Not Exactly "Socialism": While Government Pumps Trillions of Dollars Into Banks, States Forced to Slash Aid to Vulnerable Persons

These are the kind of stories that make people question the nation's priorities. An article in the New York Times reports that 34 states have been forced to slash spending for indigent and vulnerable individuals. Because the "stimulus" package only covers 40% of the state budget shortfalls, states must either make budget cuts or raise taxes -- or both.

But securing the nation's safety net and investing in human capital seem like a smart uses for federal assistance. Human capital investments could help retrain people and prepare them for a modified, post-recession economy. Instead, the approach of both the Bush and Obama administrations has centered around rescuing banks, rather than individuals. Once the banks start lending again, the country will "live happily every after." This narrative sounds like a repacked and updated version of the heavily maligned "trickle-down economics" theory advanced during the Reagan era.

Here is a clip from the New York Times article:

Battered by the recession and the deepest and most widespread budget deficits in several decades, a large majority of states are slicing into their social safety nets — often crippling preventive efforts that officials say would save money over time

Perhaps nowhere have the cuts been more disruptive than in Arizona, where more than 1,000 frail elderly people are struggling without home-care aides to help with bathing, housekeeping and trips to the doctor. Officials acknowledge that some are apt to become sicker or fall, ending up in nursing homes at a far higher cost.

Ohio and other states face large cutbacks in child welfare investigations, which may mean more injured children and more taken into foster care. Despite tax increases, California has ended dental coverage for adults on Medicaid, all but guaranteeing future medical problems.

“There’s no question that we’re getting short-term savings that will result in greater long-term human and financial costs,” said Linda J. Blessing, interim chief of the Arizona Department of Economic Security, expressing the concerns of officials and community agencies around the country. “There are no good options, just less bad options.”

Important stories like these barely receive coverage. Well, at least we know that the President has a new puppy!