AP Study: Poverty Rates In US on Track to Hit Highest Level Since the 1960s

The Associated Press conducted a survey of more than a dozen nonpartisan, liberal and conservative economists, think tanks and academics, and found a broad consensus. The official poverty rate will continue to rise from 15.1 percent in 2010, to as high as 15.7 percent, and even if the gain is a much more modest one of 0.1% as some predict, it will still  increase the poverty rate to it’s highest level since 1965.

Some 47 million people in the U.S., or 1 in 6, were poor last year. In 1983 the poverty rate was 15.2%, the highest since 1965. The highest level on record was 22.4 percent in 1959, when the government began calculating poverty figures. Poverty is closely tied to joblessness. While the unemployment rate dropped from 9.6 percent in 2010 to 8.2 percent in 2012, the employment-population ratio remained largely unchanged, meaning many discouraged workers stopped looking for work. The number of those collecting assistance for food went up, which is another indicator of the growth of poverty.

Stacey Mazer of the National Association of State Budget Officers said state’s poverty rate increases will be one of the deciding factors in whether states expand their Medicaid coverage. Most states generally assume poverty levels will hold mostly steady and they will hesitate if the findings show otherwise. “It’s a constant tension in the budget,” she said.

Demographers also say:

-Poverty will remain above the pre-recession level of 12.5 percent for the foreseeable future. Peak poverty levels, 15 percent to 16%, will last at least until 2014, due to expiring unemployment benefits, a jobless rate persistently above 6% will accompany weak wage growth.

-Part-time or underemployed workers, who saw a record 15 percent poverty in 2010, will continue to rise.

-Poverty among people 65 and older will remain at historically low levels, buoyed by Social Security cash payments.

The 2010 poverty level was $22,314 for a family of four, and $11,139 for an individual, based on an official government calculation that includes only cash income, before tax deductions. It excludes capital gains or accumulated wealth, such as home ownership, as well as noncash aid such as food stamps and tax credits, which were expanded substantially under President Obama’s stimulus package.

An additional 9 million people in 2010 would have been counted above the poverty line if food stamps and tax credits were taken into account.

 

 

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Why Won’t Mitt Romney Provide Specifics on His Tax Plan?

Could it be because he has none?

 

SCHIEFFER: When are you going to tell us where you’re going to get the revenue? Which of the deductions are you going to be willing to eliminate? When are you going to be able to tell us that?

ROMNEY: Well, we’ll go through that process with Congress as to which of all the different deductions and exemptions…My view is that the right way to do that is to limit them for high-income individuals because I want to keep the progressivity of the code. One of the absolute requirements of any tax reform that I have in mind is that people who are the high end, whether you call them the 1 percent, 2 percent, half a percent, the people at the high end will still pay the same share of the tax burden they’re paying now. I’m not looking for a tax cut for the very wealthiest.

Columbia University Professor and Nobel Laureate Joseph Stiglitz: “The American Dream is a Myth”

In Slate magazine, Columbia University professor and Nobel laureate Joseph Stiglitz provided a harsh yet honest analysis of the current American economy, something our current crop of “leaders” refuse to do:

“America likes to think of itself as a land of opportunity, and others view it in much the same light. But, while we can all think of examples of Americans who rose to the top on their own, what really matters are the statistics: To what extent do an individual’s life chances depend on the income and education of his or her parents?
Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe—or, indeed, in any advanced industrial country for which there are data. 
This is one of the reasons that America has the highest level of inequality of any of the advanced countries—and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1 percent of US income earners captured 93 percent of the income growth. Other inequality indicators—like wealth, health, and life expectancy—are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.”
Read more here.

Mitt Romney Debt Speech Full of Truthiness

Republican presidential hopeful Mitt Romney gave a speech in Des Moines, Iowa on the national debt yesterday.

Romney blamed President Obama for all the nation’s ills while conveniently leaving out some key details.

A look at some of Romney’s claims and how they compare with the facts:

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ROMNEY: “America counted on President Obama to rescue the economy, tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of your dollars to the companies of his friends, and added almost as much debt as all the prior presidents combined.”

THE FACTS: Presidents from George Washington through George W. Bush ran the national debt up to $10.62 trillion. Today, it is $15.67 trillion, according to the Treasury Department’s Bureau of Public Debt. Obama has actually added $5.05 trillion, roughly half of the amount amassed by all the other presidents combined.

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ROMNEY: “I will lead us out of this debt and spending inferno. We will stop borrowing unfathomable sums of money we can’t even imagine, from foreign countries we’ll never even visit. I will bring us together to put out the fire.”

THE FACTS: Romney’s tax and spending plan is to cut taxes and expand the armed forces, which would undoubtedly add more to the debt. He also promises to slash domestic spending but hasn’t offered any specifics.

A study by the nonpartisan Committee for a Responsible Federal Budget concluded earlier this year that Romney’s plans would not make a dent in deficits, and could worsen them considerably.

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ROMNEY: “The people of Iowa and America have watched President Obama for nearly four years, much of that time with Congress controlled by his own party. And rather than put out the spending fire, he has fed the fire. He has spent more and borrowed more. … When you add up his policies, this president has increased the national debt by $5 trillion.”

THE FACTS: The part of the increase in national debt that Romney chooses to ignore are the lower tax revenues from depressed corporate and individual incomes and high joblessness from the Great Depression 2.0. The recession began in December 2007, when George W. Bush was president and the national debt stood at just over $9 trillion. Financial bailouts, stimulus programs and auto rescue spending that started under Bush and continued under Obama contributed to the run-up of the debt.

The Bush-era tax cuts, which Obama extended, enacted in 2001 and 2003 with bipartisan support also contributed largely to the debt. The cuts are scheduled to expire at the end of the year.

Truthiness is nothing new to politicians especially when they are campaigning for office.

In 2008, then Presidential candidate Obama did the very same thing Romney is now doing.

Ignoring economic circumstances and the role of both parties in Congress, Obama accused President George W. Bush of driving up debt by $4 trillion “by his lonesome” and taking out “a credit card from the Bank of China in the name of our children.”

 

One Quarter of Young People Can’t Make Ends Meet

According to a survey of nearly 2,000 adults, one quarter of millennials, the generation aged 18 to 34, 17 percent of adults between the ages of 35 to 54 and 13 percent of those 55 and older are not making enough money to cover their basic needs. The survey was conducted by research firm WSL Strategic Retail (h/tChicago Tribune).

At 54 percent, the employment rate for Americans aged 18 to 24 is at its lowest in more than 60 years, according to the Pew Research Center. On top of that, student loan debt is more than $1 trillion. The New York Fed estimates that two-thirds of that debt is held by people under 30.

Last year, 5.9 million people aged 18 to 34 lived with their parents, according to U.S. Census Bureau data cited by the Wall Street Journal.

The United States, once the leader in the percentage of college graduates age 25 to 34, has dropped to sixteenth among thirty-six developed nations, with more and more students dropping out because they can’t afford the rising costs.

 

Housing Finance Chief Blocked Mortgage Principal Reduction Plan

According to Reps. Elijah Cummins of Maryland and John Tierney of Massachusetts, acting director of the Federal Housing Finance Agency, Edward DeMarco, failed to implement a plan that would have saved taxpayers money by cutting loan principal balances for millions of underwater homeowners.

A top U.S. housing regulator Mr. DeMarco oversees mortgage giant Fannie Mae and has, “apparently been withholding from Congress” documents showing the potential benefits of the program to taxpayers and homeowners, wrote the two Democrats, in a letter to DeMarco that was released to MSNBC.com.

Cummins and Tierney cited internal documents at government-controlled Fannie Mae describing the pilot program with Citibank, beginning in 2009, that showed that “principal reduction programs have enormous potential to save U.S. taxpayers significant amounts of money.”

Since last fall there have been calls from more than 100 members of Congress to reduce principal balances on underwater mortgages. The action could help reduce taxpayer losses on government-owned loans and keep more families in their homes.

So far the government has spent more than $160 billion in taxpayer funds to prop up Fannie Mae and sister agency Freddie Mac.

The collapse of the housing market in 2006 has erased some $7 trillion of equity from the value of American homes and left roughly 11 million homeowners owing their lender more than their home is worth.

Those homeowners, unable to sell their homes, are locked out of the housing market and cannot help in creating the buying demand needed to support any housing recovery. Five years into the housing recession, they’re also more likely to consider walking away from their mortgage, adding to the backlog of foreclosures that could further depress home prices, forcing more households underwater.

To help stabilize the housing market, proponents of principal reduction say that homeowners and lenders would benefit greatly by avoiding those defaults and foreclosures.

According to the letter sent to DeMarco, Fannie Mae officials were impressed with the results of the Citibank pilot program.

In a December 2009 review, Fannie Mae officials estimated that cutting loan balances would cost about $1.7 million to implement and taxpayers would see a potential  savings of more than $410 million. More than half of Fannie Mae customers would benefit from the program within six months.

In November 2010, Fannie Mae officials prepared a research paper that concluded that “Fannie Mae might reduce its losses substantially in many cases by writing down principal.” The paper said Fannie Mae losses resulting from foreclosures following default were “large multiples of the amounts by which the loans were underwater,” according to the documents cited in the letter.

In response to congressional pressure, DeMarco agreed to review the agency’s opposition to cutting principal balances on Fannie Mae and Freddie Mac mortgages. Last month, in a speech at the Brookings Institution in Washington, DeMarco outlined some of the reasons for his opposition to the policy.

“Most Americans that are underwater on their mortgage realize they’ve signed a contract — they’ve got an obligation to make that payment and in fact they are,” DeMarco said. Those underwater homeowners should be encouraged to continue doing so, he added.

“There is increasing data available, we believe, that shows that … principal reduction can be good not only for homeowners and communities, but for investors as well,” Shaun Donovan, secretary of Housing and Urban Development, told a Senate panel this year. “It can allow people to pay [their bills], stay in their homes and increase the value of those mortgages.”

“Private lenders are doing it for an increasing share of their (mortgage portfolios) when it makes sense,” Andrew Jakabovics, a research director at Enterprise Community Partners, told reporters in a panel discussion following DeMarco’s Brookings speech. “If (Fannie and Freddie) aren’t willing to do it, there are plenty of investors who are buying these notes because economically it makes a lot of sense.”

The White House also has encouraged Fannie and Freddie to include principal reduction as part of their mortgage relief efforts.

 

Santorum “The issue in this race is not the economy”

Rick Santorum’s presidential campaign to date has been about everything except the most important issues facing this country, so far the republican presidential hopeful has been content with given his version of America in regards to such topics as contraception, President Barack Obama’s theology, and pornography.

On Monday morning, Santorum kicked off a day of campaigning in Illinois by saying the following:

“The issue in this race is not the economy”.

That statement was part of a longer monologue about why Obamacare is a symbol of government overreach, and that Americans’ freedoms are eroding.

“The reason the economy is an issue in this race is because we have a government that is oppressing its people and taking away their freedom, and the economy is suffering as a result” Santorum said.

One supporter at the rally at The Venetian, an Italian-American social hall, said that the former Pennsylvania senator would “get soundbited on this.”

“It might have come out wrong,” said Peter Scordato, “He’s not downplaying the economy.”

Scordato said Santorum’s point was that the role of government in American life has become too big.

Another attendee said he was undecided before seeing Santorum speak, but came away impressed by his message.

“He spoke to what’s important about America: where we came from, where we’re going, how important our freedoms are,” said Al Piccirilli, 66, a construction project manager.

“Santorum speaks about what really touches the nerve in people,” he said.

Apparently what touches the nerve of Santorum supporters is not a corrupt banking system, a for profit healthcare system, endless wars or impending energy crisis.

It’s those damn pornographers responsible for the ills of society.