President Obama sounded a note of optimism about the economy in his speech on financial regulation today, declaring that “the storms of the past two years are beginning to break.” It appears, however, that that may not be true for the poorest Americans. For them, in fact, the worst of the storms may be yet to come.
A report issued late last week by the Brookings Institution projects that the national poverty rate will continue to climb because of the recession, peaking at 14.4 percent in 2011 or 2012 — up from 12.5 percent in 2007 — as more people are thrown out of work. That means another 8 million people could be thrown into poverty, in addition to the 37 million people who were poor in 2007.
Don’t look to Brookings for any “light at the end of the tunnel” rhetoric. “This recession will cast a long shadow on those at the bottom of the ladder — a group that was not doing well before the recession arrived and which will be disproportionately affected long after it has ended,” the report stated.
The stimulus bill, of course, was full of measures to strengthen the safety net during the worst of the recession: more money for Medicaid, food stamps, and Temporary Assistance for Needy Families (TANF), as well as the Make Work Pay tax credit for people farther up the income ladder. All of those measures were temporary, though, since the stimulus wasn’t supposed to ramp up social spending forever. The Medicaid, food stamps, and TANF spending is supposed to phase out starting in fiscal year 2011, and the tax credit expires at the end of 2010.
The result, according to Brookings, is that most of the safety net spending will fade away before the poverty rate has even peaked.
If the report is right, Obama and congressional Democrats may well face pressure to extend some of the measures if it’s clear that the ranks of the poor are continuing to swell over the next few years. In fact, Brookings may have even understated the case. It appears to have been finished before last week’s news that the 2008 poverty rate shot up to 13.2 percent in 2008 — well beyond the report’s projections, and a likely sign of worse things to come.
The reality is that there probably won’t be much willpower in Congress to keep ratcheting up the safety net spending, particularly with all the public anxiety about how much Congress has spent already in responding to the financial crisis. Still, Obama said in today’s speech that “I will never be satisfied while people are out of work and our financial system is weakened.” If the poverty rate continues to rise, it’s a good bet that at least some Democratic lawmakers will remind him of those words.
![[RSS]](http://blogs.cqpolitics.com/templates/images/rss_icon.gif){kind=icon}
![[ARCHIVES]](http://blogs.cqpolitics.com/templates/images/archives_icon.png){kind=icon}
Post A Comment