LAST WORD

Making Matters Worse

Programs meant to soften the blow of a recession have been scaled back.

As businesses and schools shutter and entire industries implode, the United States may be hurtling toward recession. If so, we are woefully unprepared for it. That’s because both the Trump administration and state-level officials around the country have spent the past few years dismantling the very programs that would normally cushion the blow.

Usually, when the economy falters, some anti-recession measures kick in without politicians having to lift a finger. As people lose jobs and income, they start to automatically qualify for existing safety-net programs. Or, as President Trump’s National Economic Council director Larry Kudlow put it last week, while batting away calls for major fiscal intervention: “Let’s not forget, we have automatic stabilizers in the budget, okay?” If the unemployment rate rises, he noted, then “unemployment insurance, food stamps, various welfare-related programs, those are automatic. You don’t have to go for additional appropriation.”

What Kudlow failed to mention is that this administration has been steadily working to make those “automatic stabilizers” much less automatic and much less stabilizing.

In just over two weeks, for instance, the Trump administration will start enforcing a new rule making it harder for Americans to get food stamps if they can’t find work. Which is presumably the time when food assistance might be most helpful. To be clear, food stamp work requirements have long been on the books for certain recipients. But federal law also allows states to get temporary waivers for these requirements, for areas where unemployment is high.

The new Trump rule makes it much more difficult for states to respond quickly to a sudden spike in joblessness — such as, say, if a city completely shuts down because of a pandemic.

As of April 1st, states will be able to qualify for waivers only if their average unemployment rate over the preceding 24 months is not only 20 percent above the national average but also at least 6 percent.

Meanwhile, the Trump administration is crafting two other rules that would dramatically restrict eligibility for food stamp (and free school lunch) enrollment. Such policies are not only callous, they’re also economic self-sabotage. Food assistance offers a huge bang for the buck during a recession: Every additional dollar the government spends on food stamps boosts overall economic activity by about $1.50, according to Agriculture Department research.

Public health insurance is another traditional automatic stabilizer, and one that seems especially critical during a pandemic. Trump has been working to shred this part of the safety net, too, by adding red tape and cutting funding.

In 2018, the administration began working with states to create Medicaid work requirements. These onerous new requirements for beneficiaries to document their work hours caused even gainfully employed people to lose their health coverage. (A federal appeals court unanimously struck down the policy last month.) Elsewhere, the administration has been demanding states add additional paperwork requirements for enrollment in both Medicaid and the Children’s Health Insurance Program, causing eligible families to lose coverage.

The administration also recently announced a proposal to convert part of Medicaid to block grants. This would mean states would get a capped annual amount of federal dollars for the program. It would also limit states’ abilities to expand enrollment during a downturn.

Then finally there’s the unemployment insurance program, yet another policy designed to serve as a safety net both for individual families and the macroeconomy as a whole. In theory, it allows jobless people to keep paying bills and patronizing local businesses.

Today, however, that system is a shadow of its former self. Only about a quarter of unemployed workers actually receive benefits, according to a forthcoming report from the Center on Budget and Policy Priorities. In four states, fewer than 10 percent of unemployed workers receive benefits.

Why? Among other things, states exhausted their unemployment insurance trust funds during and after the Great Recession, which began in 2007; rather than raise taxes to replenish these coffers, states ratcheted down benefits. This problem clearly predates Trump. Even so, his administration has since encouraged states to add more bureaucratic hurdles — including by doing more widespread drug testing as a condition of benefit receipt. This appears to be a solution in search of a problem, based on the handful of states that have experimented with similar programs before. It’s also expensive, and it slows down benefit receipt.

There are useful, bipartisan economic proposals on the table to address the economic fallout of the current pandemic, including many that plug holes in the programs above. I genuinely hope they pass, and fast. But I also wish the last economic crisis had taught government officials that we needed to have critical benefits that trigger on their own — without Americans needing to plead for them. Catherine Rampell writes for the Washington Post Writers Group.

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