The

Body Economic Why Austerity Kills? Yixuan Shao Jedi Policy

To: United States Secretary of Health and Human Services - Sylvia Mathews Burwell
To: United States Secretary of Housing and Urban Development - Julian Castro
To: United States Secretary of Labor - Thomas Perez
From: Yixuan Shao
Subject: Facing Crisis: No Austerity and Expand Social Welfare Program Spending
Date: 2016/5/10
Position & Key Discussing Points

The U.S. housing market bubble burst in 2007 has battered economies across the world. In
response to the crisis, many governments such as Britain, Greece, Spain and Italy chose to
cut billions of dollars from their social programs, which is also known as Austerity1. With
proven side-effects of austerity such as further deepened recession, higher unemployment
rate, larger homeless population, increased health-related mortality rate, the United States
government should not support austerity when facing crisis, and should instead implement
the following stimulus policies to bolster its health and social safety nets:

1. Provide universal healthcare through community treatment centers with a focus on

women mental health.
2. Create a nationwide job training and employment assistance program with focus on i)
individualized career plan and ii) at-risk job applicants.
3. Expand affordable public housing assistance program with a focus on homeless
population, drug and alcohol addicts, and ex-prisoner.

Problem Definition & Main Argument Breakdown

1. Provide universal healthcare. Through community-based treatment centers, we suggest

to provide universal healthcare to all the citizens of the country as our preparation for /
response to future potential economic downturns. The main logic behind is by building a
stronger and more inclusive healthcare system, more low-income citizens who cannot / are
hesitant to access the health service they need can all be guaranteed basic medical treatment.

A specific focus on women mental health is recommended when carrying out this universal
healthcare plan. According to a health survey from the World Health Organization (WHO)2,
there exist certain gender specific risk factors 3 for common mental disorders that
disproportionately affect women. However, considering the family and social roles women
play, their mental health conditions affect the family/society as a whole. Therefore we
suggest to provide/expand community-based free mental health counseling programs for
different female groups such as single mother, working mother, full-time housewife, women
in abusive relationship, unemployed young women, etc. Lots of costly social problems such

1 Austerity is medicine intended to reduce symptoms of debts and deficits, and to cure recessions. It cuts

government spending on healthcare coverage, assistance to the unemployed, and housing support.
2
WHO: Gender Disparities in Mental Health http://www.who.int/mental_health/media/en/242.pdf?ua=1
3
These risk factors include (but are not limited to) gender based violence, socioeconomic disadvantage, low income
and income inequality, low or subordinate social status and rank and unremitting responsibility for the care of
others.

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The Body Economic Why Austerity Kills? Yixuan Shao Jedi Policy

as high teenager crime rate, teen pregnancy, relationship-related suicide can now be tackled
from a much earlier stage.

Potential Concerns. Admittedly the additional budget cost required for this healthcare
coverage expansion can be significant, which, in return, will actually help stimulate
economic growth. According to a recent research conducted by David Stuckler and Sanjay
Basu4, every $1 invested in public health programs returns $3 back in economic growth.
We also expect to receive strong objections from doctors since under universal healthcare,
doctors will be asked to provide the same medical service with more restrictions and
regulations to more patients and to be paid less for doing so. Therefore, to ensure the smooth
transaction towards universal healthcare, certain salary-incentive programs for doctors need
to be implemented. We might also encounter ideas such as we have the right to choose
our own healthcare plan from the opposing parties as their push towards further
privatization of the healthcare system. In response to this, our universal healthcare plan is
designed in a way that allows high-income individuals to choose their own private healthcare
plan if they want to. Therefore, the right to choose is still preserved, but more important,
the basic healthcare rights for low-income citizens are now better protected.

2. Create a nationwide job training and employment assistance program. This program
is open to all the citizens who are currently / will be unemployed with focuses on both i)
individualized action plan and ii) at-risk job applicants.

Individualized Action Plan. Failure in activating and engaging unemployed workers is the
major problem with our current employment assistance programs in the U.S. A typical
example being one current employment program participant had to wait three hours to get a
pamphlet that told him to prepare a resume, take a shower and wear a suit. Therefore we
recommend building a nationwide employment assistance system, where unemployed
citizens can easily self-register online and a personal employment coach will reach out
shortly afterwards with an individualized action plan to help them go back into workforce.
To actively engage the program participants, each individual will have an interview with
his/her personal employment coach every six weeks for updates and can only access the
program benefits (e.g. cash benefits, bonded employment opportunities) if they actively
follow the step-by-step plan.

At-risk5 job applicants normally cannot secure employment without bonding service.
Having a record of arrest, conviction or imprisonment functions is a significant barrier to
employment since employers generally view these at-risk job applicants as potentially
untrustworthy workers and insurance companies usually designate ex-offenders as being
not bondable for job honesty. However, the unemployment status of these at-risk job
seekers normally demonstrates a closer link to a higher recidivism rate6, alcohol/drug relapse,

4 Stuckler, David, and Sanjay Basu. The body economic: why austerity kills. Basic Books, 2013.
5 At-risk job applicants include ex-offenders, recovering substance abusers (alcohol or drugs), welfare recipients, people
with poor financial credit or have declared bankrupt, economically disadvantaged youth/adults who lack a work history,
individuals dishonorably discharged from the military.
6 Past experiences reveal that 67% of them will be recidivists (i.e., return to crime and incarceration within three years of

their release). http://www.bonds4jobs.com/program-background.html

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The Body Economic Why Austerity Kills? Yixuan Shao Jedi Policy

depression and higher theft rate. Therefore we recommend a further expansion of current
Federal Bonding Program7 that guarantees honesty for at-risk, hard-to-place job seekers by
a) extending the current bond insurance maximum amount from $25,000 to $50,000 (closer
to the regular standard); b) providing 20% purchase discount for employers when the current
6 month bond coverage expires (stronger incentive for employers to keep hiring).

Potential Concern. Both the individualized career service and the expansion of the Federal
Bonding Programs will make this national employment assistance program way more costly
than it used to be, which hinders its long-term sustainability. To further address this, we
recommend mandatory Alumni Contribution: individuals who successfully secure
employment through the program are required to pay back 3% of their annual income for a
period of two years. All the payments go back to the program fund to sustain the program.

3. Expand current affordable public housing program with special housing assistance
for homeless population, drug and alcohol addicts, and ex-prisoners. By providing more
state-owned, affordable rental houses/apartments options, this policy will benefit more
low-income families, the elderly and people with disabilities. Specifically, this policy aims
to solve public health problems as well as the stressors associated with foreclosures or
non-secure housing through special housing assistance for homeless population,
drug/alcohol users and ex-prisoners. Considering the fact that this high-cluster of people can
be the major factor driving outbreaks of certain contagions diseases (e.g. AIDS,
Tuberculosis), we suggest to provide these special groups of individuals highly
subsidized/free public housing with regular medical check-up. Quarantine/medical treatment
should be followed in case certain contagious diseases are detected.

Potential Concern. Regarding the regular application procedures for public housing, there
can be concerns over the accessibility of this public housing program especially for homeless
population, drug and alcohol addicts and ex-prisoners who have a higher chance of being
illiterate / having limited access to the online-based application. The potential quarantine
treatment may even hinder their willingness to enroll. Therefore, we suggest further
connecting our program to local health service centers where individual health record is
accessible. Additionally, a reach-out team for homeless population within the community is
also highly recommended.
Conclusion

As noted above, austerity treatment during crisis can cause severe side effects. In case of
future economic downturns, the U.S. government should instead increase its social program
spending by 1) providing universal health care with a focus on women mental health; 2)
building individualized and at-risk group focused employment assistance program; and 3)
expanding affordable public housing with special assistance for high-risk individuals.

7 The current bond insurance issued ranges from $5,000 to $25,000 coverage for a 6-month period with no deductible

amount (employer gets 100% insurance coverage); when this bond coverage expires, continued bond coverage can be
purchased from TRAVELERS by the employer if the worker demonstrated job honesty under coverage provided by The
Federal Bonding Program. http://www.bonds4jobs.com/highlights.html