My last post listed many of the positive things going on in our country at the present time: rapid pandemic recovery, growing economy, much more economic mobility and equality than generally recognized, much-improved race relations, global warming being addressed BUT, unfortunately, also a massive debt crisis approaching us most likely in the near term.
Let’s look at this dichotomy more closely:
- The pandemic has accelerated a shift away from the expensive coastal cities. Cities like Indianapolis, Salt Lake City, Austin, Dallas-Fort Worth, and others have already recovered from the pandemic. It is the mostly northern “blue” cities like Minneapolis, Seattle, San Francisco, Los Angeles, Portland, Chicago, and New York where homelessness and violent crime are on the upswing.
- Millions of workers will continue, after the pandemic, to work from home offices and avoid the central cities altogether. The shift to online work is encouraging a surge of new company formations. In the 53 metropolitan areas with a million or more residents, more than three-quarters of African-Americans and Hispanics now live in suburban or exurban areas. At the same time that Florida was voting to reelect Donald Trump as President, it also voted for a $15 an hour minimum wage.
- Americans of all colors want both justice and prosperity. The American Dream of home-ownership and upward mobility is very much alive and well.
But there is also a dark, menacing, fiscal reality just below the surface:
- President Biden’s proposed $6 trillion budget for FY 2022 accelerates a trend going back to 1970 of spending more than current revenue as a matter of routine.
- In 1970, about 36% of federal spending was in benefits to individuals: Social Security, Medicare, Medicaid, unemployment compensation, and means-tested welfare benefits. Benefits spending is now 76% of total spending.
- We have created a powerful new principle of political economy: the government provides large numbers of voters with immediate personal benefits greatly exceeding what it charges in taxes, billing the difference to future generations. In other advanced democracies, healthy revenue is raised from broad-based (and regressive) taxes on consumption, such as value-added taxes. The U.S., by contrast, relies on a highly progressive income tax that doesn’t produce enough revenue. Furthermore, the IRS has been partially converted into a social welfare agency with a profusion of tax credits for “desired” social policies. In effect, the U.S. tax system is increasingly an adjunct of a borrowed-benefits policy, a means of distributing benefits rather than paying for them.
- This “borrowed-benefits syndrome” is a major disease: 1) the so-called “investments” in people will never generate the economic growth necessary to pay for them and, 2) the provision of borrowed benefits is deeply corrupting of democracy. It absolves citizens and politicians of accountability for managing the conflicts and constraints of today’s society. Instead, it encourages the fantasy that there are enough “rich” people out there to pay for everyone’s benefits.
Conclusion: Lots of things are going well in the U.S. right now and much social progress is being made. But the “borrowed-benefits syndrome” is slowly and gradually eating us alive. The unprecedented aggressiveness of the new Biden Administration continues and accelerates a fifty-year buildup of fiscal folly. We obviously can’t go on like this much longer. Will we be able to turn this terrible predicament around before it is too late? Keep your fingers crossed and stay tuned!
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The US Census Bureau annually assesses the number of citizens that survive based on an estimate of their real income. Within the last 10 years, they have undertaken extensive sampling improvements for its accuracy. I have recently explored the availability of this data, state by state, since 1996 and assembled 5 sequential 5-y rolling average data for 1996-2000, 2001-2005, 2006-2010, 2011-2015, and 2016-2020. The results are:
* 1996-2000 – 12.45%;
* 2001-2005 – 12.48%;
* 2006-2010 – 13.84%;
* 2011-2015 – 15.56%; and
* 2016-2020 – 12.54%.
With a mid-study worsening, the final data segment indicates no overall change in our nation’s poverty rate for the last 25 years.
Thanks for the info. This is really a pretty low number. It means that there really are many opportunities for self-advancement for anyone who is willing to take at least a little bit of initiative to get ahead.
Unfortunately, the occurrence of any poverty produces a neighborhood lived-experience of violence, drug-related gang activity, daily food-safety social dilemmas, and unpredictably-supportive neighborhood and family social networks. These folks then developed chronic illnesses at a much higher lifetime incidence, not to mention the effects of poverty on the early childhood developmental processes. During each of the Rolling Average datasets, the states of New Hampshire, Maryland, Alaska, Iowa, Minnesota, Connecticut, and Virginia experienced an average Poverty level of 9.2%. In contrast, Tennessee, Kentucky, Alabama, Arizona, Texas, Montana, West Virginia, Arkansas, Mississippi, Louisiana, and New Mexico had a rolling average of 18.2%. These numbers represent the number of citizens living below the basic poverty level.
It is important to note that the Medicaid waiver program for health insurance, under Obamacare, is applicable to anyone with income at <140% of the poverty level (as long as a State applies for the waiver). Incidentally, the States with the waiver versus as compared to the States without the waiver as of 2018 experienced less maternal mortality.
I’m not surprised that there is a disparity in poverty levels between states. The question is how to address this disparity. More economic growth? Lower unemployment rates? More closely targeted welfare benefits?