Federal Welfare Reform Funding Declines Despite Rising Need – In recent weeks, the already weak safety net for some of our most vulnerable citizens became substantially weaker. For the first time since 1996 when President Clinton and Congress created the Temporary Assistance for Needy Families (TANF) block grant as part of welfare reform, no additional TANF funds are available from the federal government to help states respond to the large increases in the number of impoverished families as a result of a recession. We’ve just issued an analysis on the topic. The federal cut-off in recession-related help to states is due to two factors:
- Congress recently enacted legislation that will essentially end funding for fiscal year 2011 for the TANF Contingency Fund, which was specifically created in welfare reform to help states respond to increased need during hard economic times.
- Congress failed to extend the TANF Emergency Fund, which was created in the 2009 Recovery Act to create jobs and help families weather the current downturn, but which expired on September 30.
Aggravating these problems, the 17 states that have received Supplemental Grants every year since TANF was created (most of them relatively poor states) will see those grants cut by 33 percent this year, unless Congress provides additional funding to restore them to their original level.
Florida judge considers 20-state challenge of health-care law – Three days after a federal judge in Virginia voided a key provision of the U.S. health-care overhaul, attorneys for 20 other states will ask a federal judge in this Florida city to do the same. As in the Richmond case, Thursday’s hearing before Judge Roger Vinson of the U.S. District Court for the Northern District of Florida largely centered on whether Congress has the constitutional authority to require virtually all Americans to obtain health insurance or pay a fine. However, the multistate case being heard in Florida is one of the few among the two dozen pending challenges to the law that also contests its expansion of eligibility requirements for Medicaid, the joint federal-state health insurance program for the poor.
A Survival Strategy for the Eurozone – Nouriel Roubini – Short of full fiscal unification – or a variant of it in the form of eurozone bonds – this increase in official resources would occur through a much-enlarged European Financial Stability Facility and a much greater commitment by the European Central Bank to long-term bond purchases and liquidity operations to support banks. Since quasi-fiscal union implies that the eurozone’s core economies could end up systematically bailing out those on the periphery, only a formal loss of fiscal sovereignty – a credible commitment by the peripheral countries to medium- and long-term fiscal discipline – could overcome the current political resistance of Germany and others. But even a larger envelope of official resources is not sufficient to stem the insolvency problems of Greece, Ireland, and, possibly, Portugal and Spain. Thus, a second set of policies and institutional reforms requires that all unsecured creditors of banks and other financial institutions need to be “treated” – that is, they must accept losses (or “haircuts”) on their claims. This is needed to prevent even more private debt being put on government balance sheets, causing a fiscal blowout. If orderly treatment of unsecured senior creditors requires a new cross-border regime to close down insolvent European banks, such a regime should be implemented without delay.
I come to bury Larry Summers, not to praise him – To say certain people in the media weren’t sorry to see Big Larry go is understating matters. The Washington Post’s Dana Milbank described him as a man who “rose to national prominence because of his intellect but is now leaving government known more for his dyspepsia.” In Summers’s final public appearance in Washington, Reuters blogger Felix Salmon noted, he failed to thank President Obama for hiring him as head of the National Economic Council. Why would he do this? “I don’t think Summers thinks that way,” Salmon wrote. “In his mind, the thanks should all flow the other way.” At the National Interest, Jacob Heilbrunn dismissed Summers thus: “He exemplifies the Ivy League syndrome: He is a high-IQ moron.” Still, reporters need to get over it. After all, we aren’t the only folks Larry considers intellectually beneath him. Such a category would include most members of President Obama’s cabinet and their top policy advisers; many of his colleagues in the White House; virtually all foreign officials; ninety per cent of the Harvard faculty; and a similar proportion, or possibly higher, of his fellow academic economists.
Banana Republic Watch: New York City More Unequal Than Chile – Yves Smith – A newly released report, “Grow Together or Pull Further Apart? Income Concentration Trends in New York,” by the Fiscal Policy Institute gives a picture of how New York City is now at Latin American levels of income disparity. New York’s top one percent has an income share that one and a half times as high as the 23.5 percent historically-high national level….The city used to have a broad middle class, rooted in a vast manufacturing sector and mid-level positions in corporate headquarters as well as in education, government, construction and other good-paying blue-collar jobs… the city’s labor market has seen the disappearance of thousands of middle-paying jobs and the growth in their place of moderate- to low-paying jobs, mainly in services. Given its degree of inequality, if New York City were a nation, it would rank 15th worst among 134 countries with respect to income concentration, in between Chile and Honduras. Wall Street, with its stratospheric profits and bonuses, sits within 15 miles of the Bronx—the nation’s poorest county.And if you think that the rising tide of burgeoning financial services profits has improved the living standards of those at the bottom, think again: over the period from 1980 to 2007 in New York, when total inflation-adjusted income in the state grew an average of 2.1 percent a year after adjusting for population increase, incomes for those in the bottom half of the income spectrum generally declined while those in the middle income range rose but at only a fraction of the pace of total income growth.