By Gus West
CEOs from some of the country’s largest companies just descended on Washington to offer their thoughts on the “fiscal cliff.” The administration isn’t hopelessly tied to the 1 percent. But it has to operate in an environment in which political influence is often directly proportional to the number of zeroes on your bank statement. This cold reality has held true during the legislative wrangling over the “fiscal cliff” – the combination of tax increases and spending cuts scheduled to take effect at the beginning of 2013.
For economically marginalized minority communities, especially American Hispanics, the sad truth is that going over the fiscal cliff might actually be less painful than avoiding it.
The recession hit Hispanics hard. Thirty-eight percent report that they lost a job as a result of the downturn. Work from the Census Bureau shows that the median wealth of Hispanic households dropped 66 percent between 2005 and 2009. That’s compared to a 16-percent drop for whites.
Over that same time frame, the share of Hispanics with zero or negative net worth jumped from 23 percent to 33 percent. Their foreclosure rate was nearly 12 percent – significantly higher than that for African-Americans (9.8 percent) or whites (5 percent).
This economic pummeling has led Hispanics to increasingly rely on the public safety net.
Take Medicaid. During the height of the recession, Medicaid enrollment for nonelderly Hispanics increased four percentage points, representing 2.5 million new beneficiaries. About 27 percent of Hispanics are covered by this program, compared to 11 percent of whites.
If a deal on the fiscal cliff substantially restructures Medicaid – by cutting benefits or tightening eligibility, for instance – Hispanics will bear the unfortunate consequences. They’ll lose a vital source of financial support. The same is true for other important social insurance programs.
Any negotiations about how to avoid the cliff should therefore prioritize and protect the economically marginalized.
That starts with asking upper-income Americans to contribute more to the federal treasury. Second, the defense budget needs to be pared back. Even Republicans acknowledge that wasteful, lobbyist-driven military spending is pushing America toward fiscal ruin.
Restoring federal fiscal balance is certainly a worthy goal. But if a deal to accomplish that includes huge cuts in vital public insurance programs, Hispanic-Americans would be better off if the country leapt off the dreaded cliff.
This year’s election showed the growing political importance of Hispanic voters. Politicians who don’t take Latino interests into account will be punished at the polls. Both sides of the aisle should keep that in mind as they haggle over the acantilado fiscal.
Gus West is board chairman of the Hispanic Institute.