Will recession aid pierce Carter's budget ceiling?
Fresh figures spotlight how recession, like an angry shark tearing at a fisherman's net, can wreck the fabric of a balanced budget. "For every 1/10th of 1 percent rise in unemployment," said a senior White House official, "it now costs the US Treasury $450 million to $500 million in extra outlays."Skip to next paragraph
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The April climb in the jobless rate alone -- from 6.2 to 7 percent -- will siphon up to $4 billion in unemployment compensation and related costs from the federal Treasury.
Those costs include higher US government payments to recipients of food stamps, medicaid, disability benefits, and GI-bill programs.
Each 1/10th of 1 percent climb in the jobless rate, says Robert Greenstein of the US Department of Agriculture, adds "100,000 persons to the food stamps roll."
Twenty-one million Americans now draw food stamps, according to Mr. Greenstein, of whom 13 million are chilren, elderly, or disabled. Sixty percent of households on food stamps are headed by women.
If unemployment climbs in coming months, as most analysts expect, Americans can calculate how much extra money their government must pump out to victims of recession.
This outlay goes not to create new jobs or other social programs, but simply to cushion the unemployed and other disadvantaged Americans against additional hardship.
Apart from this, the White House is asking Congress to appropriate about $1.5 billion in extra money to help Americans who have lost their jobs because of competition from imported foreign goods.
Certification of laid-off automobile workers as eligible for trade adjustment assistance, as this type of help is called, is swelling the outlays.
US carmakers blame foreign imports -- now running at 25 percent of total car sales -- for much of the slump, which has furloughed hundreds of thousands of workers.
Of the $1.5 billion extra requested by the White House, a little more than $1 billion is to make up a fiscal 1980 shortfall. The rest is to fatten the trade adjustment kitty for fiscal 1981, the budget that President Carter still hopes can be balanced.
If additional categories of workers lose their jobs because of imports, more money may be needed as the year goes on.
Jobless workers eligible for adjustment aid can get up to 70 percent of their gross wages, plus retraining and relocation assistance.
These recession-caused outlays make it all the harder for liberals in Congress to prevent spending cuts in established social programs.
The House, for example, has approved a fiscal 1981 budget calling for a $2 billion surplus -- at the cost of $9 billion worth of cuts in a wide variety of domestic programs.
The House version, very close to that proposed by President Carter in his March 31 revision, calls for a spending total of $611.8 billion, including a $14 billion increase in defense outlays over the current year, and cuts of $9 billion in domestic programs.
Since the Senate favors still higher defense spending, social programs are given little chance, at this time, of retrieving their lost money.
Additional outlays for unemployment compensation and related costs, the result of recession, must come from somewhere -- either from deeper cuts in other programs or from piercing the budget ceiling.
The latter course could wreck the balanced budget concept and threaten to throw the fiscal 1981 budget into the red, as every federal budget except one has been since 1961. The sole surplus came in fiscal 1969.
Under these conditions, says AFL-CIO Legislative Director Ray Denison, the drive for a balanced budget constitutes "callousness toward human needs."