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Left Out of the Bailout: The Poor

By Mark Kukis

November 25, 2008  "Time" -- - As the roster of corporations and financial institutions on line for government bailouts seems to grow, some public policy advocates in Washington D.C. are calling on policymakers to focus more efforts on the nation's poorest. The ranks of the destitute are growing quietly but alarmingly as much of the world focuses on troubles surrounding Wall Street. "Recent data show poverty is already rising quite substantially," says Robert Greenstein, the executive director of the Center on Budget and Policy Priorities. "There is a strong potential for more hardship and destitution than we have seen in this country in a number of decades."

Greenstein's center released a new study on Monday projecting a sharp rise in the number of people living below the poverty line, which is roughly $21,200 annually for a family of four according to Department of Health and Human Services. An estimated 36.5 million Americans currently live below the poverty line, but those numbers will likely increase by as many as 10.3 million if current projections for the depth and duration of the recession hold true. According to the center's analysis, the number of poor children will grow by as many as 3.3 million. And the number of children in deep poverty, those in families living on less than half the wages of the official poverty line, will climb by as many as 2 million. (See pictures from John Edwards' tour of poverty-stricken America.)

Signs of the recession's impact on America's impoverished are increasingly apparent, Greenstein said, pointing to a dramatic rise in food stamp caseloads in recent months. The number of people using food stamps has risen 9.6%, or roughly 2.6 million people, between August 2007 and August 2008, the last period for which data are available. Food banks around the country are reporting longer lines even as donations are falling.

By historical comparison, the expected rise in the number of impoverished in this recession is relatively normal. During the recession years of the 1980s, the number of people in poverty rose by 9.2 million, an increase of more than a third. The recession of the 1990s was not quite as deep but still increased the number of people in poverty by 6.5 million. But those falling into poverty now face harder prospects and need more government help, Greenstein says, because many social safety nets have been cut away since the last economic downturns. (See pictures of the recession of 1958.)

A number of policy changes at both state and federal levels have left basic cash assistance programs scarce, the center's study argues. State general assistance programs were largely eliminated across the country in the late 1980s and early 1990s, except for programs benefiting the disabled. On the federal level, only about 40% of families eligible for cash assistance under the Temporary Assistance for Needy Families program actually receive it. That is about half the percentage of families eligible for the program's predecessor (the Aid to Families with Dependent Children program) that received its benefits during the recessions of earlier decades.

President-elect Barack Obama voiced new concern over the economy Monday when announcing picks for his White House economic team, saying a new economic stimulus package was needed right away in addition to the ongoing efforts to pump more than $700 billion in federal rescue funds into ailing business like Citigroup. There was no indication how any of that round of spending will reach the growing numbers of nation's neediest.

Copyright 2008 Time Inc

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