Just in time for the fall harvest festival of Sukkot, the U.S. Census Bureau has published what we might call a 2013 update of America’s own Harvest of Shame: a comprehensive annual report on the state of income, poverty and health insurance in the United States.
To be fair, it’s not all bad news. For example, the report shows that 2012 was the first year since 2007, before the economy collapsed, that America’s median household income didn’t decline. It was statistically the same in 2012 as it was in 2011, roughly $51,000. That was also the first year since 2007 that there was no statistically significant increase in the number of people in poverty (46 million) or their percentage of the population (15%). All three numbers are still worse than they were in 2007, but at least they’ve stopped deteriorating. That’s the good news.
Pretty much all the rest of it is bad news, some of it shockingly so. Between 2000 and 2012 the median income for non-elderly households declined a whopping 11.6%, or $7,490 after correcting for inflation. Among African-American households the decline was 14.8%. A full 27% of blacks live in poverty, nearly 11 million people in all. Close to half (44%) of all Americans in poverty are living in what’s called “deep poverty,” with an income that’s less than half the poverty line. And the number of people under 65 receiving health insurance on the job dropped by 13.7 million or 10.8% in those 12 years (almost all before Obamacare kicked in).
The only income group reported by the Census Bureau to have gained income since 2009 is the top 5%, which saw a median gain of 0.6%, or $1,846. Everybody else lost.
Some of the information in the report is quite surprising. Remember President Reagan’s quip in 1987, “In the 60s we waged a war on poverty and poverty won”? It turns out he was dead wrong. The poverty rate plummeted during the 1960s, from about 22% of the population in 1959 to about 11% in 1973. It stayed roughly level until about 1978 and then started climbing, reaching 15% in 1982, the second year of Reagan’s presidency. (Hence the increase in poverty that he correctly perceived in 1987 was actually his handiwork.) It stayed up around 15% until 1993, the first year of Bill Clinton’s presidency, when it began dropping again, reaching 11.3% in 2000, Clinton’s last year. The next year, the first of the Bush administration it began climbing steadily, reaching 15% in 2011. In fact, contrary to what you might think, there was no dramatic jump in poverty after 2007. It’s just been a steady climb since 2000.
Likewise, median income declined between 2000 and 2007, though only a bit, then proceeded to plummet. In other words, some of our troubles began when the economy collapsed, but important parts of the disaster began directly after the Supreme Court’s historic December 2000 ruling in Bush v. Gore. It takes some digging to find out, though. The Census report doesn’t highlight this at all. It’s all built around the post-2007 collapse.
A separate income study, this one based on Internal Revenue Service figures, was released September 3 by economist Emmanuel Saez at the University of California-Berkeley. It shows that average family incomes (as opposed to median) grew by 6% between 2009 and 2012. But nearly all the gain went to families in the top 1% of the population, whose income grew 31.4%. The other 99% saw an average gain of 0.4%. (And based on the above Census Bureau numbers, even that paltry increase seems to have gone mostly to the top 5%.) The Los Angeles Times published a summary of the Berkeley study on September 11.
The Economic Policy Institute, a labor-backed Washington think tank, pulled out some of the most interesting numbers from the Census Bureau’s report:
Los Angeles Times business columnist Michael Hiltzik has an essential piece today debunking what he calls “The Myth of the Social Security system’s financial shortfall.” It’s based on the newly-released 2010 report of the Social Security Trustees.
In fact, he argues, Social Security is doing fine, sort of. If there’s a problem, it’s the fact that it has been lending money to the general fund of the federal government for years to cover expenses that used to be covered by income taxes. The payroll tax has been steadily raised to keep Social Security solvent. The income taxes of the wealthiest Americans have been repeatedly, drastically lowered under Ronald Reagan and George W. Bush (Hiltzik leaves out Reagan, as I’ll show), leaving big holes in the general fund, which covers defense, national parks, highways, welfare and all the rest. The impoverished general fund has been borrowing from the flush Social Security trust fund to help cover the deficits.
Here’s the catch: The payroll tax is a regressive tax: the poorest Americans pay the same 7.65% as the richest Americans, and the rich don’t even pay a penny on earnings above $107,000 per year. Lowering income taxes on the rich, and then covering the shortfall by borrowing from a pot that’s mainly funded by the common folk (and mainly relied on by them) amounts to a massive redistribution of income from the poor to the rich. And that’s why the Social Security trust fund looks insolvent: It has been raided to cover money that used to be in the federal budget but is now in the pockets of the rich.
I know, I know: Letting the affluent keep their money (they’re basically the only ones who get to do that under these tax cuts) encourages investment and creates jobs. If anybody here still believes that, I’ve got a lovely oil well to sell you, conveniently located just south of historic New Orleans.
In recent years, during which conservatives have intensified their efforts to destroy one of the few U.S. government programs that actually works as intended, the report’s publication has become an occasion for hand-wringing and crocodile tears over the (supposedly) parlous state of the system’s finances.
This year’s report, which came out Thursday, is no exception. Within minutes of its release, some analysts were claiming that it projected a “shortfall” for Social Security this year of $41 billion.