And Now, a Brief Word About Poor People


Before we mercifully consign this week’s Republican presidential debate to the dustbin of obscure Google searches, it’s worth noting two brief, but politically significant, moments that slipped by with almost no coverage.

The first came when Newt Gingrich got a chance to ask a question of Mitt Romney; ever concerned about the travail of the uber-wealthy, Newt wanted to know why Mitt’s economic plan imposed a $200,000 upper limit on annual income for his proposed new capital gains tax break, arguing that this is exactly the kind “class warfare” that Obama practices by calling for higher taxes on rich people.  Sigh.

Anyway, this was Mitt’s answer:

Well, the reason for giving a tax break to middle income Americans is that middle income Americans have been the people who have been most hurt by the Obama economy. The reason that you’re seeing protests, as you indicated, on Wall Street and across the country is, middle income Americans are having a hard time making ends meet.

Not only do we have 25 million people out of work, or stopped looking for work, or part-time jobs needing full-time employ, we just saw this week that median income in America has declined by 10 percent during the Obama years. People are having a hard time making ends meet.

And so if I’m going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that’s the middle class. I’m not worried about rich people. They are doing just fine. The very poor have a safety net, they’re taken care of. But the people in the middle, the hard-working Americans, are the people who need a break, and that is why I focused my tax cut right there.

Two points:

First, we were amazed that Romney, normally the most slippery of panderers, allowed the words, “I’m not worried about rich people” to pass his lips. He’s already viewed as a dangerous liberal by Tea Party types, and this kind of mega squishy statement provides them confirmation, if any was needed, for the belief that he’s a closet advocate for what you like to call your “European-style socialism.”

Which maybe explains why the Great Man immediately uttered remarkable statement #2:

The poor are “taken care of”? Really?

What do you mean you’re hungry – you just ate yesterday: Put aside the fact that the Census Bureau has just reported that more people are now living in poverty than at any time since they began tracking such things back in the 1950s:

The nation’s official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 ─ the third consecutive annual increase in the poverty rate. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 ─ the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.

And never mind that the federal definition for being poor — $22,314 for a family of four – greatly underestimates the number of people living in what you might call Actual Poverty:

Many experts now agree that families must reach twice the poverty level before achieving any semblance of income security.

By this measure, in 2010, 33.9 percent of Americans — for a total of 103.6 million — could not make ends meet. This is more than twice the number of officially poor. More than four in 10 children are low income, 32.5 million in all.

No, what’s truly astonishing is that a candidate for president of the United States can stand up and say that poor people are “taken care of” because of a “safety net” at the very time when the Tea Party-dominated Congress is systematically targeting food stamps, Head Start, home heating assistance, job training, school lunch programs, Pell Grants, rent subsidies and unemployment insurance, to name just a few tiny threads of the torn-up safety net that Romney cavalierly cites to dismiss the well-being of at least 50 million people he presumes to lead.

Sheesh. And we thought Friend of Mitt Meg Whitman was an out-of-touch, self-entitled elitist. Next to him, eMeg looks like Emma Goldman.

P.S. In California, at least 6.1 million people are living under the poverty line, with a statewide rate of 16.3 percent. The California Budget Project has its usual comprehensive report on the state numbers from the Census.

Charlie quizzes Rick: The second under-reported debate moment worth noting came a few minutes before the event ended, when moderator Charlie (Aren’t I Smart) Rose, stating that he didn’t want to “forget” to ask about wealth disparity, asked Rick Perry if he was concerned that, you know, the U.S. has become a plutocracy. Here’s what Ranger Rick said:

The reason we have that many people living in poverty is because we have got a president of the United States who is a job-killer.

Clearly this man has not been reading Calbuzz. News flash for Ranger Rick, from Bloomberg scribbler David Lynch:

Corrado Gini

Since 1968, incomes in the U.S. have become steadily less equally distributed, according to the standard statistical measure of inequality known as the Gini coefficient. The U.S. Gini score rose from .39 in 1968 to .47 in 2010, meaning that incomes were becoming increasingly unequal.

Developed by the Italian statistician Corrado Gini in 1912, the scores represent a kind of distributional thermometer, ranging from 0 (each person enjoying equal shares of income to 1 (one person has all income).

In the 30-nation Organization for Economic Cooperation and Development, only Turkey and Mexico have more unequal societies than the United States. In the U.S., the rich-poor gap widened by 20 percent since the mid-1980s, more than in most developed countries. “Nowhere has this trend been so stark as in the United States,” the OECD concluded in a 2008 study.

Economic gains in the U.S. have been spread less equally in recent years as a result of factors including globalization, technological change, the decline of labor unions, changing social norms, and government trade and tax policies, say economists such as the World Bank’s [Branko] Milanovic.

What’s interesting about both these debate moments (other than the fact that these were the only times anybody even mentioned either issue) is that the  wealth gap seems to be steadily emerging as a leading issue on the 2012 campaign agenda. Put aside Obama’s election year conversion to taxing millionaires (when it was finally clear to everyone there was zero chance such a proposal could pass) and the burgeoning “Occupy” movement, it’s an issue that has resonance, not just for moral or bleeding heart reasons, but because wealth and income disparity are bad for the economy. Lynch again:

The large and growing gap between the haves and have-nots will tend to undermine growth, both directly and indirectly — including by reducing the marginal propensity to consume and by amplifying the political polarization that has already contributed to poor economic policy making,” says Mohamed El- Erian, chief executive officer of Pacific Investment Management Co. in Newport Beach, California…

Expansions — or what [Jonathan David] Ostry and co-author Andrew Berg label “growth spells” — fizzle sooner in less equal societies because they are more vulnerable to both financial crises and political instability. When such countries are hit by external shocks, they often stumble into gridlock rather than agree to tough policies needed to keep growth alive.

Increased inequality is likely to diminish the duration of expansions,” Ostry said in an interview

Some say the wider rich-poor gap is an additional impediment to recovery. “Very high levels of inequality seem to be associated with slower economic growth,” said Michael Feroli, chief U.S. economist for J.P. Morgan Chase & Co.

Raghuram Rajan, the IMF’s former chief economist, says countries with high levels of inequality tend to produce ineffective economic policies. Political systems in economically divided countries grow polarized and immobilized by the sort of zero-sum politics now gripping Washington, he said.

As a political matter, Calbuzz views with nostalgic suspicion any movement that includes drum circles, so we’re not exactly over-the-top enamored of “Occupy Wall Street” (better it should grow into a united front Main Street  movement with actual goals, as a counter-balance to the Tea Party.) As a practical matter, however, the spread of its basic message of frustration with massive inequality to cities across the nation, and the increasing coverage the protests are receiving, not to mention the howls of outrage coming from the Tea Party whenever anyone compares the two, suggests that the wealth disparity issue has broken through into public consciousness. It’s going to be hard to put that toothpaste back into the tube, no matter how much the right hollers “class warfare.”

Read of the week:  Barbara Ehrenreich is one of the only major league journalists in the country who has been covering these kinds of issues, year in and year out, for decades. Don’t miss her take on the super-wealthy as America’s latest victimization class.

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There are 7 comments for this post

  1. avatar tonyseton says:

    A perspective on the disparity…last week a BofA exec got tossed with a $6 million severence package. That’s enough money for 150 families of four to live on comfortably for a year.
    The class warfare should be between the American people and the political class. Remember that Obama in the ’08 campaign called $250,000/year middle class.
    We need to replace the entire Congress with people who understand what it means to be afraid when the phone rings, afraid to check the mail, scared stiff about their children getting sick.
    We need leaders who would eliminate federal employee pensions until the national debt is erased.
    We need leaders who will pull the plug on the military industrial complex and bring all of our troops home to make our own country safe.
    To again be the shining city on the hill, we need bright, courageous, compassionate, visionary people to take the reins of our government for our benefit.
    One election for the House, two for the Senate. We could be in good shape in January of 2017.

    • avatar ReilleyFam says:

      “eliminate federal employee pensions until the national debt is ERASED.”

      So, your concept of a good and fair plan is to literally put 80 year old retired secretaries in the street with no income? You ought to be ashamed of yourself to even propose such a cruel & frankly thoughtless concept.

      What we need is = leaders who can come up with valid balanced solutions that dont throw faultless large populations (whether liberal or conservative) under the bus for easy fix that would be expected in Germany in the 1930s not the USA.

    • avatar Donald from Pasadena says:

      Excuse me, but how exactly will eliminating federal employee pensions erase the national debt?

      P.S. to ReilleyFam: Don’t worry about the 80-year-old retired secretaries. The proposal is a legal non-starter. Federal courts have ruled time and again that the government cannot retroactively reduce or repeal pension benefits that has already been accrued. You can amend future benefits prospectively for those who have yet to retire or have yet to even be hired, but you can’t take away from people what’s already been earned.

  2. avatar drdan says:

    Bringing hundreds of thousands of troops home to joblessness is dangerous and irresponsible. The challenge is providing work for people until they can care for themselves and get this economy moving with consumption. Jobs won’t be created by persons in poverty, so business condition improvements sufficient to create jobs is the goal. Will raising the taxes of business owners create jobs?

    • avatar Donald from Pasadena says:

      Well, let me ask you, did the “business-friendly” policies of the previous decade — i.e., tax cuts and deregulation, all of which overwhelmingly benefited those residing in the upper economic stata — create any net jobs?

      Quite the opposite happened, in fact. By Jan. 2009, when the new administration took office, we had suffered a loss of over 5 million jobs, and now have a moribund economy to show for it.

      At some point, we have to be willing to recognize that the GOP’s policies have (1) more than doubled the national debt; (2) devastated our manufacuring industries;, (3) left the middle class gasping for breath; (4) mired our country in two unsustainable and unwinnable land wars in Asia; and (5) condemned one in five American children to a life of poverty.

      How about we try something new and progressive for a change, instead of continuing to cite obsolete talking points based on willful misinformation as our primary rationale for once again doubling down on stupid?

      “It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”
      – President Franklin D. Roosevelt (1933)

  3. avatar chrisfinnie says:

    Like David Lynch, I’ve long thought this an unsustainable business model. Even Henry Ford who was, frankly, a fascist–and I mean that quite literally–realized this. When asked why he paid his workers more that competing factories, he replied that he wanted them to become customers. He realized he’d have to pay them enough to afford his cars. And, if he did, he had a built-in customer base.

    Today’s race to the bottom is doing exactly the opposite. By simply chasing the lowest wages and taxes around the globe in search of short-term profits, companies are simply eating their seed corn. They’re not supporting education and research that has been the engine of innovation. They’re not paying for the infrastructure they need to run a modern company. They’re not investing in the people they need to run their businesses or become their customers.

    It can’t last. Eventually too many people will be homeless, jobless, hungry, and ill. Already too many people are angry and protesting. The bottom is falling out and, if they’re as smart as they think they are, these captains of industry should start to notice. The politicians I have less hope for. Unless, as is already happening, some of the big-money boys (Koch brothers excepted) start putting the muscle on them to change their ways. It will be interesting to see what happens on that front.

  4. avatar tegrat says:

    America’s latest victimization class.

    link is broken

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