The collective impact: a diverse set of new financial burdens that disproportionately affect women, youth and people of color — a core segment of the Democratic electorate. On top of stubbornly high inflation, they risk further damaging the president’s tone that he is rebuilding the economy “from the middle to the bottom,” especially among the voters he needs to get out of November.
That includes millions of student loan borrowers, who faced resuming loan payments on Oct. 1, after a 3½-year moratorium. A $24 billion emergency support fund for day cares across the country also ended the same day, bringing warnings of rising day care costs and reduced access.
In addition, new restrictions on the Supplemental Nutrition Assistance Program, which feeds more than 40 million low-income Americans, began phasing in this fall, putting hundreds of thousands at risk of losing out. SNAP benefits, formerly known as food stamps. And anti-hunger advocates warn that if Congress doesn’t include another $1 billion for the Special Supplemental Nutrition Program for Women, Infants and Children, commonly known as WIC, in the next funding bill, the program could start to turn hundreds. of thousands of eligible mothers and babies.
The Biden administration has pushed for increased funding for traditional parts of the safety net, as well as safe money to extend some of the temporary social programs created in response to the Covid emergency. In many cases, Biden has been blocked by Republicans and some Democrats in Congress, who argue that the programs are too expensive and unnecessary because the pandemic is slowing. Republicans, for example, negotiated an end to the payment moratorium as part of the debt ceiling deal. The Supreme Court, however, killed Biden’s broader effort to cancel student loans
As a result, the social safety net, which witnessed a historic expansion between 2020 and 2022, is shrinking again. The US poverty rate is already rising, according to Census Bureau data – up to 12.4 percent in 2022 from 7.8 percent in 2021. And that’s before the latest round of pandemic aid ends.
“The expansion of these policies will have a big impact on the economy,” said Chloe East, an economist and visiting fellow at the Brookings Institute’s Hamilton Project, in an interview. Bringing them back, he said, “causes a lot of hardship for American families.”
The White House pointed out that although the Biden administration has been unsuccessful in its attempts to make permanent many of the Covid emergency programs, the current status quo is better than before the pandemic.
“The right comparison to think about is really, how does the social safety net compare to before the president, and how do people’s economic experience and level of economic security compare to what they experienced before the pandemic, ” said a White House official, who was granted anonymity to discuss the administration’s internal thinking. “The president made the social safety net stronger than he found it, and he believes it should be stronger.”
The Biden administration succeeded, for example, in permanently changing the way SNAP benefits are calculated, increasing the amount of food benefits between $12 and $16 per month, in most cases. The president also secured new exemptions from SNAP work requirements for the homeless, veterans and youth aging out of foster care as part of the spring debt deal. And he used existing student loan forgiveness programs to cancel more than $127 billion in debt for more than 3.6 million student loan borrowers.
Biden didn’t get much credit from voters for those and other moves that permanently expanded social programs, however.
In a New York Times and Siena College poll conducted last month, 57 percent of registered voters in swing states said economic issues were the most important factor in who they would vote for in 2024, but 19 only percent ranked the current state of the economy as good. or good.
Fifty-nine percent say they trust former President Donald Trump to do a better job of managing the economy, including 53 percent of people making less than $50,000 — a groups that are more likely to use the social safety net. Sixty-two percent of voters in that financial bracket said the economy was the most important factor in deciding their vote.
Political analysts warn that traditional safety net programs are not, by themselves, top of mind for many voters in an election year. But the loss of benefits – and any additional financial stress it causes – is likely to feed into voters’ generally pessimistic view of the economy.
“The main effect comes from a generalization of specific patterns into a general perception that the economy is not good,” said Matt Grossman, director of the Michigan State University Institute for Public Policy. and Social Research.
For student loan borrowers, families with children in day care and low-income Americans who rely on SNAP or WIC, the effects are just beginning to sink in:
On October 1, SNAP, the nation’s leading anti-hunger program, resumed purging people from its rolls for not meeting work requirements, after a pause during the pandemic.
At the same time, the number of adults needed to meet work requirements began to expand this fall thanks to language pushed by House Republicans to be included in the debt limit agreement passed by Congress at the end of May. Under the debt ceiling law, the age limit for adults subject to the work requirement increased to 50 on Sept. 1, and to 52 on Oct. 1. The age limit will eventually be increased to include adults as young as 54.
Data from the Biden administration shows nearly 8 out of 10 licensed child care providers in the US have tapped into the stabilization fund during the Covid period during the pandemic. Health and Human Services Secretary Xavier Beccera warned that ending the $24 billion program at the end of September would result in increased child care costs and cause some providers to close their doors, which could will leave tens of thousands of children without access to care.
“It’s going to feel like a slow roll, but when the cumulative effect is there, we’re going to see more women drop out of the labor force; more businesses are struggling to find people to hire; many children and families can’t find a place,” said Melissa Boteach, vice president for child care at the left-leaning National Women’s Law Center.
The White House is asking Congress for $16 billion to extend the program for another year. But Republicans have expressed skepticism that more federal funding, especially for traditional day care, is the best way to meet child care needs.
One potential compromise: a tax package that would encourage employers to help fill the gap, something groups like the US Chamber of Commerce favor more spending on. But many on the left doubt that those provisions will fill the gap as well as additional funding.
About 28 million Americans began receiving student loan payments in the past few months, an unprecedented number of borrowers who began paying off their loans at the same time.
The Biden administration has taken some steps to soften the blow. The Department of Education offers an “on-ramp” forbearance period in which borrowers will not be reported as delinquent to the credit bureaus if they fail to make payments the following year. The administration is also promoting a new loan repayment program – called the “SAVE” plan – that lowers the monthly payments for many borrowers, based on their income.
It is too early to know to what extent student borrowers are meeting their monthly payments or how many are behind. But many borrowers have indicated they expect to struggle to make repayments. Research from the Philadelphia Fed found that low-income borrowers, borrowers without a bachelor’s degree, and Black borrowers are among the most likely to expect to default in October.
As with student loan payments, Americans are likely to feel the impact of other benefits cuts gradually, in the coming months. For the White House, which is counting on better economic trends in the new year to help the “Bidenomics” message finally cut through, the timing couldn’t be worse.
However, the White House official POLITICO spoke to argued that reducing the social safety net is not the answer to the “mystery” of why Biden is not polling well on the economy. “Poverty increased last year, but it was not relative to pre-pandemic,” the official pointed out. “Wages and incomes are high in real terms, and especially at the bottom.”