• Some people are risking serious Karmic payback here

    In response to my last posting, two correspondents noted particularly awful ways that we treat families in very difficult financial and life circumstances due to a devastating illness.

    Here at TIE, Topazmoon11 writes:

    As a resident manager of David’s House , a beautiful private nonprofit home away from home for families of sick children at Dartmouth Hitchcock Hospital , like a Ronald McDonald House, one of the saddest and most frustrating things I saw was student loan collectors that would not work with parents who had run out of forbearance time to reduce or temporarily waive student loan payments despite their medical emergencies. Even the federal government will operate this way when a student loan goes into collections. Will not work with the debtor at all. We had collection agencies tracking down parents at our facility because, of course, parents who were living there temporarily needed to make the phone number known instead of keeping it confidential. The student loan crisis: another problem that you economists should address.

    Offline, a hospital social worker lamented how she now has to scramble, because Illinois Medicaid has stopped paying for simple funerals for children who die in her unit. Here’s how the Sunshine Review covered this issue:

    Illinois’ budget is so tight the state can no longer afford to pay for the burial of poor people reliant on public aid. State officials say the financial burden will now fall to county governments. Until July 1, the Illinois Dept. of Human Services had a budget of $12.6 million for indigent burials. The fund paid about $1,650 per deceased person – $1,103 for a funeral and $552 for a burial – to be handled by a private funeral home, which would later be reimbursed. Last year, about 12,000 such cases were funded statewide.

    This informative story nicely illustrates an important distinction Mark Schmitt makes in today’s New York Times. Schmitt points out that the words “scarcity” and “austerity” are frequently considered synonyms. They are not: “Scarcity is a grim reality. Austerity, particularly fiscal austerity on the part of government, is a choice.”

    Illinois state government faces serious financial challenges. Yet the actual state of Illinois is reasonably affluent, ranking 15th in in the nation by per-capita gross state product in 2010. We can amply afford to cover simple funerals for five-year-olds who die of cancer.

    Why this disconnect? Our public finance is in shambles in part because of rising health care costs and a punishing recession. Yet our fiscal strain also reflects concrete political choices we have made. We  combine Red State low and flat state income taxes with Blue State spending, sloppy budget practices, and poor governance exemplified by near 12-figure unfunded public employee retirement benefit obligations, and the incarceration of multiple governors not named Blagojevich.

    By any reasonable account, Illinois must permanently raise taxes, consolidate its debts, and enact disciplined but fair measures to support sustainable government. These would be heavy political lifts in any state. The lift is especially heavy here, because a bipartisan history of poor stewardship of public resources leaves voters understandably but indiscriminately cynical about state government.

    In this political environment, officials are pushed to enact painful cuts that affect families in the deepest pain I can imagine. Elected officials must create the political space for good policies to happen. When they don’t, this is the result.

    (HAP)

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