As the Federal Reserve lends billions to the richest and largest financial institutions in the United States (and abroad according to a recent court ordered document release), those most affected by our modern day depression are being driven into poverty.
As we pointed out in Here Comes the Sledgehammer, austerity measures are by all measures inevitable because over bloated local, state and federal budgets have reached a breaking point.
The latest example comes from Missouri, where the republican-led state Congress has taken steps to cut off unemployment benefits to thousands of workers laid off at the onset of the recession:
Thousands of people in Missouri who have been unemployed for more than a year soon will lose their jobless benefits, marking a significant victory for Republican fiscal hawks who are crusading against government spending.
When eligibility ends Saturday, Missouri will become the only state to voluntarily quit a federal stimulus program that offers extended benefits. Michigan, Arkansas and Florida also recently took steps to cut back on money going to the unemployed, although they targeted state benefits instead.
“We have to take a stand and say, `When is enough enough?’ and send a message to the federal government, and hopefully shame them into doing the right thing and quit spending money that they don’t have,” said state Sen. Jim Lembke, a Republican from St. Louis.
As a result, more than 34,000 unemployed residents in Missouri could miss out on $105 million in benefits over the next nine months. Unlike some other stimulus programs, Missouri’s unclaimed money would not be redistributed by the federal government to other states. It simply would remain unspent.
While we no doubt will be forced to make significant cuts to programs like unemployment insurance, utility assistance, health care, education and even government managed pensions, it is our view that these efforts, namely targeting unemployment assistance, are somewhat misguided.
The reason these people, for the most part, are without work is because there are no jobs. Cutting emergency unemployment benefits for workers will further impoverish those who have taken the brunt of the collapse thus far.
Despite what Senator Jim Lembke thinks, this will not “send a message” or “shame them into doing the right thing,” simply because they are not interested in this course of action. If they were, the Federal Reserve would have been audited years ago, regulatory agencies would do their job and actually prosecute those who broke the law on Wall Street and in the mortgage industry, and the US Congress would have put forward a fiscally feasible budget.
$105 million dollars is literally a drop in a 5 gallon bucket of water.
If state legislators intend to send a message to the Federal Government, they could start by following the lead of Utah who recently passed legislation to make gold legal tender, or focus on nullifying laws like President Obama’s universal health care legislation and other federal mandates that violate States’ rights under the tenth amendment.
We agree that spending and budget cuts need to happen, and fast, but taking aim at those who are already without work, struggling to pay the mortgage and having difficulty putting food on the table should be a last resort, not the opening salvo in a war on spending.