Budget deficit fight could leave blacks with bigger burden

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The two parties don’t agree on much, but both are aggressively pressing to reduce the budget deficit. House Republicans are searching for ways to dramatically reduce spending, even if it means cutting funding for food stamps. Mitt Romney delivered a speech in Iowa Tuesday attacking President Obama over the deficit and calling for more austerity. And while Obama is fighting some of these cuts, he is also proposing his own as well.

But this deficit-cutting focus could have severe negative effects, particularly for African-Americans. Look at what’s happened in Europe. Led by Britain, Germany and France, countries all over the continent implemented austerity programs which restrain spending over the last three years.

The results of these policy choices are beginning to be realized. Ireland’s economy reacted to austerity by falling into a double-dip recession at the end of 2011. The first quarter of 2012 saw UK and Spain follow suit. At the end of 2011, the unemployment rate for the entire Eurozone was 10.9 percent, with the countries that have been especially hard hit by austerity, including Spain (21.7 percent), Greece (17.8 percent), Ireland (14.4 percent) and Portugal (12.9 percent), at even higher levels. 2012 has only seen the economic situation in Europe deteriorate further.

In comparison, while not ideal, the U.S. is faring better than Europe, with economic growth of 2.2 percent in the first quarter of 2012 and the unemployment rate of 8.1 percent.

Both parties argue that the American economy is improving enough to sustain some spending reductions, but the specific proposals they are touting have worrisome elements.

To be sure, President Obama’s cuts are much less draconian than the Republicans. Obama’s most recent budget, which was voted down by Congress, highlighted early spending for job creation in 2012 and 2013, followed by cuts in 2014 and beyond in discretionary spending, reforms to Medicare and Medicaid, reductions in defense spending and tax increases on high-income households.

But while the White House budget seeks to limit the burden on the poor, cuts in federal government discretionary spending are likely to result in a loss of government jobs. And high numbers of blacks work in local, state and federal governments, which is one reason the black unemployment rate has surged in the last three years as states cut from their own workforce. Future cuts in these areas will only serve to exacerbate this reality.

The Republican plan, which the House passed on Thursday (but which is likely to die in the Democratic-controlled Senate) is considerably less forgiving. It replaces reductions in military spending with $310 billion in cuts to food stamps, social services, and Medicaid over the next decade.

According to the Congressional Budget Office, the bill that the House passed would result in pushing 1.8 million people off food stamps, 300,000 children losing their health care coverage, 280,000 children losing their school lunch subsidies, and cuts to numerous other programs like child care, and child abuse prevention programs. All told, approximately a quarter of the cuts would come from programs for the poor.

Paul Ryan’s “Roadmap for America’s Future,” which Romney has said he will push if elected, goes even further, spending $5.3 trillion less than President Obama’s budget, largely relying on a voucher program for Medicare and Medicaid which many believe will only shift costs away from the government to individuals in an unsustainable manner.

Under the GOP vision, African-Americans would likely be disproportionately affected both by a loss of jobs and huge reductions in aid from the government.

Gerald Mitchell is the creator of Power Collective, where he works to support and promote small and socially-responsible businesses. Previously, he worked in community and economic development as an adviser to, and investor in, inner-city small businesses.