The Seattle Times
By: Jon Talton
April 6, 2011
The economic consequences of a federal government shutdown are unknown. For one thing, the shutdown may not happen. Its short-lived predecessor, in the 1990s, happened during a decade of high job creation and high growth. But the Ryan budget proposal, a radical break from 50 years of public policy, goes beyond political games and may well represent the future. Even Democrats are embracing budget-cutting despite the slow economy, and both sides are committed to maintaining costly American military adventures. So something's got to give. The notion of raising taxes back to levels that sustained the America I grew up in -- President Eisenhower's top tax rate on the wealthy was 91 percent -- is not even considered.
It's in this context that I read a new Labor Department report on the working poor. In 2009, 43.6 million Americans, 14.3 percent of the population, lived at or below the official poverty line. Of these, 10.4 million were working or looking for work, and yet they still couldn't crawl above the poverty level.
The trajectory of both Washington and corporate America offers little hope. The working poor are very likely to have low educational attainment -- and yet we're cutting school funding and pricing a real university education out of reach of millions. Full-time workers are much less likely to be working poor, yet corporations, taught well by Wal-Mart, rely more and more on part-time employees.
The economic future envisioned by the budget-cutters will drag more Americans into the working poor. If Medicare is privatized, according to the non-partisan Congressional Budget Office, health care costs will rise substantially for retirees. Those who get to retire, that is. Pensions are already largely a thing of the past and 401(k)s are playthings of the Wall Street casino. Wages are stagnant.
Even if one agrees with the esoteric theory behind this future, which has no real-world experience outside the developing world (including America 1870-1900), it will depend on major job creation to prevent social collapse. Rather like China, if America is to shred the social safety net and further shatter the social compact, people will need jobs. Ryan depends on a study from something called the Heritage Center for Data Analysis, which claims his plan will reduce unemployment to 2.8 percent by 2021. This is a level of job creation that has never been reached in all the years since the government began scientific reporting after World War II. The Economic Policy Institute offers insights into how the books are cooked on this "study." Beyond that, tax cuts for the rich and for major corporations have already been shown through the 2000s to not create many new jobs. Most of the extra cash left on the table for the super-rich and corporations goes into casino capitalism and investments offshore.
Meanwhile, in the real world, the United States is years away from even regaining its pre-recession level of jobs. The budget cutters don't seem concerned about the effect of their policies on employment. And why should they? They already have jobs, and very good ones at that.