“Our Nation’s Biggest Shame”: How Much Money Would It Take To Eliminate Poverty In America?
Last week, the Census Bureau put out its annual income and poverty figures for 2012. The big news on the poverty front is that the percentage of Americans living in poverty is unchanged at 15 percent, which amounts to 46.5 million Americans. More than one in five kids under the age of 18 are in poverty, and nearly one in four kids under the age of six are impoverished as well. These are numbers we’ve all become accustomed to, but they can still shock the conscience if you make an effort to let them soak in again.
The sheer scale of poverty in the U.S. is so massive that it can seem as if eliminating or dramatically reducing it would be nearly impossible. After all, 46 million people is a lot of people. But in reality, if we stick to the official poverty line, the amount of money standing in the way of poverty eradication is much lower than people realize.
In its annual poverty report, the Census Bureau includes a table that few take note of which actually details by how much families are below the poverty line. A little multiplication and addition later, and the magic number pops out. In 2012, the number was $175.3 billion. That is how many dollars it would take to bring every person in the United States up to the poverty line. In 2012, that number was just 1.08 percent of the nation’s gross domestic product (GDP), which is to say the overall size of the economy.
To be sure, you probably don’t want to run a program that hunts out every family below the poverty line and brings them right up to it. Such a program would effectively involve imposing a 100 percent marginal tax rate for all income made below the poverty line. But, things like strategically expanding the Child Tax Credit, the Earned Income Tax Credit, SNAP, and related programs could make enormous strides toward poverty reduction. Implementing a mild basic income and a negative income tax would also help a great deal. The policy solutions for dramatically cutting poverty exist, they are used by countries elsewhere, and they could be used here, if we chose to do so.
It might be helpful to put the $175.3 billion magic number in perspective. In 2012, this number was just one-fourth of the $700 billion the federal government spent on the military. When you start hunting through the submerged spending we do through the tax code, it takes you no time to find enough tax expenditures geared toward the affluent to get to that number as well. The utterly ridiculous tax expenditures directed toward the disproportionately affluent class of people called homeowners—mortgage interest deduction, property tax deduction, exclusion of capital gains on residences—by themselves sum to $115.3 billion in 2012. Throw in the $117.3 billion in tax expenditures used to subsidize employer-based health care (also a disproportionate sop to the rich), and you’ve already eclipsed the magic number.
Eradicating or dramatically cutting poverty is not the deeply complicated intractable problem people make it out to be. The dollars we are talking about are minuscule up against the size of our economy. We have poverty because we choose to have it. We choose to design our distributive institutions in ways that generate poverty when we could design them in ways that don’t. Its continued existence is totally indefensible and our nation’s biggest shame.
By: Matt Bruenig, The American Prospect, September 24, 2013
“Letting The Debt Ceiling Cave In On Seniors”: Republican Actions Could Well Spell Disaster For Them In The Mid-Term Elections
Democrats used to be able to count on the senior citizen vote. After all, it was FDR who created Social Security and Lyndon Johnson who created Medicare. But, hello, that was about 75 years ago and 50 years ago, respectively! Times do change.
As I like to scream at my Democratic friends, the post-65 generation were Ronald Reagan voters and had zip to do with FDR and LBJ.
As most now know, the only age group to support John McCain was the 65+ crowd and Romney beat Obama handily among seniors in 2012. Romney got 56 percent of the senior vote and McCain go 53 percent to Obama’s 45 percent in 2008.
The 45-64 group was very close in 2008 and Romney narrowly won it in 2012. And this was when Obama was the first Democrat since Carter in 1976 to receive more than 50 percent of the vote.
So what is my point?
Republicans have taken serious hits for their efforts to shut down the government and their possible refusal to raise the debt limit. In my blog post last week, I quoted Ronald Reagan on the debt limit. He got the message; he never drank the Kool Aid on that one.
But here is a very serious problem for the Republicans. If they really go through with their draconian plan, sure it hurts everyone, hurts the economy big time. But who does it especially freak out? You got it, senior citizens.
Why? The retired and those who live on fixed incomes and who have to draw on their retirement accounts get hammered. The last time the Republicans even threatened to hold the debt limit hostage in 2011, the stock market went down 17 percent.
Let me repeat that: After the debacle of 2008 and the economic meltdown, the stock market took a 17 percent hit for one reason and one reason only – Republicans doing what Reagan had warned against. Plus, the U.S. credit was downgraded, which was unprecedented.
Seniors can’t afford to have that happen again and they know it – their 401(k)’s can not become 201(k)’s. The crash in 2008 and the double digit hit in 2011, if repeated, will affect those who are retired and those planning on retirement, and that is about 50 percent of the voters. If Republicans lose substantial numbers of those who are over 50 years old, it won’t just impact their chances of winning the presidency, with the changing demographics of race and ethnicity, but it could well spell disaster for them in the mid-term elections as well. Republicans could lose the House and not make the gains they want in the Senate.
Republicans may think they are going strong with their base of tea party radicals bashing the Affordable Care Act, but nothing impacts voters as much as watching their monthly savings and retirement statements tank.
Seniors and upcoming retirees watch their stocks and bonds and IRAs and 401(k)’s like a hawk and if Republicans get the blame for big losses, trust me, they will feel it big time at the polls next November and for many Novembers to come.
Shutting down the government and defaulting on our obligations are not just bad policy, but they are really bad politics for the Republicans. They simply cannot afford to watch their advantage with the 50+ age group evaporate.
The real question is will the Republicans come to their senses? It is not a sure bet.
By: Peter Fenn, U. S. News and World Report, September 23, 2013
“Collapse Of Their Credibility”: GOP Desperate To Defund ObamaCare Now Because They Know Its Popularity Is About To Skyrocket
Why are the Tea Party Republicans so desperate to defund ObamaCare right now? Because they know that once it goes into effect its popularity will skyrocket.
They know that once it is fully implemented, it will be impossible to take away the many benefits of ObamaCare. It is one thing to prevent something good from being passed by Congress. It’s quite another to take something away from the voters.
The Republicans know that once it is in effect, it will be impossible to tell the millions of Americans who have a pre-existing condition that they have to return to the days when they either were denied insurance coverage or had to pay an arm and a leg to get it.
They know that once it is in effect, it will be impossible to end the affordable coverage that will soon be available to the millions who are not covered by their employers and will have access to health insurance through the health insurance exchanges – where prices have come in lower than projected.
They know that once it is in effect, it will be very difficult to end coverage for the millions who will for the first time have health insurance through expanded Medicaid.
They know that once it goes into effect, it will be very hard to convince Americans to turn the health care system back over to the big insurance companies.
Most importantly, they know that all of the many ObamaCare “horrors” they have predicted – from “death panels” to price increases to a “government takeover” – will not happen.
As a consequence, they believe that once ObamaCare is fully implemented their credibility on the subject will collapse, support for major new progressive initiatives will increase, the popularity of the President – and of Democrats in Congress – will go up, and their chances of hanging on to the House or taking the Senate in 2014 – and the White House in 2016 – will decline.
All of that is why the Tea Party Republicans are so desperate to stop ObamaCare. That’s why they will risk shutting down the government or defaulting on America’s obligations – on the chance that they can force President Obama and the Democrats to delay its implementation and allow them to live to fight another day.
They are desperate. And to achieve their narrow ideological goal, they are willing to use the same desperate measures that other marginal movements have adopted around the world: they have taken a hostage. Except their hostage is not one person – it’s 320 million people – it’s the American economy.
The success of their hostage taking strategy faces two virtually insurmountable obstacles:
First, the President has made clear that he is not willing to negotiate at all over the debt ceiling or ObamaCare.
Many of these hostage takers are the same people who would demand, categorically, that the American government should never negotiate with hostage takers, because to do so only encourages them to take more hostages and make more demands.
President Obama apparently agrees with them. He knows that if he negotiates with people who are willing to collapse the American economy just to get their way, that they will then use the same threat again and again. And he is unlikely to budge, since he is obviously unwilling to sacrifice his signature initiative — ObamaCare.
Second, many key GOP stake holders think that the Tea Party’s willingness to shut down the government or cause a default is sheer madness and would severely damage the GOP brand. Democratic pollsters Jim Carville and Stan Greenberg wrote in a memo last Wednesday:
The Republican Party has a serious brand problem, and it keeps getting worse. The GOP is viewed unbelievably negatively, and even Republicans themselves agree that it is deeply divided.
Polls show the Republican brand problem manifesting itself in the Virginia gubernatorial race, and in Senate races across the country. And if Republicans damage their brand even worse by shutting down the government, we think that they could trigger a revolt that might even imperil their House majority in 2014.
The GOP demand that President Obama and the Democrats surrender or face a government shutdown or default is like a combatant in a war demanding that the other side surrender or he’ll blow his own head off. From a purely political point of view -if it weren’t so bad for the country and economy – you’d have to say: “Go ahead, make my day.”
All the polls show that if either a shutdown or default takes place, the Republicans will take the blame by a factor of at least two to one.
And after they have taken the blame, in the end they will collapse. Even the Wall Street Journal editorial page said recently:
The evidence going back to the Newt Gingrich Congress is that no party can govern from the House, and the Republican Party can’t abide the outcry when flights are delayed, national parks close and direct deposits for military spouses stop. Sooner or later the GOP breaks.
So while the state of desperation in evidence among Tea Party Republicans at the prospect of ObamaCare going into effect — and becoming very popular — might be understandable, their desperate strategy of holding the economy hostage in order to kill it is downright suicidal.
Then again, while suicide bombers end up as victims of their own actions at the end of the day, there is no question they can inflict enormous amounts of pain and suffering on everyone else.
By: Robert Creamer, The Huffington Post Blog, September 20, 2013
“Let’s Impeach Congress”: Failure To Pay Debt Is ‘Unconstitutional’
In what has become an annoying and unnecessary annual ritual, Congressional Republicans and the White House have staked out their political ground as we approach this year’s Season of the Witch—the time when any remaining shred of reason in government is retired in favor of political posturing over the debt ceiling.
Appearing this morning on ABC’s “This Week”, Obama made clear that he has no interest whatsoever in cooperating with Speaker John Boehner’s demand for budget cuts in trade for House GOPers permitting the government to pay the debts it has already incurred.
Speaking in an interview with George Stephanopoulos, the President stated:
“Never in history have we used just making sure that the U.S. government is paying its bills as a lever to radically cut government at the kind of scale that they’re talking about,” he said. “It’s never happened before. There’ve been negotiations around the corners, because nobody had ever presumed that you’d actually threaten the United States to default.”
Speaker Boehner would beg to differ, noting earlier this week—
“For decades, the White House, the Congress have used the debt limit to find bipartisan solutions on the deficit and the debt,” Boehner said. “So President Obama is going to have to deal with this as well.”
While there may be a small element of truth in Boehner’s words regarding the use of the annual debt ceiling as a tool to manage deficit and debt in previous days, that doesn’t mean that many participants in either the Congress or the Administration, prior to 2011, have ever viewed such an effort as a legitimate means of negotiating the annual budget nor perceived the threat of default as something to be followed through upon.
Nor does it mean that prior occupants of the White House ever found the threat of default to be a particularly useful exercise.
Indeed, were we to go back to President Ronald Wilson Reagan’s perspective on such an action, we find that The Gipper didn’t much care for the approach—
“Unfortunately, Congress consistently brings the government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veteran’s benefits. Interest rates would skyrocket, instability would occur in the financial markets, and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility—two things that set us apart from much of the world.”
Despite these words offered up by Ronald Reagan—the golden calf worshipped by true-believing Republicans everywhere—the Congressional Republicans appear to, once again, hope that the American public will forget—or simply fail to grasp—that it was Congress who authorized the very expenditures that now require a raise in the debt ceiling if these bills are to be paid.
Obama also offered one more, rather tantalizing thought in his Stephanopoulos interview when he noted that Congress’ constant efforts to use the the debt ceiling as leverage “changes the constitutional structure of this government entirely.”
Could the President be telegraphing that he may now be willing to use Section 4 of the 14th Amendment to raise the debt ceiling without Congress in the event of an unfortunate vote—something that Obama has previously been unwilling to do?
The fact that Congress, including House Republicans, authorized these expenditures is of no consequence to those who seek to reap what they perceive as the political benefits of agreeing to spend on items that the public wants and then shift the blame onto the White House every year when it comes time to pay for Congress’ actions.
And while Boehner takes liberties with history in an effort to make himself look tough—a rather comical effort given that exactly nobody believes that the Speaker is in control of much of anything these days—what is genuinely scary is the fact that it is Speaker Boehner who passes for “reasonable’ among today’s House Republicans.
Increasingly, the House of Representatives is under the control of the extremists who are pushing hard to both default on the debt and shut down the entire government if Obama refuses to cave to their desire to defund the President’s landmark legislation, Obamacare.
Still worse, these extremists continue to hold a grudge over the previous failures to shut down the government and default on our obligations at debt ceiling time and are just itching to make it happen this year.
While I would truly enjoy the opportunity to egg these people on in the firm belief that a government shut-down at the hands of Republican extremists could be just the thing to rid ourselves of this scourge once and for all, I admit that some restraint is required when considering who would be left to suffer the consequences.
What would a government shutdown mean to Americans?
As it happens, we’ve had some experience with this so let’s take a look at what happened when the House Republicans shut down the government in 1995-96:
- More than 400,000 veterans saw their disability benefits and pension claims delayed.
- Educational benefits were delayed for 170,000 veterans
- Instead of providing benefits to veterans, a number of VA hospitals were forced to set up food banks for their employees who were going without pay checks.
- Approximately $3 billion in U.S. exports couldn’t leave the country because the Commerce Department couldn’t issue export licenses.
- For the first time in the federal unemployment program’s 60-year history, six states ran out of federal funds to pay unemployment benefits.
- Processing and deportation of illegal immigrants stopped, and employers were unable to verify job applicants’ immigration status.
- 10,000 new Medicare applications and 212,000 Social Security requests were delayed.
- Tens of thousands of Americans could not purchase a home because the Federal Housing Administration was unable to insure single family home loans.
- EPA’s enforcement activities were stopped and toxic waste clean-up at more than 600 sites slowed or came to a halt.
- 95% of workplace safety activities were halted.
- The Department of Interior stopped inspecting oil and gas well on public lands.
- 760,000 American workers were either furloughed or worked without pay.
- 200,000 U.S. applications for passports went unprocessed.
It stretches the imagination to understand how anyone could view such an action as helpful at a time when the American economy is struggling to recover and when recent wars have left so many veterans in need of the benefits that would stop flowing as a result of a shut-down.
Thus, while the idea of “teaching Obama a lesson” or doing something drastic to get the national debt under control may appeal to many, my suggestion would be that you familiarize yourself with who will directly suffer as a result of your grand plans. If trashing the economy, denying veterans their benefits and slowing down social security payments to your parents works for you, knock yourself out.
If not, you might consider letting your representatives know that you are not in favor of such a ridiculous effort to resolve our problems.
By: Rick Ungar, Op-Ed Contributor, Forbes, September 15, 2013
“Biggest Banks Are Bigger Than Ever”: Five Years After Lehman Brothers, We’re Still Just One Crisis From The Edge
Five years ago tomorrow, the investment bank Lehman Brothers filed for bankruptcy, officially kicking off the financial crisis that led to what we now call the Great Recession. Lehman’s bankruptcy was followed by the bailout of insurance giant AIG, the $700 billion bank bailout known as TARP and an alphabet soup of Federal Reserve programs launched in an attempt to stem the damage being done to the economy.
But even with those emergency measures, the final toll of the crisis was staggering: 8.7 million jobs were lost, $16 trillion in household wealth was wiped out and 12 million homeowners were left underwater, owing more on their mortgages than their homes were worth. According to the Federal Reserve Bank of Dallas, the cumulative effects of the crisis – wealth lost during the recession plus the effect that lower earnings and wealth will have on future earnings and output – could add up to more than $28 trillion.
The crisis began with a housing bubble fueled by subprime mortgage lenders, who were encouraged to make loan after loan by Wall Street banks that wanted mortgage securities to slice, dice and sell around the world. But it was exacerbated by the fact that the biggest Wall Street banks were so interconnected that the failure of one meant all the others were brought to the brink of collapse. The banks – engorged on debt and engaging in risky trading for only their own benefit – put the whole economy at risk.
Since then, quite a lot of time, effort and ink have been spent trying to fix what went wrong. So how did that attempt go?
The main legislative response to the crisis – the Dodd-Frank financial reform law – undeniably contains some things that will make the next crisis, whatever its form, easier to manage (or even prevent). There’s now a regulator explicitly tasked with policing consumer financial products, the Consumer Financial Protection Bureau. There’s a new process that, at least in theory, will allow the government to dismantle a failing mega-bank without resorting to ad-hoc bailouts, a legal process that was sorely missing during the 2008 crisis.
There’s a new regulatory regime for derivatives – the risky financial instruments that helped bring down AIG – that should make their market much more transparent. And banks are now required to hold more capital on hand to protect against a sudden downturn.
In other areas, though, not much has changed. For instance, the biggest banks are bigger than ever. In fact, the six largest banks in the U.S. now hold $9.6 trillion in assets, a 37 percent increase from five years ago. That total is equal to 58 percent of the entire economy. As Fortune’s Stephen Gandel noted, “The biggest bank in the nation, JPMorgan, has $2.4 trillion in assets alone — the size of England’s economy.”
And while those banks have gotten bigger, rules meant to rein in their risky trading have gone precisely nowhere. A key part of Dodd-Frank known as the Volcker Rule – which was supposed to prevent banks from making risky trades with taxpayer-backed dollars, such as consumer deposits – was watered down by Congress even before it passed, and is now stuck in a bureaucratic and lobbying morass. (Overall, just 40 percent of the rules in Dodd-Frank are actually finished.) More ambitious reforms, like capping the size of banks, garnered just one unsuccessful vote in the Senate.
Homeowners, meanwhile, continue to struggle. Not only are 7.1 million still underwater, but banks are engaging in shady practices to push homeowners into foreclosure who should have been able to stay in their homes. A much ballyhooed settlement stemming from rampant “foreclosure fraud,” as it’s called, doesn’t seem to have actually stopped these pernicious practices.
So while some things have certainly changed for the better – and having a consumer regulator will hopefully shortcircuit a lot of problems before they start – the biggest banks are still just one catastrophe away from pulling the country back to the edge of a cliff. And if the new process for unwinding a failed mega-bank doesn’t work, there won’t be many options available other than the odious bailouts used in 2008. In the meantime, homeowners who have suffered at the hands of the financial industry still find themselves with few avenues for receiving any justice.
Is there any momentum for new reform? Well, Sen. Elizabeth Warren, D-Mass., has been beating the drum for breaking up the biggest banks, and introduced a bill – along with Sens. John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine – that would bring back a Depression-era regulation keeping investment and commercial banking separate. Former Citigroup CEO John Reed, who presided over the nation’s first true banking behemoth, told the Financial Times recently that breaking up banks can and should be done, making him one of a handful of Wall Street titans to take such a position.
But the financial industry is as strong as ever, so the prospects of real reform happening absent another crisis or a real populist reawakening are still pretty slim. If another crash comes along, we’re going to have to hope that the tinkering and tweaking that’s already occurred is enough to save us.
By: Pat Garofalo, U. S. News and World Report, September 14, 2013
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