The failure of Congress to pass a bill containing Medicaid relief to the states and jobless benefit extensions to millions of long-term unemployed workers ensures that the social crisis will intensify in the coming weeks and months.
The decision will result in a new wave of foreclosures, evictions, homelessness and hunger, while states will be compelled to further slash social spending.
The $33 billion bill would have extended federal long-term unemployment benefits and provided states with $24 billion in emergency funding for Medicaid, the joint federal-state medical insurance program for the poor. Most commentators believe that final passage of the bill, which has been delayed for a month, is unlikely.
US Senate Majority Leader Harry Reid and fellow Democrats blamed the bill's all but inevitable demise on opposition from minority Republicans. However, Democratic support for the measure has been tepid at best. The New York Times acknowledged, "The Obama administration has not fought aggressively for the legislation." One only has to compare the administration's campaign for "health care reform, " designed to cut costs for business, with its promotion of the extension of unemployment benefits. In any event, since the Democrats accept the framework of austerity policies, they are in no position to argue convincingly.
Washington's The Hill noted, "The failure [of the bill to extend benefits] would also illustrate the extent to which fears about the deficit are now dominating the legislative process. " Worries about the record public debt now seem to have overcome the desire in Congress to spur along the economy and help the unemployed."
A consensus has emerged in the ruling class, signaled by Obama's three-year freeze on discretionary social spending, that costs not related to the military and the ongoing bailout of the finance industry must be curtailed. In contrast, House Speaker Nancy Pelosi has guaranteed passage of another $33 billion bill by summer recess--this one a short-term funding bill for the war in Afghanistan.
By last Friday, 1.2 million workers had lost unemployment benefits since the beginning of June. By this weekend, the figure will swell to 1.63 million, and by mid-July the number will reach two million. These two million workers and the millions of children who depend on them will be thrown off the rolls into an economy in which the average length of unemployment is now six months (twice the previous record duration), where one in six workers is unemployed or underemployed, and where there are at least five job-seekers for every opening. They will join the millions of Americans--6 million last year--who survive only on food stamps, with no cash income.
Until last month, unemployed workers who had surpassed the 26-week cap on state unemployment benefits could extend their benefits to just under two years by virtue of federal money appropriated through the stimulus bill, the American Recovery and Reinvestment Act of 2009.
The US jobless benefit system is, by design, among the worst in the developed world. All sorts of hurdles are put in place to prevent workers from accessing the shamefully low benefits, including degrading requirements that force workers to prove they are "actively seeking" jobs. These rules have their effect--nationally, less than half of unemployed workers receive benefits; in 11 states less than 30 percent of the jobless receive checks.
Congress' failure to extend special Medicaid assistance to the states, which was part of the same bill, will be just as punishing. The stimulus act apportioned $87 billion in additional funding for Medicaid to cope with high levels of unemployment and a decline in employer health insurance subsidization. These funds are expected to run out at the end of the year. The $24 billion would have offset this cut for an extra six months, through the end of the 2011 budget year.
State governments--already confronting massive fiscal crises--had based their budgets on the supposition that the extended federal assistance would be realized. The thirty states, plus Washington D.C., that budgeted on receiving an extension of the funds will meet the new fiscal year, set to begin on July 1 for most, facing the prospect of making hundreds of millions of dollars in new cuts.