigslist so she could pay her utility bills. “This is no joke, please be a serious buyer,” her ad read. “It is too cold for us to be without electric and heat so if you have been looking consider my deal.” After selling her ring, she locked herself in her bathroom, pretending to take a shower, so she could cry without upsetting her family. “I just felt like it was the last piece of what little I had left,” she says. “I came out smiling as usual and tried to get my husband and daughter excited that this was a good thing.”
Faye Harris was laid off from her accounting job at Emory University Hospital in Atlanta last year. She had been diagnosed with cancer and was fighting it successfully. But as soon as the time off she was guaranteed by the Family and Medical Leave Act expired, she received a letter of termination and her health insurance was canceled. “Do I just lie down and die? Am I not worthy anymore?” she asked herself. “I’ve worked all my life. Put myself through school, raised four children, played by the rules, saved money, and this one illness has just wiped me out.”
Ricky Macoy of Quinlan, Texas, is a fifty-two-year-old electrician who found himself among the long-term unemployed. With little work since late 2008, he began pawning
