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Category Archives: History

Why the Percentage of Poor People in America Hasn’t Changed in 50 Years

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If you don’t subscribe to the New York Times, you might not be able to read an important article called “Why Poverty Persists in America”. But the Times and some other papers are making it possible to share “gift” articles, like this one to the poverty article.

By making the article available, I’m not exploiting you and you aren’t being exploited. I’m not making any money out of the transaction and you aren’t spending any. If anything, you’re exploiting the New York Times (it was their idea and they can afford it).

The thesis of the article, however, is that exploitation is rampant in America and it’s the key reason why poverty persists. The author, Matthew Desmond, a Princeton sociologist, discounts the idea that the poor aren’t really poor (“you can’t eat a cellphone”). He argues that the poor (and others) are being taken advantage of.

The primary reason for our stalled progress on poverty reduction has to do with the fact that we have not confronted the unrelenting exploitation of the poor in the labor, housing and financial markets.

… Social scientists have a fairly coolheaded way to measure exploitation: When we are underpaid relative to the value of what we produce, we experience labor exploitation; when we are overcharged relative to the value of something we purchase, we experience consumer exploitation….When we don’t own property or can’t access credit, we become dependent on people who do and can, which in turn invites exploitation….

The author explains in detail how exploitation works in these three markets and how we might insure there’s less of it. Maybe I’ll share more of the article later. For now, here’s how the article ends.

In Tommy Orange’s novel, There There, a man trying to describe the problem of suicides on Native American reservations says: “Kids are jumping out the windows of burning buildings, falling to their deaths. And we think the problem is that they’re jumping.”

The poverty debate has suffered from a similar kind of myopia. For the past half-century, we’ve approached the poverty question by pointing to poor people themselves — posing questions about their work ethic, say, or their welfare benefits — when we should have been focusing on the fire. The question that should serve as a looping incantation, the one we should ask every time we drive past a tent encampment, those tarped American slums smelling of asphalt and bodies, or every time we see someone asleep on the bus, slumped over in work clothes, is simply: Who benefits? Not: Why don’t you find a better job? Or: Why don’t you move? Or: Why don’t you stop taking out payday loans? But: Who is feeding off this?

Those who have amassed the most power and capital bear the most responsibility for America’s vast poverty: political elites who have utterly failed low-income Americans over the past half-century; corporate bosses who have spent and schemed to prioritize profits over families; lobbyists blocking the will of the American people with their self-serving interests; property owners who have exiled the poor from entire cities and fueled the affordable-housing crisis.

Acknowledging this is both crucial and deliciously absolving; it directs our attention upward and distracts us from all the ways (many unintentional) that we — we the secure, the insured, the housed, the college-educated, the protected, the lucky — also contribute to the problem.

Corporations benefit from worker exploitation, sure, but so do consumers, who buy the cheap goods and services the working poor produce, and so do those of us directly or indirectly invested in the stock market. Landlords are not the only ones who benefit from housing exploitation; many homeowners do, too, their property values propped up by the collective effort to make housing scarce and expensive. The banking and payday-lending industries profit from the financial exploitation of the poor, but so do those of us with free checking accounts, as those accounts are subsidized by billions of dollars in overdraft fees.

Living our daily lives in ways that express solidarity with the poor could mean we pay more; anti-exploitative investing could dampen our stock portfolios. By acknowledging those costs, we acknowledge our complicity. Unwinding ourselves from our neighbors’ deprivation and refusing to live as enemies of the poor will require us to pay a price. It’s the price of our restored humanity and a renewed country. 

One funny note. This is the article’s subtitle: “A Pulitzer Prize-winning sociologist offers a new explanation for an intractable problem”. I guess whoever wrote that has never heard of Karl Marx or Das Kapital.

Understanding the Coming Arguments About the Federal Budget

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Paul Krugman’s new column sets the scene for this year’s dispute regarding the federal budget. It will be in the news a lot so it’s good to know what’s going on:

[Today], the White House released its budget [proposal]; Republicans haven’t offered a specific counterproposal, but they seem to be coalescing around a plan released by Russell Vought, [the former president’s] last budget director. Neither plan will become law. Instead, they’re intended to position the two sides for the looming confrontation over the federal debt ceiling.

But let’s not engage in false equivalence. The Biden budget may be political theater, but its numbers make sense. The Republican numbers don’t.

In some ways we’ve been here before. A decade ago President Barack Obama also confronted a Republican-controlled House, which sought to use blackmail over the debt ceiling to extract policy changes it couldn’t have enacted through the normal budget process. And Vought’s plan bears a strong family resemblance to the plan advanced back then by Paul Ryan, who would become speaker of the House in 2015.

But the political and intellectual environment is different this time. In 2013 Washington was full of Very Serious People who were obsessed with the budget deficit and believed Republicans who claimed to be deficit hawks. Ryan, in particular, was the subject of much media swooning, although anyone who looked at the details of his proposal realized that it was flimflam.

These days the deficit scolds are much less influential than they were. The news media is, by and large, treating Republican claims that they have a plan to balance the budget with the ridicule they deserve. And the parties themselves have changed: Democrats have become more unapologetically progressive, while the [Republicans seem] far less interested in fiscal policy, or policy in general, than in the past.

So, about President Biden’s budget: The starting point for this budget is that Biden’s people evidently view deficits as a source of concern, but not a crisis. Overall, Biden’s budget proposes increasing social benefits on a number of fronts even in the face of rising debt. It nonetheless proposes to reduce the budget deficit, but only modestly — it claims to shrink the deficit over the next decade by almost $3 trillion, but that’s less than 1 percent of G.D.P.

How can Biden reduce deficits while expanding social programs? Mainly by raising taxes on corporations and wealthy individuals, with an assist from cost-cutting measures in health care, especially using Medicare’s bargaining power to reduce spending on prescription drugs.

Are Biden’s numbers plausible? Yes. Notably, the economic projections underlying the budget are reasonable, not very different from those of the Congressional Budget Office. The projections even assume a substantial but temporary rise in unemployment over the next year or so [as the Federal Reserve raises interest rates].

Now, even economists like yours truly, who have been fairly relaxed about budget deficits, generally believe that at some point we’ll have to do more than this. We’ll need a much broader effort to bring down health care costs, and we’re also going to need more revenue than you can raise solely by taxing Americans with very high incomes. But Biden’s plan is a step in the right direction.

What about the Republicans? They claim to believe that rising federal debt is a major crisis. But if they really believed that, they’d be willing to accept at least some pain — accept some policies they dislike, take on popular spending programs — in the name of deficit reduction. They aren’t. The Vought proposal calls for preserving the [Orange Menace’s] 2017 tax cuts in full, while also avoiding any politically risky cuts in defense, Social Security or Medicare.

Yet it also claims to balance the budget, which is basically impossible under these constraints. In fact, even with savage cuts to Medicaid and drastically reduced funding for the basic functions of government, Vought is able to claim an eventually balanced budget only by promising that tax cuts and deregulation will cause a big rise in the economy’s growth rate. Tax cutters often make such claims; they never, and I mean never, deliver on their promises.

What I find a bit puzzling is why Republicans are still rallying around this stuff. The modern Republican Party gets its energy from culture war and racial hostility, not faith in the miraculous power of tax cuts and small government. So why not give up on the ghost of Reaganomics? Why not come out for a strong social safety net, but only for straight white people?

Part of the answer may be that the party still needs money from billionaires who want to keep their taxes low. But it also seems to me that the peddlers of right-wing economics have done an extremely good job of marketing their wares to politicians who don’t know or care much about policy substance. That Vought proposal, as I said, looks a lot like Paul Ryan’s plans a decade ago — but it’s titled “A Commitment to End Woke and Weaponized Government,” and somehow manages to mention critical race theory [CRT] — which is not exactly a line item in the budget — not once, not twice, but 16 times.

In any case, where we are now is that Biden is offering a basically reasonable fiscal plan, while Republicans are talking meanspirited nonsense.

A few weeks ago, Krugman was interviewed and offered his opinion about the debt ceiling. He said he knows of at least six different strategies that would allow the government to keep paying its bills and avoid a financial crisis even if Republicans refuse to raise the debt ceiling:

I think a lot of us are operating under the working assumption that the Biden people will deny up till the last minute that they’ll do any of the funny strategies. But then if push actually does come to shove they will. And they’ll mint the trillion dollar coin or they’ll invoke the [14th Amendment to] the constitution. [These] different, exotic strategies … all have zero economic significance. They’re all about just exploiting the fine print in the law to avoid [a crisis].

… America does many things well and many things badly. But one thing we do have is smart lawyers…. I assume that there is an ultra-secret team of lawyers maybe working under Cheyenne Mountain preparing debt strategies.

A Big Story Fox “News” Won’t Cover

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Really good liars never admit they’re lying. From CNN:

Fox News continues to be exposed like never before.

In legal filings made public Tuesday as part of Dominion Voting Systems’ $1.6 billion defamation lawsuit against the right-wing channel, a trove of private text messages, emails, and deposition transcripts offered a new look at how the sausage is made behind the scenes at the channel — and it is ugly. 

The filings expose the face of the network, Tucker Carlson, as a fraud. They show that Rupert Murdoch rejected conspiracy theories about Dominion, despite allowing them to be promoted on his network. And they show the contempt that hosts like Sean Hannity have for some of their colleagues who tried to tell the truth about what actually transpired in the 2020 election.

► Carlson “passionately” hates [the former president]: In a number of private text messages, Carlson was harshly critical of T____…. Carlson [wrote] that T____’s post-election behavior was “disgusting”…. In another text message, two days before the January 6 attack, Carlson said, “We are very, very close to being able to ignore T____ most nights. I truly can’t wait.” Carlson added of T____, “I hate him passionately.” The Fox host said of the Trump presidency, “… We’re all pretending we’ve got a lot to show for it, because admitting what a disaster it’s been [the last four years] is too tough to digest. But come on. There isn’t really an upside to T____.”

â–şMurdoch rejected conspiracies: In his January deposition, Murdoch was repeatedly asked about various electronic voting conspiracy theories — and he rejected all of them. “You’ve never believed that Dominion was involved in an effort to delegitimize and destroy votes for D____ T____, correct?” a Dominion lawyer asked at one point. “… No, I’ve never seen it,” Murdoch replied….

► Hannity and Doocy mocked Fox’s journalists: In a series of November 2020 text messages, Hannity and Steve Doocy attacked the reporting from their colleagues on the so-called “straight news” side of the network. “‘News’ destroyed us,” Hannity complained. “Every day,” Doocy replied. “You don’t piss off the base,” Hannity said. “They don’t care. They are JOURNALISTS,” Doocy texted back. Hannity said he has “warned” people at the network “for years” and there is “NOTHING we can do to fix it.”

► Fox D.C. chief decried “existential crisis” at network: More than a month after the 2020 election, then-Fox News DC Managing Editor Bill Sammon decried the network’s coverage of false election claims in private messages to a colleague, fearing it had become an “existential crisis” for the right-wing channel. “It’s remarkable how weak ratings make good journalists do bad things,” Sammon wrote then-political editor Chris Stirewalt. Stirewalt replied, “It’s a real mess.”

Greg Sargent of The Washington Post comments:

[The] fear that viewers might see telling the truth about D____ T____’s loss as betrayal was widespread inside the network…. [Fox insiders] fumed that candor about 2020 was driving the audience away, prompting viewers to defect to competitors who offered a more comforting cocoon. On the air, some of those personalities kept doling out what they privately admitted were lies.

[This scandal] points to an even bigger story: The right wing media’s long war on the truth. For decades, conservative media outlets have expressly sought to build and capture an audience that would accept only their version of events, and would be cordoned off to place them beyond the reach of mainstream news sources entirely.

“Right wing media have been engaged in a 70-year project to ensure that their audiences only trust conservative news outlets,” Nicole Hemmer, who tells this story in “Messengers of the Right”, her excellent history of conservative media, told me. “They’ve worked to discredit other sources of more-objective information, so that their audiences are unwilling to trust outlets more rooted in reality”….

Hemmer traces the genesis of this broader ideological project to the late 1940s and early 1950s. At the time, she tells me, leading figures on the right made a concerted decision to “create their own media outlets” in the form of periodicals such as Human Events, while spreading “the message that all non-conservative media are deeply biased”.

This intensified during the presidency of Richard M. Nixon, who turned Vice President Spiro Agnew loose to make snarling speeches attacking the television networks…. The influence of right-wing media intensified in the late 1980s with the explosion of talk radio. This capture of conservative audiences was aided, Hemmer notes, by the success of Rush Limbaugh and others who made the message about biased mainstream news “entertaining and profitable.”

Enter Fox News, which was founded in the mid-1990s and attained itscommanding heights in the right-wing information ecosystem in the early 2000s. 

But now the audience’s captivity to an alternate version of events is blowing back on Fox News. Over the years Fox News’s audience has rebelled over other things, such as Hannity’s championing of immigration reform, which incited a backlash from his viewers. Nothing, however, has compared to the current scandal. 

Will there be any repercussions? There should be. Democratic politicians shouldn’t appear on their programs. People giving press conferences shouldn’t answer questions from their “reporters”. Cable TV operators should either drop Fox “News” or make people pay a lot to watch. Businesses and government facilities, including military bases, shouldn’t let Fox run in waiting rooms, offices, etc. Fox management should be ostracized. And there should be more defamation lawsuits.

I’ve read that Fox isn’t telling its viewers about any of this (no surprise). But I hope other right-wing outlets are spreading the news. Don’t watch Fox! They don’t really believe the election was stolen! Or that vaccinations are terribly dangerous! Watch us and visit our site instead! We’re on your side! We promise not to upset you by telling you the truth about anything!

There’s No Need To Panic About Social Security

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Prof. Paul Krugman explains a few things about Social Security:

The thing about Social Security is that from the beginning it was designed to encourage misconceptions. It looks, on casual inspection, like a giant version of a private pension plan. You pay into such a plan during your working years, contributing to a pension fund, and when you retire, you receive payments from that fund in proportion to the amount you put in….

I haven’t studied the detailed history of the program’s origins, but I’m pretty sure that it was set up to look like an ordinary pension fund because that made it politically easier to sell. But in reality, Social Security has never been run like a private pension plan.

For one thing, for the first half-century of the program’s existence, it had almost no assets; in 1985, the trust fund was only large enough to pay around two months’ worth of benefits. So it has always operated mainly on a pay-as-you-go basis, with today’s payroll taxes paying for today’s retiree benefits, not tomorrow’s.

I often get mail from people claiming that this makes Social Security a Ponzi scheme. But it isn’t. It’s just a government program supported by a dedicated tax, which is fairly common — for example, that’s how we pay for roads and bridges, which are funded by gas taxes.

The other way Social Security is unlike a private pension is that what you get out isn’t at all proportional to what you put in. Workers with low earnings get a much higher share of those earnings replaced than higher-wage workers. In the past, this made the program strongly redistributive — a much better deal for workers with low pay than for workers with high pay.

By the late 1970s, it was clear, however, that Social Security was facing financial trouble down the road. The baby boom ended in 1964, so the working-age population, which grew rapidly as long as boomers were still entering the labor market, would grow more slowly in the decades ahead; this meant that the program’s tax base would grow more slowly than the number of beneficiaries, especially once the boomers began retiring.

So in 1981 a bipartisan commission set out to secure Social Security’s future. It tried to do so with two measures. First, it increased the payroll tax rate; the idea was to make Social Security a bit more like a “real” pension fund by taking in more than it was spending, building up a serious trust fund that could help defray costs once the baby boomers hit the system. It also set in motion a gradual rise in the age of eligibility for full benefits, which started at 65 and will reach 67 for those born after 1960.

All of this was supposed to secure the system’s finances until 2060. It did, in fact, buy the system a number of decades, but the Social Security Administration currently expects the trust fund to be exhausted by 2035. The main reason for the shortfall, as I understand it, is that taxable wages have grown more slowly than expected, which in turn is largely the result of rising inequality: A growing share of overall income has gone to people with really high earnings, and much of that income [anything over $160,200] isn’t subject to the payroll tax….

So what happens once the trust fund is exhausted? The system doesn’t collapse — but payroll tax receipts are expected to be only about 80 percent of promised benefits. So if nothing is done, benefits will suddenly have to be slashed by 20 percent.

That, however, almost certainly won’t be allowed to happen. These programs are both immensely popular and deeply relied on, after all.

One obvious course of action would be to provide the system with more money. I get a lot of mail from people saying that we should simply eliminate the upper limit on the payroll tax. That would certainly raise a lot of money. But bear in mind that there’s no fundamental reason Social Security has to be financed with payroll taxes; we do it that way only because back in 1935, F.D.R.’s advisers thought it would be a good idea to dress Social Security up to look like a private pension fund. And Social Security isn’t the only program that’s going to need more money unless we cut expenses. So we should be trying to figure out the best way to raise a few more percentage points of G.D.P. in taxes. To achieve that, raising the payroll cap may not be the best way to go.

The other idea I hear a lot is that we should raise the retirement age — which has already been increased, from 65 to 67. After all, people are living longer, so they can work longer, right?

Well, some people are living longer. But one key point in thinking about Social Security is that the number of years you can expect to spend collecting benefits has become increasingly linked to the income you earned earlier in your life. Here’s a chart everyone discussing retirement ages should know about, although many don’t. It shows how life expectancy at age 65 has changed for Americans with different levels of income.

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:…. Life expectancy has indeed risen a lot for the affluent, but for the less well-paid members of the working class, it has hardly risen at all.

What this means is that calling for an increase in the retirement age is, in effect, saying that janitors can’t be allowed to retire because lawyers are living longer. Not a very nice position to take.

Growing disparities in life expectancy also mean, by the way, that Social Security isn’t as redistributive as it used to be. Low earners get more of their income replaced than high earners, but this is increasingly offset by the fact that they have fewer years to collect benefits.

In any case, I hope we don’t raise the retirement age further. As I wrote last week, what we need is medical cost control plus moderate tax hikes.

And meanwhile, don’t worry too much about your future benefits. Social Security isn’t a Ponzi scheme, it isn’t going bankrupt, and it will probably continue much as it has.

Meanwhile, an article for Politico suggests a way to protect Social Security that nobody seems to mention.

There are a lot of strange aspects about [the Social Security] debate, but perhaps the oddest is that [everybody acts] as if Social Security is the only part of the U.S. old-age benefit system. The other parts of the system — including defined-benefit (DB) pensions, defined-contribution (DC) plans like 401(k)s, and individual retirement accounts (IRAs) — are rarely mentioned and completely spared from proposals to cut benefits….

According to the Joint Committee on Taxation, the tax advantages for DBs, DCs and IRAs will cost the federal government $371 billion this year…. Given these tremendous [tax breaks], it is initially hard to understand why people who seem so worried about the costs of old-age benefits choose to focus solely on Social Security. But it becomes easier to understand once you realize who benefits the most from the various parts of the old-age system….

According to the Congressional Budget Office, the richest 20% of Americans receive 58.1% of all the government subsidies provided to DBs, DCs and IRAs while the poorest 20% receive just 1.3%….

DBs, DCs and IRAs also provide significant amounts of fee revenue to Wall Street banks and other financial intermediaries who administer the tens of millions of individual accounts and pension funds….

Of course, it doesn’t have to be this way. The rules governing DCs, DBs and IRAs … can be changed just as the rules governing Social Security can be changed. If we are seriously worried about the generosity of old-age benefits or the government’s debt, then everything should be on the table and the part of the system that most favors the rich should be front and center.

For example, … gradually raising the full retirement age to 70 years old … would save $121 billion between 2024 and 2032. However, a similar amount of savings could be achieved by applying an annual 0.03 percent tax on the $34.5 trillion of assets held by DBs, DCs and IRAs…. For a person with a $100,000 IRA, the tax would amount to just $30 per year.

Making Crazy and Dangerous Sound Normal

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The Orange Menace, campaigning for president for the third time, spoke at a gathering of rabid reactionaries this weekend. A reporter for HuffPost captured the scene:

Within minutes of taking the stage, [he] went into his typical remarks, disparaging the United States as a “filthy communist country” and attacking Democrats and the news media. “They’re not coming after me. They’re coming after you. I’m just standing in their way,” he said. “We will drive out the globalists. We will kick out the communists.”

And even though dozens of rows in the back remained empty, [he] thanked the fire marshal for letting in so many of his supporters. “Look at all these people. They’re up to the rafters,” he said.

[He] called prosecutors investigating him “racist” — the ones in New York and Georgia are Black — and claimed they only went after him because he is likely to win the presidency again. He continued lying about the 2020 election having been stolen from him: “We did much better in 2020 than we did in 2016.” He added later, “I won that second election, and I won it by a lot.”

He relitigated, at length, his two impeachments… And he promised that if he won reelection, he would take revenge on those who didn’t respect his followers. “I am your retribution,” he said….

He promised that if he won the White House, he would quickly end the war because he “gets along great with Putin.”

“I’m the only candidate who can make this promise: I will prevent — and very easily — World War III. Very easily. And you’re going to have World War III, by the way, you’re going to have World War III if something doesn’t happen fast,” he said.

His aides had promised reporters that [he] would offer a forward-looking vision for his return to the White House. Instead, his 105-minutes on stage was largely a repeat of his oft-repeated lies and grievances.

Even this relatively accurate description doesn’t capture what went on. CNN’s Daniel Dale added this (see here for his fact check of the “wildly dishonest speech”):

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But Jennifer Rubin of The Washington Post points out that we still have a big problem.

We saw throughout [the Orange Menace’s] two presidential campaigns and four years in the White House a symbiotic relationship between mainstream media outlets and Republicans, in which both made [him] out to be a far more normal politician than he was.

On the one hand, there was Republican denial (Didn’t see the crazy tweet! I’m sure he’s learned his lesson!). On the other, there was the media’s determination to avoid claims of bias and maintain a false balance — which often resulted in their obscuring how loony he sounded….

Apparently, neither the media nor supposedly sober Republicans have learned anything from the past. [He] gave a bonkers speech on Saturday, musing about Russia blowing up NATO headquarters, claiming President Biden had taken the border wall and “put it in a hiding area,” and telling the crowd, “I am your warrior. I am your justice. And for those who have been wronged and betrayed: I am your retribution.”

We do not get headlines acknowledging this is unhinged. Instead, we get from the New York Times: “[T] Says He Would Stay in 2024 Race if Indicted.” And a similar angle from CNN. ABC started its website report this way:“Former President [DT] continues to reign supreme over the conservative wing of the Republican Party.” From The Washington Post: “[T] takes victory lap at conservative conference”.

CBS intoned that [he] “aired grievances with his familiar foes: President Biden, the Department of Justice, and the litany of legal fights he is embroiled in.” Politico went with: “[T] ties a ribbon on the most MAGA CPAC [conference] yet.” Hmm.

From the coverage, you would never understand how incoherent he sounds, how far divorced his statements are from reality, and how entirely abnormal this all is. Talk about burying the lede.

The press and Republicans’ mutual distaste for candidly acknowledging [his] break with reality and the danger he poses to democracy was on full display on the Sunday shows [where Republican politicians said they’d support whoever the party nominates in 2024]. 

Coverage can be so bland and innocuous as to mislead. The audience — that is, potential voters — might easily come away from such coverage believing that [T] acted like a normal candidate, not a figure plainly unfit to handle any public position. And interviews can be so inept as to allow Republicans to repeatedly avoid explaining how in the world they could support someone so unfit for office.

If you put cowering Republicans together with media unwilling to accurately describe what is going on in front of them, you wind up gaslighting voters, who come away with the impression that [T’s] carnival of crazy is acceptable. We know how this ends: If [too few of us are] willing to call [him] out for what he is — and the danger he poses to the United States — we risk returning him to the Oval Office.

Whereupon, expect the headlines: “How did this happen?”

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