According to yesterday's BLS Real Earnings report, for the fourth month in a row, workers saw a year-over-year decline in their paychecks. In January workers saw their pay drop by 0.5% from Dec. 2007 and 1.4% from Jan. 2007.

Although a recession has not been officially declared, for millions of wage earners it certainly feels like one.

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The Bush administration is pursuing or has achieved several policy goals that work to cut social support services by reducing federal funding for Medicaid programs. The Center for Medicare and Medicaid Services (CMS) has released all of these policies — three proposed rules, one interim final rule, and two final rules — in the past nine months.

Two recent reports (one by the Center for Budget and Policy Priorities and one by the Kaiser Family Foundation) link the policies together to show a uniform attack by the Bush administration on federal support of state Medicaid programs. From the Kaiser report:

The Administration views these regulatory changes as promoting the purposes of Medicaid by enhancing the integrity of the program. However, states argue that many of the regulations could limit flexibility in administering the program and could impede the ability of the Medicaid program to fulfill some of its critical roles in the health care system such as providing support to safety-net providers or providing long-term care supports in the least restrictive settings.

Basically, the new rules undermine Medicaid benefits by placing an increasing burden on the states. "Each of the regulations is expected to reduce federal Medicaid spending by directly limiting the level of provider reimbursement, restricting the scope of services eligible for federal match and by limiting states' ability to finance their Medicaid programs," according to the Kaiser report. By reducing federal spending, states would be forced to either cut benefits or pick up the slack financially.

Some of these rules represent efforts by the Bush administration to circumvent Congress. For example, one of the proposed rules would limit the ability of state governments to provide rehabilitation services (such as transitions to independent housing) for people with mental illnesses or developmental disabilities. According to the Kaiser report, the Bush administration proposed this limitation as a legislative provision in 2006, but Congress rejected it.

These are exactly the kind of administrative changes we should expect the Bush administration to pursue in its waning days of power. Confronted by a Democratically-controlled Congress and election-year politics, the administration will try to accomplish administratively what it cannot accomplish legislatively.

Writing in the New York Times, Robert Reich explains how a minor and temporary boost to workers' incomes is tempered by the long-term trend in income inequality.

The underlying problem has been building for decades. America's median hourly wage is barely higher than it was 35 years ago, adjusted for inflation. The income of a man in his 30s is now 12 percent below that of a man his age three decades ago. Most of what's been earned in America since then has gone to the richest 5 percent.

Yet the rich devote a smaller percentage of their earnings to buying things than the rest of us because, after all, they're rich. They already have most of what they want. Instead of buying, and thus stimulating the American economy, the rich are more likely to invest their earnings wherever around the world they can get the highest return.

The problem has been masked for years as middle- and lower-income Americans found ways to live beyond their paychecks. But now they have run out of ways.

Indeed. As economic gains from productivity growth accrue at the upper end of the income spread, the bottom two thirds of American households will experience dwindling consumption resources. And so the trend in inequality is not only troubling from an equity perspective, but it has deleterious consequences on the performance of the economy.

The House voted (380-34) to approve an economic stimulus package passed by the Senate hours earlier. The measure now awaits the president's signature.

Congress has decided that the hungry, the unemployed, and the cold should continue to go without adequate food, adequate income, and adequate heat, because putting money into their hands would do little stimulate the economy as they probably wouldn't spend it.