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Wednesday, November 6, 2013

There Once Was a Time When the Super-Rich Needed a Middle Class to Be Successful -- Not Any More



  Economy  

      

There Once Was a Time When the Super-Rich Needed a Middle Class to Be Successful -- Not Any More

 

Times have changed -- and the elites inhabit their own private economy.

     
 
 
America is falling apart — and this nation's super-rich are to blame.

There was once a time in America when the super-rich needed you, and me, and working-class Americans to be successful.

They needed us for their roads, for their businesses, for their communications, for their transportation, as their customers, and for their overall success.

The super-rich rode on the same trains as us, and flew in the same planes as us. They went to our hospitals and learned at our schools.

Their success directly depended on us, and on the well-being of the nation, and they knew it.
But times have changed, and the super-rich of the 21st century no longer think that you and I are needed for their continued success.

And in some ways, they have given up on America, period.

As Paul Buchheit brilliantly points out over at AlterNet, "As they accumulate more and more wealth, the very rich have less need for society. At the same time, they've convinced themselves that they made it on their own, and that contributing to societal needs is unfair to them. There is ample evidence that this small group of takers is giving up on the country that made it possible for them to build huge fortune."

Buchheit goes on to say that, "The rich have always needed the middle class to work in their factories and buy their products. With globalization this is no longer true... They don't need our infrastructure for their yachts and helicopters and submarines. They pay for private schools for their kids, private security for their homes. They have private emergency rooms to avoid the health care hassle. All they need is an assortment of servants, who might be guest workers coming to America on H2B visas, willing to work for less than a middle-class American can afford"

Unfortunately, these millionaires and billionaires who have given up on America and on the working class are in control of the political process in this country.

They have brainwashed Republicans into thinking that the success of working-class Americans no longer matters for the future of this nation.

As a result, Republicans are no longer investing in things that have traditionally made America - and the working-class - successful.

Take America's infrastructure for example - or lack thereof.

According to the American Society of Civil Engineers annual report card on America's infrastructure, America's infrastructure is a mess.

Our roads are falling apart, our transportations systems are in turmoil, and our energy and electrical systems are stuck back in the 1900's.

A new graph released by investment research firm BCA shows why.

Non-defense related infrastructure spending was around $325 billion per year when George W. Bush stepped foot inside of the White House.

Today, it's around $235 billion per year, a $90 billion drop in funding from when Bush took office.
Republicans, brainwashed by America's super-rich, have repeatedly refused to fund comprehensive infrastructure spending bills, all in the name of austerity.

But cutting funding to the nation's infrastructure isn't the right way to address American's debt or spending problems. And it certainly isn't the right way to rebuild this nation.

As Cardiff Garcia over at The Financial Times points out, "It's also likely that much of the investment that has been forgone in the name of fiscal consolidation will have to be made eventually anyways - only it will be made when rates are higher, exacerbating the long-term fiscal outlook rather than improving it. And as Think Progress points out, "continued underfunding in this arena over the coming years will cost businesses a trillion dollars in lost sales and cost the economy 3.5 million jobs." 

The Society of Civil Engineers says that it will take a staggering $3.6 trillion investment by 2020 - or $450 billion per year - to bring the American infrastructure into the 21st century, and to avoid risking a complete infrastructure collapse.

But the super-rich don't care about how much funding is needed to save this country, as long as they have their private schools, private hospitals, private airports and private places.

The super-rich in this country are bleeding working-class Americans dry, while destroying the infrastructure of the nation that has done so much for their success.

No matter what Jamie Dimon, Charles Koch, or Shelly Adelson will tell you, America's wealthy elite did not make their fortunes on their own.

Without a strong economy and infrastructure, America's millionaires and billionaires would not be where they are today. It's that simple.

So what can we do right now to rebuild America's infrastructure and give a boost to the American economy?
First, it's time to bring an end to globalization.

We need to be protecting American jobs, instead of letting the super-rich ship them overseas and build factories in China and third-world countries.

But more importantly, we need to roll-back the Reagan tax cuts, and make sure that America's wealthy elite are paying their fair share to support our economy and infrastructure.

Right now, the burden for rebuilding America is on the backs of working-class Americans, and that's just wrong.

It's ridiculous that working-class Americans struggling to survive day-to-day are paying more in taxes than billionaire banksters and oil tycoons.

A lot has changed in America over the past 100 years or so but one thing remains the same: The success of the super-rich still depends on the success of you and me.

The super-rich still need us for their roads, for their businesses, for their communications, and for their transportation.

Our infrastructure may be crumbling, but there's still time to get America back on the road to success.
We're all in this together.

Thom Hartmann is an author and nationally syndicated daily talk show host. His newest book is The Last Hours of Humanity.

Monday, November 4, 2013

Republicans Make the Poor Pay to Balance the Budget



The impetus to cut food stamps is ideological not fiscal, and low-wages mean work provides no guarantee against hunger

 
 
During a discussion at the University of Michigan in 2010, the billionaire vice-chairman of Warren Buffett's Berkshire Hathaway firm, Charles Munger, was asked whether the government should have bailed out homeowners rather than banks. "You've got it exactly wrong," he said. "There's danger in just shovelling out money to people who say, 'My life is a little harder than it used to be.' At a certain place you've got to say to the people, 'Suck it in and cope, buddy. Suck it in and cope.'"


 
Photo: Robert Neff/cc/flickr


But banks, he insisted, need our help. It turns out that moral hazard – the notion that those who know the costs of their failure will be borne by others will become increasingly reckless – only really applies to the working poor.

"You should thank God" for bank bailouts, Munger told his audience. "Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies."

In the five years since the financial crisis took hold, people have been sucking it in by the lungful and discovering how pitiful a coping strategy that is. In Michigan, the state where Munger spoke, black male life expectancy is lower than male life expectancy in Uzbekistan; in Detroit, the closest big city, black infant mortality is on a par with Syria (before the war).

As such, the crisis accelerated an already heinous trend of growing inequalities. Over a period of 18 years, America's white working class – particularly women – have started dying younger. "Absent a war, genocide, pandemic, or massive governmental collapse, drops in life expectancy are rare," wrote Monica Potts in the American Prospect last month. But this was a war on the poor. "Lack of access to education, medical care, good wages and healthy food isn't just leaving the worst-off Americans behind. It's killing them."

This particular crisis, however, has also accentuated the contradictions between the claims long made for neoliberalism and the system's ability to deliver on them. The "culture" of capitalism, to which Munger referred, did not die but thrived precisely because it was not forced to adapt, while working people – who kept it afloat through their taxes and now through cuts in public spending – struggle to survive. Given the broad framing of economic struggles in the west exacerbated by the crisis, this reality is neither new nor specific to the US. "Over the past 30 years the workers' take from the pie has shrunk across the globe," explains an editorial in the latest Economist. "The scale and breadth of this squeeze are striking … When growth is sluggish … workers are getting a smaller morsel of a smaller slice of a slow-growing pie."

A few days before the bailout was passed, I quoted Lenin in these pages. He once argued: "The capitalists can always buy themselves out of any crises, as long as they make the workers pay." What has been striking, particularly recently, has been the brazen and callous nature in which these payments have been extorted.

Last Friday, 47 million Americans had their food stamp benefits cut. These provide assistance to those who lack sufficient money to feed themselves and their families. Individuals lose $11 (£7) a month while a family of four will lose $36. That will save the public purse precious little – bombing Syria would have been far more costly – but will mean a great deal to those affected. "Before the cut, it was kind of an assumption you were going to the food bank anyway," Lance Worth, of Washington state, told the Bellingham Herald. "I guess I'm just going to go $20 hungrier – aren't I?"

The cut marks the lapse in stimulus package ushered in four years ago. But while the recession is officially over, the poverty it engendered remains. Government figures show one in seven Americans is food insecure. According to Gallup, in August, one in five said they have, at times during the last year, lacked money to buy food that they or their families needed. Both figures are roughly the same as when Obama was elected. This negligence will now be compounded by mendacity. Republicans propose further swingeing cuts to the food-stamp programme; Democrats suggest smaller cuts. The question is not whether the vulnerable will be hammered, but by how much.

The impetus behind these cuts are not fiscal but ideological. Republicans, in particular, claim the poor have it too easy. "We don't want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency," claimed former Republican vice-presidential candidate Paul Ryan. "That drains them of their will and their incentive to make the most of their lives."

The notion that food "drains the will" while hunger motivates the ambitious would have more currency – not much, but more – if the right wasn't simultaneously doing its utmost to drive down wages to a level where work provides no guarantee against hunger. In last week's paper for the Economic Policy Institute, Gordon Lafer, an associate professor at the University of Oregon, revealed the degree to which conservatives have been driving down wages, benefits and protections at a local level after their victory at the 2010 midterms.

He writes: "Four states passed laws restricting the minimum wage, four lifted restrictions on child labour, and 16 imposed new limits on benefits for the unemployed. With the support of the corporate lobbies, states also passed laws stripping workers of overtime rights, repealing or restricting rights to sick leave, and making it harder to sue one's employer for race or sex discrimination."

That's why 40% of households on food stamps have at least one person working. And the states most aggressive in pursuing these policies, Lafer points out, had some of the smallest budget deficits in the country.

Immediately after Obama's election in 2008, his chief of staff to be, Rahm Emmanuel, said: "You never let a serious crisis go to waste. And what I mean by that is it's an opportunity to do things you think you could not do before." The crisis didn't go to waste. But it is the right that has seized the opportunity. Not content with balancing the budget on the bellies of the hungry, it is also fattening the coffers of the wealthy on the backs of the poor.

Gary Younge
Gary Younge is a Guardian columnist and feature writer based in the US

How America Is Killing the Poor



Lack of access to education, medical care, good wages and healthy food isn't just leaving the worst-off Americans behind. It's killing them. 

 
 
 
 

During a discussion at the University of Michigan in 2010, the billionaire vice-chairman of Warren Buffett's Berkshire Hathaway firm, Charles Munger, was asked whether the government should have bailed out homeowners rather than banks. "You've got it exactly wrong," he said."There's danger in just shovelling out money to people who say, 'My life is a little harder than it used to be.' At a certain place you've got to say to the people, 'Suck it in and cope, buddy. Suck it in and cope.'"

But banks, he insisted, need our help. It turns out that moral hazard – the notion that those who know the costs of their failure will be borne by others will become increasingly reckless – only really applies to the working poor.
"You should thank God" for bank bailouts, Munger told his audience. "Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies."

In the five years since the financial crisis took hold, people have been sucking it in by the lungful and discovering how pitiful a coping strategy that is. In Michigan, the state where Munger spoke, black male life expectancy is lower than male life expectancy in Uzbekistan; in Detroit, the closest big city, black infant mortality is on a par with Syria (before the war).

As such, the crisis accelerated an already heinous trend of growing inequalities. Over a period of 18 years, America's white working class – particularly women – have started dying younger. "Absent a war, genocide, pandemic, or massive governmental collapse, drops in life expectancy are rare," wrote Monica Potts in the American Prospect last month. But this was a war on the poor. "Lack of access to education, medical care, good wages and healthy food isn't just leaving the worst-off Americans behind. It's killing them."

This particular crisis, however, has also accentuated the contradictions between the claims long made for neoliberalism and the system's ability to deliver on them. The "culture" of capitalism, to which Munger referred, did not die but thrived precisely because it was not forced to adapt, while working people – who kept it afloat through their taxes and now through cuts in public spending – struggle to survive. Given the broad framing of economic struggles in the west exacerbated by the crisis, this reality is neither new nor specific to the US. "Over the past 30 years the workers' take from the pie has shrunk across the globe," explains an editorial in the latest Economist. "The scale and breadth of this squeeze are striking … When growth is sluggish … workers are getting a smaller morsel of a smaller slice of a slow-growing pie."

A few days before the bailout was passed, I quoted Lenin in these pages. He once argued: "The capitalists can always buy themselves out of any crises, as long as they make the workers pay." What has been striking, particularly recently, has been the brazen and callous nature in which these payments have been extorted.

Last Friday, 47 million Americans had their food stamp benefits cut. These provide assistance to those who lack sufficient money to feed themselves and their families. Individuals lose $11 (£7) a month while a family of four will lose $36. That will save the public purse precious little – bombing Syria would have been far more costly – but will mean a great deal to those affected. "Before the cut, it was kind of an assumption you were going to the food bank anyway," Lance Worth, of Washington state, told the Bellingham Herald. "I guess I'm just going to go $20 hungrier – aren't I?"

The cut marks the lapse in stimulus package ushered in four years ago. But while the recession is officially over, the poverty it engendered remains. Government figures show one in seven Americans is food insecure. According to Gallup, in August, one in five said they have, at times during the last year, lacked money to buy food that they or their families needed. Both figures are roughly the same as when Obama was elected. This negligence will now be compounded by mendacity.Republicans propose further swingeing cuts to the food-stamp programme; Democrats suggest smaller cuts. The question is not whether the vulnerable will be hammered, but by how much.

The impetus behind these cuts are not fiscal but ideological. Republicans, in particular, claim the poor have it too easy. "We don't want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency," claimed former Republican vice-presidential candidate Paul Ryan. "That drains them of their will and their incentive to make the most of their lives."

The notion that food "drains the will" while hunger motivates the ambitious would have more currency – not much, but more – if the right wasn't simultaneously doing its utmost to drive down wages to a level where work provides no guarantee against hunger. In last week's paper for the Economic Policy Institute, Gordon Lafer, an associate professor at the University of Oregon, revealed the degree to which conservatives have been driving down wages, benefits and protections at a local level after their victory at the 2010 midterms.

He writes: "Four states passed laws restricting the minimum wage, four lifted restrictions on child labour, and 16 imposed new limits on benefits for the unemployed. With the support of the corporate lobbies, states also passed laws stripping workers of overtime rights, repealing or restricting rights to sick leave, and making it harder to sue one's employer for race or sex discrimination."

That's why 40% of households on food stamps have at least one person working. And the states most aggressive in pursuing these policies, Lafer points out, had some of the smallest budget deficits in the country.
Immediately after Obama's election in 2008, his chief of staff to be, Rahm Emmanuel, said: "You never let a serious crisis go to waste. And what I mean by that is it's an opportunity to do things you think you could not do before." The crisis didn't go to waste. But it is the right that has seized the opportunity. Not content with balancing the budget on the bellies of the hungry, it is also fattening the coffers of the wealthy on the backs of the poor.

Saturday, November 2, 2013

The Real Problem with Obamacare: Are you really covered?

IN THESE TIMES 

with liberty and justice for all






An October 31, 2009 rally outside the White House by CODEPINK in favor of single-payer healthcare. (CODEPINK: Women for Peace/Flickr/Creative Commons>

The Real Problem with Obamacare

Where the defeat of single-payer healthcare has gotten us.


BY David Sirota
 
Back when Obamacare was being negotiated, Congress could have circumvented the private insurance industry by simply expanding Medicare to cover everybody. Medicare isn't perfect, of course, but it remains one of the most popular institutions in America because its single-payer model guarantees access to decent, cost-effective healthcare rather than just meager health insurance. 

Whenever scandal arises in Washington, D.C., the fight between the two parties typically ends up being a competition to identify a concise message in the chaos—or, as scientists might say, a signal in all the noise. This week confirms that truism, as glitches plagued the new Obamacare website and insurance companies cancelled policies for many customers on the individual market.
Amid the subsequent noise of congressional debate and cable TV outrage, Republicans argued that the signal is about government—more specifically, they claim the controversies validate their age-old assertions that government can't do anything right. Democrats countered that the signal in the noise is about universal healthcare—Obamacare is a big undertaking, they argue, and so there will be bumps in the road as the program works to provide better health services to all Americans.

This back and forth is creating an even more confusing cacophony—and further obscuring the signal that neither the two parties nor their health industry financiers want to discuss. That signal is about the need for single-payer healthcare—otherwise known as Medicare for all.

One way to detect this signal is to consider the White House guest list.
In trying to show that he was successfully managing the Obamacare roll out, the president last week staged a high-profile White House meeting with private health insurance executives—aka Obamacare's middlemen. The spectacle of a president begging these middlemen for help was a reminder that Obamacare did not limit the power of the insurance companies as a single-payer system would. The new law instead cemented the industry's profit-extracting role in the larger health system—and it still leaves millions without insurance.

The second way to see this single-payer signal is to behold the Obamacare-related congressional hearings. During the proceedings, you've been hearing a lot about the insurance enrollment website that the government is paying millions to insurer UnitedHealth Group to build. But you're not hearing much about actual healthcare. That's because the insurance industry wrote the Affordable Care Act, meaning the new statute's top priority isn't delivering health services. Obamacare is primarily about getting the insurance industry more customers and government contracts, whether or not that actually improves health services.

The third way to see this single-payer signal is to simply experience the confusion about Obamacare for yourself.

If you've managed to successfully log onto Healthcare.gov, you probably have been treated to a wave of perplexing information about different kinds of private insurance plans and premiums. In other words, you haven't seen a simple, standardized and guaranteed form of healthcare coverage like the kind provided by the single-payer government-administered Medicare system. You've likely seen the same maddeningly labyrinthine private insurance system that works to ration—and often deny—access to healthcare.

It didn't have to be this way. Back when Obamacare was being negotiated, Congress could have circumvented the private insurance industry by simply expanding Medicare to cover everybody. Medicare isn't perfect, of course, but it remains one of the most popular institutions in America because its single-payer model guarantees access to decent, cost-effective healthcare rather than just meager health insurance. It also does a good job of preventing profit-taking middlemen from getting between patients and their physicians.

Obamacare doesn't do all that. It certainly includes some important reforms, but it doesn't do what a single-payer system does—it doesn't guarantee better healthcare or a more simple health system.

Those Democrats who pretend it does are just as dishonest as the Republicans who ignore Medicare and pretend government cannot effectively manage healthcare. All of them are making noise to drown out the single-payer signal.
David Sirota, an In These Times senior editor and syndicated columnist, is a bestselling author whose book Back to Our Future: How the 1980s Explain the World We Live In Now—Our Culture, Our Politics, Our Everything was released in 2011. Sirota, whose previous books include The Uprising and Hostile Takeover, co-hosts "The Rundown" on AM630 KHOW in Colorado. E-mail him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

More information about David Sirota

Millions on food stamps facing benefits cuts

CBS Moneywatch




By
Alain Sherter /
MoneyWatch/ October 31, 2013, 5:36 AM

Millions on food stamps facing benefits cuts






 

(MoneyWatch) It is late October, so Adrianne Flowers is out of money to buy food for her family. That is no surprise. Feeding five kids is expensive, and the roughly $600 in food stamps she gets from the federal government never lasts the whole month. "I'm barely making it," said the 31-year-old Washington, D.C., resident and single mother.

Starting Friday, the money is likely to run out even quicker.

That is when Supplemental Nutrition Assistance Program, or SNAP, benefits are set to fall for more than 47 million lower-income people -- 1 in 7 Americans -- most of whom live in households with children, seniors or people with disabilities. Barring congressional intervention, the maximum payment for a family of four will shrink from $668 a month to $632, or $432 over the course of a year.

That amounts to 21 meals per month, according to the U.S. Department of Agriculture. The cuts will leave participants in the program, better known as food stamps, with an average of $1.40 to spend on each meal. The amount people get could sink even more if Congress makes deeper cuts later this year when House and Senate lawmakers try to hammer out a farm bill.

The Nov. 1 benefit cuts "will be close to catastrophic for many people," said Ross Fraser, a spokesman for Feeding America, the nation's largest domestic hunger-relief charity, which estimates that this week's SNAP reduction will result in a loss of nearly 2 billion meals for poor families next year.




Food stamps are the government's biggest nutrition-assistance program for low-income people and, along with federal unemployment benefits, a key support system for the most vulnerable Americans. More than three-quarters of households getting food stamps include a child, elderly person or someone with a disability. Some 83 percent of families are at or below the official poverty line (roughly $11,500 for an individual and $23,500 for a family of four).


Not surprisingly, participation in SNAP has soared during the epic downturn and ongoing job slump that followed the housing crash, with an additional 21 million people added to the rolls since 2008. Today, more than 1 in 4 U.S. children live in a home that gets food stamps.

SNAP gets a lot of use: Statistics show that roughly half of all U.S. children go on food stamps sometime during their childhood; half of all adults are on them sometime between the ages of 18 and 65. The USDA estimates that, as of last year, nearly 15 percent of American families, or 18 million households, lacked enough food at least some of the time to ensure that all family members could stay healthy.

Another group with lots of members in SNAP: Veterans. U.S. Census Bureau data show that, in 2011, some 900,000 former U.S. military personnel lived in households that used food stamps.


Inflicting hunger
The average SNAP recipient receives about $133 a month in benefits, while the typical family gets $278. Benefits are means-tested, meaning that poorer households receive larger benefits (The formula used to calculate payments assumes that families will spend 30 percent of their net income on food.)

With the vast majority of SNAP beneficiaries already destitute, the diminished assistance would hurt in the best of times. But the Great Recession has thrown millions more people into poverty, including a growing segment of working poor. Experts say the food stamp cuts will spread hunger in the U.S., undermine public health and tax food banks around the country struggling to cope with the upsurge in poverty.

"The cuts are going to make millions of people hungry," said Jim Weill, president of the Food Research and Action Center, a not-for-profit public policy firm focused on ending hunger in the U.S. "It's going to send people into a charitable system that's already overwhelmed and screaming for help itself. And it will make life harder and worse for millions of children, seniors, veterans and people with disabilities."


Another possible casualty -- everyone else. The left-leaning Center for Budget and Policy Priorities, a Washington think-tank, says that the November benefit cuts will curtail the flow of money into every U.S. state, in some cases by hundreds of millions of dollars.

The concern? Economists have found that every dollar of SNAP spending generates roughly $1.70 in local economic activity. The USDA has calculated that food stamps generate an even bigger bang for the buck. So pinching food stamp recipients will ripple into the broader U.S. economy. Among other effects, that could dent revenues for the nearly 250,000 groceries and supermarkets around the country that accept SNAP payments, potentially affecting everyone from store workers and truck drivers delivering food to consumers, as food sellers raise prices to offset the loss of revenue.

Meanwhile, research suggests that reducing food aid could not only increase hunger, but also undermine public health. In a six-year study, Children's HealthWatch, a nonpartisan pediatric research center, recently found that young children in families that got SNAP benefits were at significantly lower risk of being underweight, which is linked with poor nutrition, and of developmental delays. That jibes with research by Northwestern University economist Diane Whitmore Schanzenbach. She has found that since food stamps were introduced in the 1960s, women in the program have seen a reduction in low-weight births and a decrease in infant mortality.

Families that get food stamps are also able to eat more healthfully and are less likely to skip doctor's visits to pay for food, housing and other basic needs. "Increasing SNAP benefit levels improves family diet quality and children's health," the authors of the Children's HealthWatch report wrote.

Will work for food

SNAP costs about $80 billion a year, which amounts to roughly 2 percent of the federal budget. It is paid for entirely by the federal government, although administrative costs are shared by states. Congress reauthorizes funding for the program every five years.

Payments are scheduled to decline this week because Congress three years ago voted to reverse a temporary increase in benefits made under the American Recovery and Reinvestment Act, a 2009 law passed to bolster the sagging economy.

As the economy was melting down, lawmakers at the time lifted monthly SNAP payments by $20 to $24 per month. Economists say this is an effective way to stimulate growth because the poor must spend almost all of their money just to get by. That, in turn, funnels money into the economy, creating a "multiplier" effect as food benefits spent in a grocery store generate revenue for other businesses.

The size of SNAP cuts will vary by state. California faces the largest spending reduction, at $457 million, which will affect more than 4 million people. Other states with large populations of SNAP recipients expected to see big cuts include Florida, Michigan, New York and Texas. Some states have already sought to trim the rolls by imposing new eligibility requirements for food stamps. In Ohio, for example, able-bodied people must work or get job training at least 20 hours a week to qualify for SNAP.




For critics of food stamps, including those who express concern about certain kinds of government spending, such measures are necessary to shrink the federal deficit and encourage SNAP beneficiaries to work. Hostility to the program, especially among some conservatives, has long made it a target. In the early 1980s, for example, Congress sought to slim down the level of benefits SNAP provided by looking at people's gross, rather than, income and by limiting income tax deductions, among other measures.

The reality, however, is that many people who get food stamps are working. Well over half of SNAP recipients have jobs, according to the Center for Budget and Policy Priorities. More than 80 percent of beneficiaries find employment within a year of starting to collect payments.

With the economy no longer in free-fall and SNAP participation leveling off, analysts also do not expect the program to drive up the deficit. The Congressional Budget Office projects federal spending on food stamps to fall over the next five years as the economy strengthens.

Watering the milk

Most SNAP recipients run out of food stamps by the third week of the month, Fraser said. Parents often skip meals to ensure children are fed and use other means to make ends meet. "I had a mother tell me recently that her children loved milk, so she was secretly watering it down to stretch it," he said.

"It's always, 'I've got to get something for my kids.' They're not coming in and asking for snacks or this or that. They're asking for things like milk and cereal," added Margarette Purvis, CEO of the Food Bank for New York City, which provides food to more than 1.5 million local residents. "They're saying that they don't have anything for breakfast. People are looking for something they can feed their children right now."

Families, particularly single mothers, rely heavily on food kitchens, mobile food pantries, faith-based organizations and other charitable groups when their food stamps run out. Flowers leans on her church and Bread for the City, a Washington, D.C., group that provides food, clothing, medical care and other services for lower-income people.

But that, too, worries, anti-hunger specialists. People in the field say food banks across the country are already at their limit in the help they can offer people. Resources are always tight, and they have been stretched to bursting by the recession and anemic recovery.

"While this work is fueled by love, it can't be sustained by it," said Purvis, a veteran hunger activist who nevertheless expressed shock that Congress would reduce food aid. "You need cash and you need resources. And right now there is none."

As usual with large socioeconomic problems requiring public policy solutions, any remedies in principle lie in Washington. That may be bad news for SNAP recipients. Although some Democrats in Congress have attacked the Nov. 1 rollback in benefits, the Democratic-controlled Senate in June approved legislation that included $4.5 billion in SNAP cuts. House Republicans envision far more draconian cuts, passing a bill last month that would cut funding for the program by $40 billion over 10 years.

When it comes to America's hungry, it seems, political leaders who can't agree on anything can agree on this: The poor can make do with less.

For her part, Flowers has not given up hope that elected officials will help her keep food on the table. "They found a solution to the government shutdown," she said, "so I hope they can find a solution to this."

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How much did the shutdown cost the economy?

Washington Post




How much did the shutdown cost the economy? 

By Josh Hicks



eye-opener-logo6

Shutdowns aren’t cheap. This year’s closure, which ended Thursday, has likely cost the government and the economy billions of dollars, according to economists and policy analysts.

Below are a few of the estimates we’ve seen, plus a video of Federal Diary columnist Joe Davidson discussing the financial impacts:

* $24 billion in lost economic output, or 0.6 percent of projected annualized GDP growth, according to the Standard and Poor’s ratings agency. Similarly, Moody’s Analytics estimated the impact at $23 billion.
The ratings agencies calculate their estimates using complicated formulas that consider past economic behavior, combined with the number of federal employees and contractors who were not paid during the shutdown, according to Moody’s chief economist Mark Zandi.

* $2.1 billion in government costs for the fiscal 1996 shutdowns, calculated in today’s dollars, according to Office of Management and Budget estimates at the time. The impact could be worse this time, since the 2013 shutdown forced more government employees off the job. Most of the cost of the fiscal 1996 closure resulted from agencies paying furloughed workers for hours they didn’t actually work.

* $450,000 a day in lost revenue at National Parks, according to the National Park Service. That was until late last week, when a handful of states agreed to fund operations for the some of the parks within their boundaries.  The costs may have been lower from that point forward, as some parks reopened and began collecting fees again.

The numbers come from top-line estimates by the National Park Service, which made projections based on October 2012 park attendance and fee collections.

* $2.4 billion in lost travel spending, based on the U.S. Travel Association’s estimate of $152 million per day. The organization said it based its numbers in part on the National Park Service projections, as well as estimated reductions in business travel for federal employees and the federal government.

Bonus material:

As most politics junkies know, the government could soon shut down again if Congress and the White House cannot agree to another spending plan early next year. The agreement signed by President Obama early Thursday morning will only fund operations through Jan. 15.

The deal also suspended enforcement of the debt limit until Feb. 7, which means another confrontation over the nation’s borrowing could occur again sometime in March.

S&P said in a statement Wednesday that the threat of new debt-ceiling and shutdown standoffs early next year could “weigh on consumer confidence, especially among government workers that were furloughed.”

“If people are afraid that the government policy brinksmanship will resurface again, and with the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks,” the agency said. “That points to another Humbug holiday season.”

S&P estimated that a default could force the government to reduce spending by 4 percent of annualized GDP, which would “put the economy in a recession and wipe out much of the economic progress made by the recovery from the Great Recession.”


To connect with Josh Hicks, follow his Twitter feed or e-mail  josh.hicks@washpost.com. For more federal news, visit The Federal Eye, The Fed Page and Post Politics. E-mail federalworker@washpost.com with news tips and other suggestions.

Wall Street Legend Admits: ‘We Got Rich Off the Backs of Workers’



Wall Street Legend Admits: ‘We Got Rich Off the Backs of Workers’

- See more at: http://aattp.org/wall-street-legend-admits-we-got-rich-off-the-backs-of-workers/#sthash.XunW9MUK.dpuf

Wall Street Legend Admits: ‘We Got Rich Off the Backs of Workers’

- See more at: http://aattp.org/wall-street-legend-admits-we-got-rich-off-the-backs-of-workers/#sthash.XunW9MUK.dpuf

Wall Street Legend Admits: ‘We Got Rich Off the Backs of Workers’

 



People are afraid of chance, afraid of the dark. A human’s power is in his intelligence, and the nature of intelligence is that of pattern recognition; without a recognizable pattern, we’re left with chaos, powerlessness and fear. We fear the dark we can’t see into. To put order to the chaos, some people pray, others create conspiracy theories and still others grasp desperately for retroactive evidence of divine design and will.

Those young and privileged by chance will often talk themselves into believing that they were granted privilege by God, or by some dint of inherent superiority. That’s the heart of Divine Right — the belief that you DESERVE whatever fate has handed you, absent of any real evidence to that effect. For some, denying chaos is the only means to defeating a fear of the dark, of grasping at the illusion of security in a frighteningly random world.

For those willing and able, it is the very pattern recognition of intelligence that allows it to solve the paradox of good fortune. But the desire to solve that paradox rarely comes up, except for the self-made wealthy who in the search for wealth, have had to question if they’ll know when enough is enough.

Self-made men like Warren Buffett and Bill Gates have faced that chaos, and have come to the same peace with it that did their spiritual forebear, Andrew Carnagie. These super-rich have seen the chaos for what it is, and realized that they were, more than anything else, just very, very lucky. That’s a frightening thing to face, because that realization precedes another and far fiercer emotion than fear of the dark:

Fear for ones’ very humanity.

What follows is a letter from William H. Gross, who is an author, financial manager and co-founder of investment firm Pacific Investment Management Company. PIMCO is one of the largest active global investment firms in the world, with over $2 TRILLION in assets under management in 2012. Gross has been donating to charitable causes like Duke University, Doctors Without Borders and to various hospitals and medical foundations. Gross is known for his colorful memos and letters to investors, and this one may be the missive to top them all.

Thanks again to Bill Gross, who among a few very respected others, shows us what great men can do when they’re not afraid of the dark.

With the budget and debt ceiling crises temporarily averted, perhaps a future economic priority will be to promote economic growth; one way to do that may be via tax reform. How to proceed depends as always on the view of the observer and whether the glasses are worn by capital, labor or government interests.
 
Having benefited enormously via the leveraging of capital since the beginning of my career and having shared a decreasing percentage of my income thanks to Presidents Reagan and Bush 43 via lower government taxes, I now find my intellectual leanings shifting to the plight of labor. I often tell my wife Sue it’s probably a Kennedy-esque type of phenomenon. Having gotten rich at the expense of labor, the guilt sets in and I begin to feel sorry for the less well-off, writing very public Investment Outlooks that “dis” the success that provided me the soapbox in the first place. If your immediate reaction is to nod up and down, then give yourself some points in this intellectual tête-à-tête.

Still, I would ask the Scrooge McDucks of the world who so vehemently criticize what they consider to be counterproductive, even crippling taxation of the wealthy in the midst of historically high corporate profits and personal income, to consider this: Instead of approaching the tax reform argument from the standpoint of what an enormous percentage of the overall income taxes the top 1% pay, consider how much of the national income you’ve been privileged to make. In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled from 10% in the 1970s to 20% today. Admit that you, and I and others in the magnificent “1%” grew up in a gilded age of credit, where those who borrowed money or charged fees on expanding financial assets had a much better chance of making it to the big tent than those who used their hands for a living.

Yes I know many of you money people worked hard as did I, and you survived and prospered where others did not. A fair economic system should always allow for an opportunity to succeed. Congratulations. Smoke that cigar, enjoy that Chateau Lafite 1989. But (mostly you guys) acknowledge your good fortune at having been born in the ‘40s, ‘50s or ‘60s, entering the male-dominated workforce 25 years later, and having had the privilege of riding a credit wave and a credit boom for the past three decades. You did not, as President Obama averred, “build that,” you did not create that wave. You rode it.

And now it’s time to kick out and share some of your good fortune by paying higher taxes or reforming them to favor economic growth and labor, as opposed to corporate profits and individual gazillions. You’ll still be able to attend those charity galas and demonstrate your benevolence and philanthropic character to your admiring public. You’ll just have to write a little bit smaller check. Scrooge McDuck would complain but then he’s swimming in it, and can afford to duck paddle to a shallower end for a while. If you’re in the privileged 1%, you should be paddling right alongside and willing to support higher taxes on carried interest, and certainly capital gains readjusted to existing marginal income tax rates. Stanley Druckenmiller and Warren Buffett have recently advocated similar proposals. The era of taxing “capital” at lower rates than “labor” should now end.

There was a time in Pimcoland long, long ago; so long ago that it now seems like a fairytale – except it wasn’t. I had criticized a large Fortune 500 company about its balance sheet and use of commercial paper. It wasn’t really meant to be company-specific but more indicative of the growing amount of leverage that our credit system was accommodating. The company took it personally. Sorry about that.

I mention it now in the age of the golden Scrooge McDuck because another large company – I shall name it Company X to be safe – is again representative of an excess that may haunt America’s future. X is a well-known corporation that, to put it simply, has grown earnings and earnings per share accompanied by nearly flatline revenues. This troubling trend began nearly a decade ago – sales having increased by only 9% since 2003 – barely a percentage point a year. Its most recent quarter in 2013, as a matter of fact, showed no improvement, with revenues actually declining by 1% instead of moving up.

Profits, however, increased because the company cut expenses along the way. Earnings per share (EPS) did even better, because X used some of its cash flow to buy back stock instead of reinvesting much of it in new plant and equipment. What struck me was not this unmasking of company X’s secret sauce to elevate its stock price, but the similarity of this corporation to the plight of the broader U.S. and even global economy. Never have American companies sent a greater share of their sales to the bottom line. Even when S&P 500 companies have witnessed a decline in corporate earnings, as shown in Chart 1, they have still experienced EPS gains. X and many companies in the S&P 500 are remarkably similar.




The U.S. economy and Company X are lookalikes as well, perhaps even twins. Revenue growth in the U.S., for instance, can best be shown by national income or its proxy, more commonly known as nominal GDP. While our annualized nominal GDP growth rate has been a tad better than the 1% that Corporation X has shown over the past 10 years, our five year moving average has slowed from nearly 7% to just above 3% in recent years and struggled to do just that, as shown in Chart 2. “Expenses” have been cut significantly as the share of wages to GDP has declined from 47% to 43% during the past decade. Before-tax profits as a percentage of GDP on the other hand have increased from 10% to 14% over the same period, mimicking what has happened with Company X.

And here’s a rather incredible kicker to this theoretical comparison. The U.S. economy – thanks to the Fed – has been operating a 1 trillion dollar share buyback program nearly every year since late 2008, buying Treasuries but watching much of that money flow straight into risk assets and common stocks instead of productive plant and equipment.My goodness! If X can’t grow revenues any more, if X company’s stock has only gone up because of expense cutting and stock buybacks, what does that say about the U.S. or many other global economies? Has our prosperity been based on money printing, credit expansion and cost cutting, instead of honest-to-goodness investment in the real economy?


The simple answer is that long-term growth for each company, and for all countries, depends not on balance sheet alchemy and financial wizardry, but investment and the ultimate demand for a company or a country’s “products.” In the U.S. we have had little of that, watching our investment (ex housing) as a percentage of GDP decline from 14.6% to 12.2% over the past 13 years. Similarly, our net national savings rate (total savings after depreciation) has sunk below ground zero over the past few years before rebounding recently, as shown in Chart 3. Without savings there can be no investment. Without investment there can be little growth.


President Obama just this past week finally sounded a faint alarm, mounting a campaign to bolster foreign investment in the U.S. – amidst evidence like that presented in Chart 3 that the U.S. is falling far behind less developed nations such as Mexico in the race for investment and future productivity.

“It’s time for folks to…focus on doing everything we can to spur growth and create new, high-quality jobs,” he said last Friday. Folks? Ordinary folks, the 99%, don’t have money anymore, Mr. President. The rich 1% and corporations do. Perhaps your Administration could focus some attention these next few weeks and months on an effort to engage foreign investors, corporate America and the 1% in investing in the U.S. If there’s not a profitable new “iGIZMO” or a dynamic biotechnological breakthrough worthy of investment, how about simply a joint effort between government and private enterprise in an infrastructure bank where our third world airports, third world city streets and third world water systems are modernized?

And back to my original point. Developed economies work best when inequality of incomes are at a minimum. Right now, the U.S. ranks 16th on a Gini coefficient for developed countries, barely ahead of Spain and Greece. By reducing the 20% of national income that “golden scrooges” now earn, by implementing more equitable tax reform that equalizes capital gains, carried interest and nominal income tax rates, we might move up the list to challenge more productive economies such as Germany and Canada.

Our problems are significant, Mr. President, and “Obamacare” and the signing up for it is far down the list of what we need to correct in order to move in the direction of “old normal” growth rates. Surely a few astute observers in Congress know that as well. Until we can more equitably balance “Scrooge McDuck” tax rates to rebalance wealth and “GINI coefficients,” while at the same time focusing on investment in the real as opposed to the financial economy, then the prospects for markets – whatever the asset class – are anything but “golden.”

Scrooge McDucks Speed Read

1) Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest.

2) The era of taxing “capital” at lower rates than “labor” should end.

3) Investors in the U.S. and elsewhere must look for investment in the real economy, not share buy-back maneuvers that artificially elevate stock prices.

William H. Gross
Managing Director