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As cash-strapped states relentlessly slash spending on relief for people who fall outside the federal social safety net, a new group of "untouchables" is fast emerging, experts warn.

For decades, hundreds of thousands of people in dire straits -- mentally or physically disabled, homeless and unemployed, ineligible for federal welfare, disability or food subsidies -- could generally count on state or local governments for modest handouts of cash to help scrape by. Under the rubric of "general assistance," these down-and-out Americans received modest payments -- often no more than a few hundred dollars a month -- to help defray the cost of necessities including rent, food, clothing, toilet paper, aspirin, phone cards and bus tickets.

But in the midst of the worst recession of modern times and changing attitudes about the poor, many states have been gradually chipping away at general assistance programs or eliminating them altogether. Thirty states currently offer any form of general assistance -- down from 38 in 1989. And in late October, Washington state formally ended its "Disability Lifeline" program for an estimated 18,000 to 22,000 economically desperate residents.

That program once provided beneficiaries with as much as $339 a month to help cover the bare necessities of life, but that was cut to $197 a month in the past year, before the governor and state legislature zeroed out the program. What remains of general assistance in Washington includes new proposals for temporary medical treatment, modest housing vouchers, and aid to the elderly and blind and to pregnant women who have no other source of support. But even much of that assistance may never materialize as the state wrestles with its latest budget shortfall and the governor pushes for even deeper cuts, according to state officials.

Although precise figures are not available, states spend an estimated $3 billion to $4 billion every year on basic assistance to needy people, and a fraction of that goes for general cash assistance to people who don't qualify for other federal programs like food stamps. But even food stamps are not a slam dunk: If the congressional supercommittee fails to reach a minimum $1.2 trillion deal in three weeks, the ax will fall on domestic programs that help the poor.

"The reality is that people aren't going to be able to get their basic needs met and that is the bitter, unvarnished truth," Alison Eisinger, the executive director of the Seattle/King County Coalition on Homelessness told The Fiscal Times. "And the result, we know, is going to mean more desperation, more fragmentation of households, more homelessness and higher costs for our community."

Tony Lee, the advocacy director for Solid Ground, a social-services agency in Seattle's King County, said many of those who have lost their general assistance support are part of what has become a throwaway class of people. Hanging on by a thread, many are now likely to end up on the streets or dumped into hospital emergency rooms, detoxification centers and jails.

"It really is a disastrous situation," Lee said. "General assistance was the ultimate safety net, and we're doing away with that -- we really shredded it."

The new underclass

In the first comprehensive national study of general assistance in more than a dozen years, the Center on Budget and Policy Priorities has documented decades-long erosion in the programs as more and more states abandoned the concept or could no longer afford it.

Just three-fifths of the states and the District of Columbia still offer general assistance, and only to those people who do not have minor children, who are not disabled enough to qualify for the federal Supplemental Security Income program and are not elderly. For those who qualify, the benefits are modest. In 29 of the 30 states with general assistance programs, the maximum benefit falls 50% or more below the poverty line for individuals.

What's more, the rules established for many of these programs seem to set logic on its head. Some of the lowest benefit levels serve individuals who are mentally or physically unable to work and are therefore incapable of earning money to supplement their benefit. For these people, the median benefit is $215 a month, yet the median benefit for employable individuals -- who presumably could earn some extra money -- is $381.

Delaware, Illinois, Kansas and Ohio provide a benefit only for unemployable individuals, yet they set the maximum benefit level at or below $115 a month, or barely subsistence. In the majority of states with general assistance programs, most recipients qualify for health coverage, generally through Medicaid or a state-funded health care program. There is no federally supported cash program for poor childless adults who do not receive Supplemental Security Income.

"It is definitely a safety net of the very last resort," says Liz Schott, a veteran lawyer specializing in government assistance for the poor and a co-author of a study of such aid issued in late October. "Because general assistance is entirely state or local funded and . . . budgets are pressed with the increased demands, we're seeing programs being cut just when the people who need them need them more than ever."

This year alone, as officials struggled to close large budget shortfalls, 10 states considered proposals to further shrink or eliminate general assistance, and seven states adopted such measures, according to the new study.

Kansas and the city of Chicago eliminated their programs; Minnesota restricted eligibility; Michigan reduced benefit levels for all recipients; and Rhode Island is cutting benefits for some recipients. The District of Columbia reduced funding for its program by two-thirds and plans to limit the size of its caseload accordingly.

In Washington, Democratic Gov. Christine Gregoire and the Democratic-controlled state legislature are eliminating general assistance as part of an ongoing financial crisis brought on by the recession and steep drops in revenue. Over the past three years, the governor and legislature have cut government agencies and programs by $10 billion, and they now face an additional $2 billion budget shortfall.

Gregoire circulated a list of dozens of potential budget cuts, including elimination of the general assistance medical program and other vestiges of the general assistance program. "This is not what I signed up for when I started as a caseworker 40 years ago," Gregoire said. "But it's what the world economy handed our state and our country."