The soon-to-be-harder politics of economic anxiety

On a cold, slushy winter’s day in a Great Lakes city, there’s no place people would rather stay away from than the welfare office. On a recent morning’s visit to the downtown headquarters of the Erie County Social Services department, there were hundreds of people waiting in line to apply for Food Stamps, home-heating assistance, rental assistance, Medicaid, and other income-support programs. The faraway Washington conversation about what to do about the rising levels of stress for working people—millions of whom today are still not working at jobs they had until a year ago—comes right home, in sharp and stark detail, in the big waiting room where you fill out paper forms, sit if there’s an available chair and stand if there isn’t, and wait for your name to be called.

In this recession, hundreds of people are finding themselves all queued up in a place they never thought they’d have to visit—a place that tells them, no matter how you slice it, that they’re not succeeding.

One hesitates to ask them what they think of the Erie County executive who, in early 2009, announced his “Road to a Bright Future” economic plan. Since that plan was announced here in Buffalo last year:

• the Buffalo-Niagara metro area has lost at least 11,300 and possibly as many as 12,000 jobs, including 4,800 in manufacturing and over 1,800 jobs in hospitality;

• of those who still have jobs, many households’ incomes are sharply down, as evidenced by the fact that non-welfare Erie County households eligible for Food Stamps went from 43,226 in December of 2007 to 57,366 in December of 2009.

A new report from the Brookings Institution suggests that the recession has resulted in a broad suburbanization of poverty, as formerly stable working families hit the wall, and now the Social Services waiting areas, after the housing bubble burst and the economy came crashing down.

There are places far worse off than the Buffalo area—but because Upstate communities are so dependent on the New York City economy, it’s bad news that New York City lost more than 75,000 jobs in the past year. The New York City suburbs lost another 50,000 jobs. When the governor proposes a budget that would slash spending for the state university system, for the state-funded cancer institute, and for suburban school districts, it’s not because he’s Scrooge, but because the Gotham money-creation machine is running on fewer cylinders now. As that state pipeline pumps less, expect even more distress here.

Thus it’s not entirely fair to criticize a local elected official for the calamity visited upon the relatively small, thoroughly dependent Upstate community he represents—any more than it’s fair to blame Barack Obama for the near-collapse of the global financial system that happened before he took office. Elected officials all want to be like the president of the United States: They all would like to have actual influence over whether citizens prosper or struggle. A president can negotiate trade treaties, conduct wars over energy supplies, spend billions to rescue car companies and banks, but even a president is far from economically omnipotent.

But it’s quite fair to ask what is happening with the billions in federal “stimulus” money that the president and the Congress sent to local (especially county) governments to help keep local economies running. What is your county government doing with all that federal money to mitigate the fallout of the global recession?

The answer here: politics, politics, politics. And don’t expect anything to change soon, because the political rewards of ignoring growing poverty and dependency are evidently greater than the political benefit of fixing the problem.

The $74 million question

Local government did not cause the great recession of 2008, 2009, and 2010. But Erie County government—whose leader announced in 2009 that he was making a commitment to “promote our community’s arts, culture and heritage”—reduced funding for tourism and hospitality development, and cut more than $1 million from cultural organizations and more than $2 million from libraries, even though Erie County received more than $74 million in federal “stimulus” funds.

Erie County will be cutting funding for childcare support for 1,500 low-income working mothers, thus pushing them back into welfare dependency from which subsidized daycare helped release them in the first place.

Why? Simple: It’s better politics, in our current anti-government era, to show a leaner county budget. Using the “stimulus” money to plug a budget gap helped Erie County to avoid raising property taxes (Erie County’s are among the lowest in New York State) to pay for things like subsidized daycare for poor working moms. Using the “stimulus” money to plug holes prevented the Erie County Fiscal Stability Authority from going from an “advisory” period to a “control” period. The anti-government county executive polls well notwithstanding all this new pain.

But when local officials who get federal funds fail to put those funds to use to benefit the regional economy, everybody loses: The regional workforce shrunk from about 537,000 to 525,000 over the last year.

The next round of “stimulus” money will come the way it usually comes: in the form of capital projects, a list of which we published last week. The very most that one can say about these projects is that their economic impact will be real. But the hard truth is that the economic impact will be temporary, and the net effect will be to leave this area as poor, as dependent, and as declining as it has been, with none of the spending expected to disturb our trend toward decline.

Could better local policy mitigate, arrest, or reverse the decline?

What could happen in 2011

Politics matters for the economy because politics drives policy—and “policy” is shorthand for the many hundreds of billions of public dollars, annually, that move around. Just this past week, two events utterly changed the predictable course of who our elected officials are going to be, and thus the course of policy and where all that money might go.

First, there was the Massachusetts race for the late Ted Kennedy’s US Senate seat. The Democrat lost because of bad White House messaging, but mainly because of specific local conditions including widespread misogyny, her own stone-deafness to local culture (i.e., she didn’t know much about the World Series champion Red Sox), and because the Republican sounded tougher on terrorism in a state that is still embarrassed that the September 11 hijackers all took off from Logan Airport in Boston. Republicans got a lift, Obama got a shaving cut, and those of us who believe that the Tea Party movement is broadly popular and very real got to say, “Told ya so.”

The real news came from the Supreme Court. Just in time for this election year, a 5-4 majority has opened the door for corporations and unions to spend unlimited amounts of money to influence elections.

This is a scary development. Some alarmists think that American democracy may have been struck a fatal blow by the Roberts Supreme Court. That’s because the forces that are uninterested in the fate of the low- and moderate-income working folks—forces that for decades have been counterbalanced by public-sector unions here in New York—don’t face much of a counterbalance anywhere else in America.

That’s because the private-sector unions are almost extinct. And they’re extinct because globalized trade, driven by newly empowered financial elites, delivers higher profits to investors than localized, unionized production.

It happens that here in New York, if you parse the details compiled by the New York State Public Interest Research Group, there has been a rough balance between unions and business interests. The division of public money here works like this: Public unions get comparatively high wages and generous benefits for their members, while major corporate interests—especially construction companies, insurers, nursing-home operators, and those who finance the runaway housing industry—get lots of direct handouts as well as tax breaks. And the single largest source of revenue for all of this spending has been and remains Wall Street, which pays about 25 percent of the bill all by itself.

This year, however, with an influx of corporate money, the November elections in New York State could become a decidedly red affair—and not in the usual New York-style Republican way, but clothed in a new, anti-union, anti-poverty rhetoric funded by corporations that want what they want and see their best chance to get it as right now, this year, while Obama is on the ropes.

The Right has momentum already. Suburbanites in Westchester and Nassau counties this past fall threw out moderate, pro-business Democratic county executives because anti-tax, anti-union Republicans promised tax relief, lower welfare costs, and a better deal for homeowners who once felt themselves prosperous but no longer do. Here in Erie County, a small suburban government-downsizing movement is succeeding by going town to town promising big results, even though reducing a town board from seven to five members won’t save more than a couple of thousand dollars in salaries and benefits and won’t change planning, zoning, tax rates, public safety policy, recreation amenities, or much of anything else. In Rochester, the current mayor has been getting lots of media attention because of his quest to take over the Rochester school system, and a big part of his argument is that he can manage the money a whole lot better for taxpayers than can the free-spending educators of the disorderly, violent, homework-avoiding urban poor.

All over the place, the message is that the poor are the problem—even the low-income working women of Erie County, who will lose their subsidized daycare, which keeps them off welfare rolls, because the county government’s popularity with suburban homeowners rests on its willingness to tout that it’s protecting suburbanites from the visible poor.

But the complexion of the poor here is changing. The local jump in Food Stamp recipients here, from 43,000 to 57,000 in just two years, is not about urban minorities, but rather about the new economic hardship faced by suburban white folks. The new Brookings study, which runs up through 2008, suggests that the poverty level inside the city limits of Buffalo was creeping up slowly, with just over half of Buffalo’s population either low-income or poor. But what nobody has been paying much heed to is that about a fifth of the suburbs are low-income or poor. In the Buffalo-Niagara metro, that means that almost 200,000 of the folks in the suburbs—folks who are, in the main, not “visible minorities”—fall into that category that you can call near-poor or low-income.

Almost 200,000 suburbanites are now poor or near-poor. The suburbs are where the disengagement, the simmering discontent, and the resentment are growing. I doubt that there will be an anti-incumbent movement in the city—but in the suburbs, where money is getting tighter? Is there going to be a politics based on economic anxiety and funded by corporate interests?

Count on it. How strange, then, that the historic, transformative grassroots victory of 2008 seems to have little or no follow-through in 2010. It wasn’t campaign advertising that won the day for Barack Obama—it was street organizing. In an environment of economic anxiety for the working poor and terror for the middle class, when the door has just been opened for the big-money groups to pour more in, the question is whether any direct organizing is going to occur that speaks directly to the reasons for economic anxiety.

That means getting to the hard questions. Obama’s allies could organize citizens, as they know very well, to ask our House of Representatives candidates why America’s manufactured goods all come from overseas. Town hall meetings could be organized to ask our Senate candidates why we can’t have Glass-Steagall banking regulation back—the regulation that prevented, between 1935 and 1999 when it was in force, the meltdown that occurred after it was repealed. If unions were bold enough to join up with parent groups in the stressed-out suburbs, whose school aid is about to be cut, we could ask the really smart question—why it is that suburban school boards can’t do a deal with Buffalo schools to let suburban kids use the brand-spankin’-new buildings that the state just spent $500 million fixing, even though they’re inside the city limits of Buffalo.

Republican candidates for state office, funded by brand-new corporate money, will be out in force promising tax cuts and a challenge to the control of “special interests.” Perhaps grassroots activists can ask them, and Democrats as well, why massive public works projects don’t give us a new network of streetcars that extend into the suburbs, or why we can’t have a land-banking program like Youngstown, Ohio or Flint, Michigan has—and why it is that corporations that get tax breaks on the promise of creating jobs don’t have to pay back the taxes they avoided when they cut the jobs.

It’s a sad thing to go down to the welfare office on a weekday morning and see hundreds of people standing in line to qualify for Food Stamps. Working-class economic anxiety has translated into 13,000 more non-welfare households here getting help in feeding themselves, but there isn’t a lot of happiness in that scene. Middle-class economic anxiety has, since the 1920s, translated into hard-edged pro-corporate, pro-elite political movements that always target minorities for abuse while failing the middle class and eventually getting violent. If American economic independence is not already doomed by the financial interests that sold us out for cheap overseas labor, the Obama campaign’s politics of citizen engagement, middle-class outreach and youth mobilization needs to get going again—and soon—before the corporate messengers scare the anxious with the ugly but sadly effective politics of resentment.

Democrats in power have been as pliant for the financial elites as Republicans were. Will keeping Congress Democratic mean any different outcomes for deindustrialized America? One wonders whether there will be any prospect of fundamental direction-change in banking, finance, trade, land-use or energy policy. But in the new environment of corporate money shaping and delivering campaign messages, though, it’s a good bet that a lack of citizen-driven engagement will get us what we had before Obama.

Bruce Fisher is a former deputy executive for Erie County and currently visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.