By Mitch Gurney
May 2009
Recently a family member sent me an email regarding a commentary Back on Uncle Sam’s Plantation by Star Parker. Prior to receiving the email I was not familiar with Ms Parker who is the founder and president of a social policy think tank, Coalition for Urban Renewal & Education (CURE). In her commentary she expresses her opinions regarding Federal assistance for America’s needy and the current drama of corporate bailouts, describing these as America’s legacy of socialism. She references to a book she wrote about six years ago, Uncle Sam’s Plantation.
I don’t know whether it was intentional or an accidental consequence of being brief on the details but Ms Parker unfortunately makes a few errors and omissions that convey misleading information in her commentary.
With respect to the bailouts she implies the Obama Administration is solely responsible by making the following statements:
“Uncle Sam has welcomed our banks onto the plantation and they have said, “Thank you, Suh.”
“There is some kind of irony that this is all happening under our first black president on the 200th anniversary of the birthday of Abraham Lincoln.”
“Perhaps more incredibly, Obama seems to think that government taking over an economy is a new idea. Or that massive growth in government can take place “with unprecedented transparency and accountability.”
To support her thesis of “America’s legacy of socialism” and of government “taking over the economy” Ms Parker creates an impression these activities are those of the Democrats alone by linking Obama’s current plans to previous actions undertaken during the Carter and Johnson administrations while failing to point out the more recent bailout activities launched by the Bush administration. She makes no mention of Nixon’s efforts in the 1970’s to manage the marketplace with measures such as price and wage controls and removing the U.S. from the gold standard and makes no mention of any bipartisan support along the way.
We should be able to recall easily enough the corporate invitation to join “the plantation” did not begin with Obama but with the Bush Administration. Sadly however he has continued what Bush started. But that shouldn’t come as a big shock for those who understand there’s no real difference between the two parties especially when it comes to serving their corporate benefactors – corporate entities that fund our elected officials with campaign and lobbyist contributions thereby acquiring a disproportionate degree of influence over national and foreign policy.
In terms of potential taxpayer obligations the bailout figures are sobering indeed. They consist of numerous programs some of which we may not be as familiar with due to a lack of publicity about them. The more publicized programs are the two bailouts of course; $700 billion “Troubled Asset Relief Program” (TARP) signed into law in October 2008 by President Bush and the $787 billion “American Recovery and Reinvestment Act” (ARRA) signed into law in February 2009 by President Obama. Both passed Congress with mostly bipartisan support. The other less publicized programs are those implemented by the Federal Reserve and Treasury. These programs do not require Congressional or Presidential approval or involvement. There are 11 such programs to date each fall under the “Term Auction Facility” (TAF). Since inception these programs have essentially operated with little public transparency or scrutiny even though taxpayers a fully obligated. In just over the past 14 months the government has committed some $13 trillion dollars of which $2.5 trillion has already been spent or lent. To put this debt obligation into perspective our 2009 GDP is tracking toward $11.3 trillion.
Democrats do have more of a legacy for promoting socially oriented support programs in contrast to the Republicans and in this respect there is a point of difference between the two parties. Both parties however have a legacy for showing corporate favoritism.
There is a huge difference between America providing assistance for our needy and the bailouts and how these activities relate to socialism which is defined broadly as;
“An economic system of government which advocates state ownership of the means of production with equal distribution of goods among the people. In practice the government owns the banks, railroads, farmlands, factories, and stores, and is the only employer.”
This definition does not fit to the government’s activities of providing assistance to our needy or to the bailouts in particular. I suggest that rather than government “inviting companies to the plantation” that government instead is dragging its citizens to the plantation to save insolvent companies. In exchange for bailout funds these companies are transferring their bad debts and toxic assets to the taxpayer. If this scheme actually works and these same companies are made whole again they will survive to live another day prospering and profiting once again from the very same citizens now enslaved on the taxpayer plantation paying huge debts far into the future. This is hardly socialism resulting in “equal distribution of goods among the people.”
I have not read her book so I do not know how she describes the federal assistance programs she refers to in the following statements, but in her commentary she mixes up the history and makes a clumsy association resulting in misleading information:
“I talked about government programs like Temporary Assistance for Needy Families (TANF), Job Opportunities and Basic Skills Training (JOBS), Emergency Assistance to Needy Families with Children (EANF), Section 8 Housing, and Food Stamps.”
“A vast sea of perhaps well intentioned government programs, all initially set into motion in the 1960′s, that were going to lift the nation’s poor out of poverty.”
The “Temporary Assistance for Needy Families” (TANF) was a program implemented in 1997 and replaced a program called “Aid to Families with Dependent Children” (AFDC), a program created under the name of “Aid to Dependent Children” (ADC) by the Social Security Act of 1935. TANF also replaced the “Job Opportunities and Basic Skills Training” and “Emergency Assistance to the Needy Families with Children.”
TANF was created by the “Personal Responsibility and Work Opportunity Act”(PRWORA) which was passed by Congress in 1996 and signed into law by President Clinton in August 1996 becoming Public law 104-193. PRWORA was a bill that was a “cornerstone of the Republican “Contract with America” and signed into law by Clinton as part of his promise to “end welfare as we know it.” PRWORA was considered at the time to be a “fundamental shift in both the method and goal of federal cash assistance to the poor.” It was heralded as a “reassertion of America’s work ethic by the U.S. Chamber of Commerce, mainly due the skills workforce components it contained.” PRWORA shifted welfare management primarily from the federal level to the state level with TANF managed on the state level through grants made by the Fed.
TANF’s primary objectives were to reduce the number of recipients by providing temporary assistance limited to 60 months in one’s life time aiming to get people off assistance, primarily through employment. Specific requirements and effects of the program as outline by Wikipedia are as follows:
- Ending welfare as an entitlement program;
- Requiring recipients to begin working after two years of receiving benefits;
- Placing a lifetime limit of five years on benefits paid by federal funds;
- Aiming to encourage two-parent families and discouraging out-of-wedlock births.
TANF falls under the umbrella of Social Security as did the programs it replaced and as such became a mandatory part of the U.S. federal budget. As explained in this video which explains the budget process, mandatory in that once legislation of this nature is enacted it cannot be altered or changed by Congress or the President until it expires.
I believe it is the above legislation Ms Parker is referring to when she states:
“I had the privilege of working on welfare reform in 1996, passed by a Republican congress and signed into law by a Democrat president. A few years after enactment, welfare roles were down fifty percent.”
She is correct in that the number of recipients receiving assistance has declined. Since TANF was implemented in 1997 there has been a steady decline in the number of recipients and many advocates have herald the program a success. In 1996 there were over 12 million recipients, by 2007 there just about 4 million (see chart).
It appears the legislation has accomplished its primary objectives in reducing the number of recipients receiving assistance. But there are multiple ways in which to measure the success of a program and it appears by Ms Parkers following statement that in some areas it has fallen short of expectations:
“Trillions of dollars later, black poverty is the same. But black families are not, with triple the incidence of single parent homes and out of wedlock births.”
In some respects one could point out that the success of the legislation she “had the privilege of working on” in 1996 is a contributing factor to the conditions she now describes as “black poverty is the same.” During the signing ceremony Clinton had acknowledged the program was not perfect and that future refinements might be necessary. This leaves me wondering what her expectations are in relation to the legislation by her following statement:
“I thought we were on the road to moving socialism out of our poor black communities and replacing it with wealth producing American capitalism… but, incredibly, we are going in the opposite direction.”
In terms of the corporate bailouts we are indeed heading in the wrong direction. But in terms of the needy receiving government assistance, TANF expired in 2005 and was reauthorized in the “Deficit Reduction Act of 2005” through Senate bill S. 1932. The bill passed the Senate with a tie-breaking vote cast by V.P. Cheney. The bill was signed by President Bush in February 2006 becoming Public Law 109-171. This legislation is effective until September 2010. At the time it was estimated the Act would reduce, over the next five years, $40 billion in the mandatory spending.
Those savings may not be realized now in light of our current financial crisis and growing unemployment which is near 16 percent. The number of recipients receiving TANF assistance may increase, not because of any specific actions undertaken by the Obama administration, but as a result of the prior commitments made in the “Deficit Reduction Act of 2005”
The Congressional voting records indicate the legislations had wide Republican support with weak support among the Democrats. While PRWORA primarily passed with bipartisan support the “Deficit Reduction Act” had only two Democrat Senators voting in support. The Republicans may be anticipating and gearing up for a tough battle over TANF with the Democrats in 2010.
PRWORA – Congressional actions
Public Law 104-193; signed by Clinton
Congressional Major Actions Timeline
Deficit Reduction Act of 2005 – Congressional Actions
Public Law No: 109-171, signed by Bush
Re-authorized TANF which expires in September 2010 (see pgs 3- 4)
Even if in a haphazard manner Ms Parker raises some valid issues and concerns. But regardless of our political or religious differences we have looming on our horizon a far greater U.S. fiscal challenge that as a society we will need to come to terms with in the near future, a point made clear in State of the Union’s Finances –A Citizens Guide. If we fail to get government spending under control soon we may all become America’s needy.
Mitch Gurney
Addendum:
May 17, 2009
At the time of composing the above commentary I did not discuss the “American Recovery and Reinvestment Act of 2009,” (ARRA) in detail and I had not researched it and therefore unaware of any impact it might have on TANF. But having now researched the legislation I find there is.
Regarding TANF, I had made the following statement:
“Those savings may not be realized now in light of our current financial crisis and growing unemployment …the number of recipients receiving TANF assistance may increase, not because of any specific actions undertaken by the Obama administration, but as a result of the prior commitments made in the “Deficit Reduction Act of 2005.”
Well…what the government taketh away it soon restoreth.
ARRA Public law 111-5 is a supplemental appropriations bill “for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization, for fiscal year ending September 30, 2009, and for other purposes.” It provides additional funding for TANF, outlined in Title II – Assistance for Unemployed Workers and Struggling Families, Sec 2000 -2006 and in Subtitle B – Assistance for Vulnerable Individuals, Sec 2101- 2202 – Emergency Funds for TANF Program.
In my only reference to ARRA I stated that it like TARP had “passed Congress with mostly bipartisan support” and I stand corrected:
One should never underestimate the political complexities of our government. In a reversal to TARP only three Republican Senators voted in favor of ARRA which garnered full support of the Democrats in the Senate. In the House 11 Democrats and all the Republicans opposed the legislation.
ARRA – Congressional Actions
Public Law 111-5, signed by Obama, 2/17/2009
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