When Congress and Bill Clinton decided to end "welfare as we know it," they made a deal with the poor folks who were being cut loose from their AFDC checks. Go out and find a job, they told the mothers with dependent children. Government will help by providing a modest subsidy to pay for child care. As a practical matter, most mothers with small children couldn’t go to work without it.

Now that promise is gradually being withdrawn. The federal government still funds the child-care subsidy, but across the country local governments and some states are deciding they can no longer afford to take the federal money. Faced with horrendous budget deficits, cities and counties are cutting back the local matching money required of them.

Child care providers, often former welfare recipients themselves, see their incomes plummet and have to close down. Working women with kids are stranded without good choices. They scramble. Some wind up back on the welfare rolls or getting emergency cash assistance.

Poor mothers who work in low-wage jobs are not exactly a high-profile interest group. Their calamity is just one more dislocation among the many caused by the Great Recession. The New York Times took notice, however. Reporter Peter Goodman told their story with powerful reporting and his comprehensive account led the newspaper’s front page.

A 23-year-old mother in Tucson, Arizona, told Goodman: "I’m totally able, physically and intellectually, to continue working. But I can’t work without child care, and I can’t afford child care without work."

If President Obama were serious about large-scale public job creation to confront unemployment (he isn’t serious, not yet anyway), he might start with this mother’s humble dilemma. The realm in which these women scramble and struggle is actually a promising opportunity for economic development–one place where public investment can generate massive job creation. In fact, the broad universe of "care giving" would deliver a bigger payoff in new jobs than federal spending on infrastructure or green energy projects.

Leave aside the harsh inequities of welfare reform. In the post-welfare world, necessity generated a lot of personal enterprise and small-scale ventures–plucky welfare mothers who wound up creating and operating their own neighborhood businesses as care givers. I got a glimpse of this world recently in upstate New York when I met with child-care organizers from the Civil Service Employees Association (CSEA). The union of nearly 300,000 workers from state and local governments now has some 22,000 members who work in the child-care sector, sometimes know as "kith and kin care."

Their stories involve "true grit" in the classic American manner. These micro-entrepreneurs cope with all the usual nightmares of owning a small business, getting the accounting right or meeting payrolls and burdensome regulations.

But these care givers also fill an important social role. In neighborhoods often decimated by poverty, they are often the vital connecting threads–the eyes and ears and voice for powerless communities. CSEA recognizes their potential as political voices too. The union is helping the organizers develop the self-confidence to speak up on broader public issues. They know what working folks think–they talk to them everyday.

Typically in recessions, poor people are first to be thrown over the side. This recession is worse than typical. In Erie County (Buffalo), the county government has cut eligibility for the federal subsidy. Ed Gresco, the CSEA organizer, described the ripple effect: 50 to 60 providers go out of business, 1,500 children lose their child care, 700 families lose their ability to hold jobs.

This is a small living example of why reducing the federal deficits at this fragile stage of economic recovery is utterly wrong-headed (though Obama says he is going to try). In many areas, cutting public spending adds to the ranks of unemployed and may ultimately add to the government’s costs for welfare support. A state or local government may make bad choices in the name of balancing the budget. The federal government does not have that excuse.

The Levy Economic Institute of Bard College–an unapologetic voice for liberal economics–published a provocative study called "Why President Obama Should Care about ‘Care’" that makes the case for doing the opposite. The study asserts "the government needs to identify useful projects that have the potential for massive public job creation, and to select investments that maximize job creation both immediately and equitably."

The Levy economists conclude that "social sector investment, such as early childhood education and home-based care, generates more than twice the number of jobs as infrastructure spending and almost 1.5 times the number of jobs as investing in green energy. In addition, it is relatively more effective in providing jobs to people with the least education. The social sector is particularly beneficial for women (new jobs are concentrated in teaching, child care and home health care)."

There is the catch. Those groups–women, less educated and lower income workers–are usually first fired, last hired. This recession is a model for that reactionary dictum. "The government has focused on rescuing Wall Street and the banks–the main beneficiaries during times of economic prosperity–rather than low-income householders who continue to lose their homed and their jobs," the authors noted.