Oregon workers lost one recently when Senate Republicans blocked the extension of federal payments to the timber-dependent counties, including millions of dollars in funding which could have gone to pay for infrastructure and peoples’ needs.

In the past, 32 of Oregon’s 36 counties received federal payments based on historical timber harvest levels, and these funds have become a significant county revenue source.

Sen. Gordon Smith (R-Ore.) and Oregon’s leading Democratic representatives both showed a lack of leadership. In Smith’s case, we might have expected him to use his cross-the-aisles nice-guy-Republican credentials to make a case for keeping the funding. He backtracked instead and allied himself with Sen. Mitch McConnell (R-Ky.) in making sure that the money didn’t get here. Smith no doubt needs this credibility with the Republicans in order to build his reelection campaign.

In the case of the Democrats, we expected them to mobilize and to lead on the issue as a way of winning the money for Oregon and building momentum for a victory in 2008, but they failed to do so.

Many local politicians in Oregon who operate with more accountability at the county and city levels were apparently caught by surprise when the county payments extension fell through. The deal was, by almost any standard, non-controversial, much-needed, and previous extensions of the program made renewal seem likely.

Perhaps funding cut-off will lead to reshuffling of political alliances. For instance, perhaps Salem Mayor Janet Taylor will rethink her support for Sen. Smith.

Should federal payments be a primary means of funding county services? No. But withdrawing this money broadens a developing social crisis in Oregon. Neither the Republicans nor the Democrats have a solution to this crisis at present.

What is this ‘developing social crisis’?

Other reports this week found that 850,000 Oregonians spend more than 10 percent of our incomes on healthcare and that 55 percent of current jobs in Oregon don’t pay a living wage for a family of four—even when both parents work. When companies like Pope & Talbot file for bankruptcy protection, you know there are systemic problems.

Most of the folks spending at least 10 percent of their incomes on healthcare are in families and are under 65—working people, in other words. The numbers of people in this situation has been increasing over the past seven years, and Oregon has a higher rate of people caught in this situation than nationally. About eight percent of the population will spend more than 25 percent of their family income on healthcare in 2008. Because of the loss of federal timber payments, that number could grow as services get cut at the county level.

The problem is not necessarily a lack of health insurance, either. About 576,000 Oregonians, or 16 percent, are uninsured. On the other hand, many families have some kind of health insurance, but the insurance is either inadequate or has premium costs which families cannot easily meet. Moreover, there may well be a total decline in real income, which means that percentage increases come to hit poor people disproportionately hard when it comes to healthcare spending.

Oregon’s seasonally adjusted non-farm payroll employment grew by 3,200 in October and 7,500 in November. Most of these jobs are in trade, transportation, utilities and the service sector. But little improvement has been seen over the previous year as Oregon still had about a 5.5 percent unemployment rate (compared to 4.7 percent nationally) in both October and November.

Lost payments to timber-dependent counties and the strain on local budgets combined with rising health care costs, employment in low-wage jobs or unemployment are not, by themselves, a crisis. The gaps could be filled by ending the war and putting the money going to the war back into building the economy and giving catch-up raises to workers without a major disturbance to the system.

But that isn’t going to happen without an on-going political fight. From the point of view of the far right and the liberal forces they have either co-opted or intimidated, the system is working pretty much as it should be.

The problems cited here signify something deeply wrong and contradictory in the system overall, and in Oregon’s political environment particularly.