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In 1933 at the height of the Great Depression, Arkansas was the last state to default at a time Washington rescues weren't considered. Today, workers will be punished to assure steady debt service payments. In 2009, California state treasurer Bill Lockyer said only a "thermonuclear war" might force default, nothing less.
Less draconian than Republicans, congressional Democrats want FY 2010 spending levels frozen for three years, at least rhetorically. House Republicans, however, control appropriations so expect debt ceiling level confrontations. For one thing, Republicans want spending increases offset by cuts, meaning those affecting working Americans most.
They'll come at a time that the Economic Policy Institute (EPI) evaluated poverty in the "Great Recession." Calling official measures outdated, its own analysis shows over 21% of Americans in poverty - based on after-tax market wages and salaries, excluding entitlements, welfare, and other government programs that lower the figure considerably but not for millions not helped. Then add higher cost of living expenses, especially for health, food, gasoline, heating oil, and rent at a time home prices are declining.
With planned FY 2011 budget cuts, greater poverty ahead looms. On January 6, even the Census Bureau raised its numbers, saying 15.7% of the population (not 14.3%) lived in poverty in 2009, or 47.8 million people. Moreover, despite Social Security and Medicare, 16.1% of seniors are impoverished when out-of-pocket medical and other expenses are included. Children are most impacted at 18%, nearly one-fifth of them all. A 2009 EPI report estimated one in four, and for Blacks and Hispanics well over one in three.
In fact, Census Bureau figures way understate reality. Its poverty threshold, for example, is based on an annual $22,050 income for a family of four. Yet urban needs throughout America are much higher. A Chicago family of four needs over $49,000, and in New York over $72,000.
Yet even official data offer insight into America's worst economic crisis since the Great Depression at a time bipartisan consensus plans social spending cuts when large increases are needed. Even so, public outrage is strangely absent. For how long is at issue.
States Plan Major Budget Cuts and Layoffs
Though slightly lower than in 2009 and 2010, the National Conference of State Legislatures forecasts $83 billion in combined state deficits, requiring greater cuts than earlier, absent federal government help or too little. As a result, major public spending cuts, wage freezes, and lower benefits are planned. Moreover, public employee unions are targeted, threatening organized labor overall.
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