- In early September, The US Census Bureau released its
new report titled, "Income, Poverty, and Health Insurance Coverage
in the United States: 2008" showing disturbing data that portends
much worse ahead under a president and Congress doing nothing to address
- In 2008, poverty reached 13.2% of the population, its
highest level in 11 years, the result of millions losing jobs during the
first year of the gravest economic crisis since the 1930s. For blacks,
the figure was nearly double at 24.7%, and 31% of all Americans were impoverished
for at least two months between 2004 and 2007, years of economic expansion.
- At yearend 2008, even by the Bureau's conservative measures,
39.8 million people were impoverished, the highest level since 1960, and
17.1 million lived in extreme poverty at below one-half the official threshold.
In addition, for the first time since the 1930s, median household income
failed to increase over a 10-year period from 1999 - 2008.
- The Census Bureau states that it "presents annual
estimates of median household income and poverty by state and other smaller
geographic units based on data collected in the American Community Survey
(ACS)" covering population areas of 20,000 or more. The Bureau's Small
Area Income and Poverty Estimates (SAIPE) program also produces yearly
figures "for states and all counties, as well as population and poverty
estimates for school districts." It uses data from a variety of sources,
including surveys, administrative records, inter-censal population estimates,
and personal income data published by the Bureau of Economic Analysis.
- Critics maintain that official government figures way
understate the gravity of today's crisis, and the Bureau says:
- "The official poverty thresholds were developed
more than 40 years ago and have been criticized for not taking into account
rising (or since the 1970s inflation-adjusted falling) standards of living,
expenses such as child care that are necessary to hold a job, variations
in medical costs across population groups (that have skyrocketed nationally
and are now unaffordable for millions), and geographic differences in the
cost of living."
- In addition, income and poverty estimates are pre-tax
and exclude non-cash benefits, usually employer-provided. Disposable personal
income, after income, payroll, sales, property and other taxes, reveals
a far higher poverty level than the Census Bureau reports and a much graver
crisis for growing millions as the economic decline deepens.
- The Bureau reported that 2008 median (inflation adjusted)
household income fell 3.6%, the largest single-year decline on record to
the lowest level since 1997 and falling as conditions continue to worsen.
- The plight of the poor and impoverished shows up in numerous
other reports that paint a darker picture than the Census Bureau and suggest
much worse ahead:
- -- an unprecedented, growing disparity between the very
rich and other income groups;
- -- economists Thomas Piketty and Emmanuel Saez's research
showing the top 1% of households got two-thirds of the national income
growth during the last recovery, a larger share than at any time since
- -- wages losing ground to inflation;
- -- millions of children dependent on school lunches for
a hot meal;
- -- an Economic Policy Institute estimate of one-quarter
of all children living in poverty by yearend 2009;
- -- the continued erosion of employer and government-provided
benefits, including at the state and local levels; the growing uninsured
crisis is discussed below;
- -- greater numbers of households unable to meet expenses,
even with two working members;
- -- added duress from state budget cutbacks;
- -- record numbers of food stamp recipients;
- -- persistent and growing hunger and homelessness; and
- -- job losses and higher unemployment continuing for
many more months with some analysts projecting record high numbers before
- A September 11 Kissinger Associates Joshua Ramo story
in Time magazine highlighted the problem. Titled, "Jobless in America:
Is Double-Digit Unemployment Here to Stay," it quoted Larry Summers'
remarks last July before the Peterson Institute for International Economics
about the disturbing rate of job losses. He suggested something strange
was happening, unpredicted by experts:
- "I don't think that anyone fully understands this
phenomenon," he said. Will job losses mount longer than expected?
At the "recession's" end, will low numbers of new ones follow,
and will double-digit unemployment persist and remain common?
- Without saying it, Summers wondered if America's economic
model was broken, and if so how to fix it. Or can it be fixed? According
to the Peterson Institute's Jacob Kirkegaard, "It is entirely possible
that what started as a cyclical rise in unemployment could end up as an
- Summers earned his reputation as an employment theorist.
He now believes that earlier unemployment views are "importantly wrong.
I thought if you could have areas where there was long-term substantial
unemployment, then that raised some questions about the functioning of
- In 1986, he wrote an article titled, "Hysteresis
and the European Unemployment Problem." Hysteresis is the Greek word
for late, referring to what happens when something snaps and can't be fixed.
It's an idea economists deplore applying to economies, preferring instead
to cite normal business cycle ups and downs. Yet in 1986, Summers argued
that Europe's unemployment might be chronic and persist in times of growth.
- Today's are another matter at a time of a changing economic
landscape perhaps suggesting that hysteresis is confronting America, and
many lost jobs aren't coming back, especially better paying ones. That's
Kirkegaard's view in saying growth won't put Americans back to work, and
new jobs created will be poorer quality than old ones.
- So what can be done going forward? Unlike in the 1930s,
machines now do much of the work that people did then on infrastructure
projects. And it's a lot harder converting white collar workers to blue
collar ones. Moreover, Summers' own research concludes that the traditional
Western economic model won't alleviate the jobs crisis, so what will?
- Summers won't say it, but short of a total remake of
"free market" economics, likely nothing and perhaps that's America's
future with growing millions consigned to a permanent underclass, while
an elite few at the top grow richer, until one day "hysteresis"
snaps the system in a disruptive convulsion, the old model passes from
the scene, and nothing is the same again.
- More Evidence of Economic Duress in the Latest Federal
Research Report on Consumer Credit
- On September 8, the Federal Reserve reported that total
consumer credit fell by a record $21.6 billion in July (the sixth consecutive
monthly decline) and year-over-year by $2.47 trillion or 10.4%. According
to Bernard Baumohl, The Economic Outlook Group's chief global economist:
- "It is one more important sign that consumers are
not going to be contributing very much to the economy for the balance of
this year and probably for (at least) a good part of next year." Shrinking
credit's impact on consumption indicates an economy in decline. It shows
up in growing poverty, falling incomes, and greater duress for growing
millions, sure to be reflected in the Bureau's 2009 report.
- Continued Erosion of Health Care Coverage
- In 2008, the Bureau also collected data on health insurance
coverage, putting the number of uninsured at 46.3 million last year (15.4
of the population), or an increase of 682,000 over 2007. It was the eighth
consecutive year that fewer workers got employer-provided coverage, and
those with it had to pay more of the cost.
- Other estimates are far grimmer. Some, including the
Congressional Budget Office, place the current uninsured total at about
50 million, and a May 2009 Todd Gilmer - Richard Kronick study estimated
that 191,670 more lose coverage monthly, 2.3 million annually at the present
rate, and an expected 6.9 million more Americans (over 2007) will lack
it by yearend 2010 if the present trend continues.
- Add to these the underinsured. According to the American
Public Health Association, at least another 25 million at great risk if
they face a serious health problem not covered by their present plan. In
addition, Families USA estimates about 90 million Americans had no health
insurance during some portion of 2007 or 2008. The Henry J. Kaiser Family
Foundation reported that over 80% of the uninsured come from working families,
and the Agency for Healthcare Research and Quality estimated that 27% of
under aged-65 year old Americans lack coverage.
- Still other estimates project up to 60 million uninsured
if the commonly reported U-3 unemployment rate hits 10%, and the Urban
Institute sees around 66 million without coverage by 2019, given the present
trend of rising costs forcing employers increasingly to cut back.
- Bureau data show that coverage weakened across most sectors
of the population, including full-time workers and the middle class, the
result of economic decline and years of employers putting a greater burden
on their workforce.
- Since at least 2001, the percent of workers with employer-provided
insurance has steadily eroded, and it's the main reason behind growing
numbers of uninsured and underinsured. In 2008, 61.9% of the below-aged
65 population had job-provided coverage, down from 67% in 2001 and falling
due to cost cutting, continued job losses, and the trend to lower-paying
- In addition, holding a job no longer guarantees coverage.
Plans offered have been greatly eroded, and medical expenses today are
the leading cause of personal bankruptcies. America is the world's only
industrialized country denying its citizens universal coverage, yet spends
on average more than double the other 30 OECD countries and delivers less
for it because of unaffordable private insurance and overpriced drugs.
- Nothing being debated in Washington addresses this, so
whatever legislation emerges will make a dysfunctional system worse with
the American public betrayed by "a slick-talking street hustler"-
what analyst Bob Chapman calls Obama, or according to James Petras, "the
greatest con man in recent history." Make that plural with Congress
under Democrat or Republican leadership because both parties are beholden
to the corporate interests that own them and are indifferent to growing
- Since taking office in January, Obama kept reform off
the table, made progressive change a nonstarter, and achieved the impossible
by governing worse than George Bush on virtually all of his domestic and
foreign policies. Along with looting the federal Treasury, wrecking the
economy, selling out to Wall Street, and continuing imperial wars, Obamacare
is the centerpiece of his failed agenda and a betrayal of the public's
- On September 9, he presented his vision to a joint congressional
session, reassuring providers that their interests are secure. Rejecting
universal single-payer coverage, he said it "makes more sense to build
on what works and fix what doesn't, rather than try to build an entirely
new system from scratch." And while favoring a "public option,"
he assured private insurers that it's not a deal-breaker, guaranteeing
that no final plan will include one because enough votes can't be gotten
in the Senate.
- Key also is lowering costs by:
- -- cutting hundreds of billions in Medicare and Medicaid
benefits as a prelude to eliminating or greatly gutting these programs
with perhaps Social Security and other social gains to follow;
- -- placing caps on what tests and treatments doctors
- -- putting "medical expert" gatekeepers in
charge of deciding the most cost-effective care, thus preventing doctors
from prescribing what's best for their patients and denying people the
right to make their own health care choices if their cost exceeds what
Washington will allow;
- -- taxing so-called "Cadillac" plans (mostly
covering state employees, municipal union members, and other working Americans,
not just the super-rich) to encourage employers to provide fewer benefits,
thus placing a greater burden on workers; forcing everyone to have insurance;
and placing a surtax on non-compliars with incomes of between 100 - 300%
of the poverty level under the Baucus Senate plan;
- -- creating a "deficit trigger" to reduce the
growth of Medicare and Medicaid spending if anticipated savings aren't
- -- making everyone more responsible for their own care
by forcing them to cover more of the cost in return for less coverage when
they need it most.
- Numerous details remain hidden from the public, but the
goal of Obamacare is clear. It's a scheme to ration care; charge people
more for it; enrich private insurers, PhRMA, and large hospital chains;
mandate insurance for everyone; and penalize non-compliars. It's up to
public outrage to stop it.
- Stephen Lendman is a Research Associate of the Centre
for Research on Globalization. He lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
listen to The Global Research News Hour on RepublicBroadcasting.org Monday
- Friday at 10AM US Central time for cutting-edge discussions with distinguished
guests on world and national issues. All programs are archived for easy