12.22.2010

from the u.s. third-world country files

In the US, one in seven people - and in some states, one in five - are now receiving food stamps.
The use of food stamps has increased dramatically in the U.S., as the federal government ramps up basic assistance to meet the demands of an increasingly desperate population.

The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That's about 43 million people, or about one out of every seven Americans.

In some states, like Tennessee, Mississippi, New Mexico and Oregon, one in five people are receiving food stamps. Washington, D.C. leads the nation, with 21.5% of the population on food stamps.

Some months ago, Maclean's ran a story called "Third World America" - subtitled: "Collapsing bridges, street lights turned off, cuts to basic services: the decline of a superpower". It was interesting to see a theme I've written about for so many years tackled by mainstream media, especially Canadian media, which consistently views the US through the country's own press releases.
In February, the board of commissioners of Ohio’s Ashtabula County faced a scene familiar to local governments across America: a budget shortfall. They began to cut spending and reduced the sheriff’s budget by 20 per cent. A law enforcement agency staff that only a few years ago numbered 112, and had subsequently been pared down to 70, was cut again to 49 people and just one squad car for a county of 1,900 sq. km along the shore of Lake Erie. The sheriff’s department adapted. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don’t respond to property crimes,” deputy sheriff Ron Fenton told Maclean’s. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.”

If a county without police seems like a weird throwback to an earlier, frontier-like moment in American history, it is not the only one. “Back to the Stone Age” is the name of a seminar organized in March by civil engineers at Indiana’s Purdue University for local county supervisors interested in saving money by breaking up paved roads and turning them back to gravel. While only some paved roads in the state have been broken up, “There are a substantial number of conversations going on,” John Habermann, who manages a program at Purdue that helps local governments take care of infrastructure, told Maclean’s. “We presented a lot of talking points so that the county supervisors can talk logically back to elected officials when the question is posed,” he said. The state of Michigan had similar conversations. It has converted at least 50 miles of paved road to gravel in the last few years.

Welcome to the ground level of America’s economic crisis. The U.S. unemployment rate is 9.5 per cent. One in 10 homeowners are behind on their mortgage payments. Home sales are at record lows. While the economy has been growing for several quarters, the growth is anemic—only 1.6 per cent in the second quarter of this year—and producing few new jobs.

Maclean's doesn't quite get it right, unaware or uninterested in how bad things were in the US before the current economic crisis, and just how bad things truly are right now.

Paul Krugman and others - such as those radicals at the Wall Street Journal - put the true unemployment rate at around 17%. A recent "60 Minutes" report showed unemployment in California at 22%, more than one out of every five; of those, one in five is university educated. Krugman has shown that long-term or permanent unemployment is at the highest rate ever recorded.

At the same time:

• In 2010 US businesses earned profits at the highest rate since statistics have been kept, totaling $1.66 trillion in the third quarter alone.

• The economic policies of the last 30 years have benefited the very few at the expense of the many.
[Economists Thomas Piketty and Emmanuel Saez] found that from 1950 through 1980, the share of all income in America going to everyone but the rich increased from 64 percent to 65 percent. Because the nation's economy was growing handsomely, the average income for 9 out of l0 Americans was growing, too – from $17,719 to $30,941. That’s a 75 percent increase in income in constant 2008 dollars.

But then it stopped. Since 1980 the economy has also continued to grow handsomely, but only a fraction at the top have benefited. The line flattens for the bottom 90% of Americans. Average income went from that $30,941 in 1980 to $31,244 in 2008. Think about that: the average income of Americans increased just $303 dollars in 28 years.

• Between 1979 and 2006, the bottom 20% of the US population had real income growth of 0.3%, the middle 20% income growth of 0.7 percent - while the top 1% enjoyed income growth of 260%.

• The US just cut taxes again for the wealthiest Americans.
...an environment in which their tax rates on income and investments remain at historic lows. . . .

"The climate we'll have after this legislation is extremely favorable for wealthy families," says Jeffrey Cooper, a professor at Quinnipiac University School of Law and a former estate planner who has studied the history of U.S. tax law.

The good news for the rich starts with income tax rates, which for top income groups would remain 35 percent, a rate enacted by former President George W. Bush in 2003. Except for a period from 1988 to 1992, the top tax rate has never been this low since 1931.

• Most US corporations pay no taxes.

• A full 54% of the US federal budget feeds the military-industrial complex, which is mostly privatized. Meaning, working USians' income taxes not only support two foreign wars and a military presence in 75 countries; those same taxes continue to transfer wealth upwards.

My thoughts on where Canada figures into this, coming soon.

2 comments:

allan said...

The Government Accountability Office found that "two out of every three United States corporations paid no federal income taxes from 1998 through 2005".

General Electric generated $10.3 billion in pretax income in 2009, but paid $0 in taxes. Instead, it received a tax benefit of $1.1 billion.

Exxon also paid $0 to the IRS as it was able to shift its $100,000,000,000 tax burden onto US taxpayers.

laura k (aka L-girl) said...

There is also the corporate/ government revolving door that keeps things rolling. For example:

Senior executives of General Electric, JPMorgan Chase, Goldman Sachs, Banco Popular, Sun Trust and Fifth Third Bank served as directors of regional Federal Reserve Banks even as they doled out funds to their firms.

The new information lends support to the concept of a financial oligarchy detailed by my fellow Economix blogger Simon Johnson and his co-author, James Kwak, in “13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.”

The specifics also provide a case study of regulatory capture, in which a state agency created to act in the public interest instead advances the commercial or special interests it was charged with regulating.


See here for links.