Inflation for the Poor, Stagnant Prices for the Rich

Beneath the mortgage crisis brought about by the deliberate systematic scamming of the poor by greedy lendersis the story of the disparity between the kinds of goods with steep mark-ups. The sector that has suffered the greatest inflation, it turns out, is the sector where low and middle class consumers spend most of their money. At the same time, wages have barely risen for the people hit hardest by inflation while luxury sectors have stabilized and incomes risen dramatically.

We all knew that but a new study of govt data by WaPo reporters (doing some actual investigative journalism for a change) proves it.

Inflation is walloping Americans with low and moderate incomes as the prices of staples have soared far faster than those of luxuries.

The goods and services Americans consumed in February were 4 percent more expensive than they were a year earlier. But there is a big divide in how much prices are climbing between the basic items people need to live and get to work, and those on which they can easily cut back when times are tight.

An analysis of government data by The Washington Post found that prices have risen 9.2 percent since 2006 for the groceries, gasoline, health care and other basics that a middle-income American family has little choice but to consume. That would cost such a family, which made $45,000 on average in 2006, an extra $972 per year, assuming it did not buy less of such items because of higher prices. For a broad range of goods on which it is easier to scrimp — such as restaurant meals, alcoholic beverages, new cars, furniture, and clothing — prices have risen 2.4 percent.

Wages for typical workers, meanwhile, have been rising slowly. In that same time span, average earnings for a non-managerial worker rose about 5 percent. This contradiction — high inflation for staples, low inflation for luxuries and in wages — helps explain why American workers felt squeezed even before the recent economic distress began.

(emphasis added)

So, once again, if you’re rich, the expensive trinkets you buy cost little more than they did a few years ago. If you’re poor, a much bigger part of your budget goes for basics like food, transportation, and heat. The reporters – Neil Irwin and Alejandro Lazo – claim that the culprit is foreign market pressure.

Inflation is not occurring because labor markets are tight or because the U.S. economy has been overstimulated; if that were the case, wages would be driving inflation up, leaving ordinary households in decent shape and doing more damage to those who lent money at fixed interest rates.

Instead, this inflation is driven by global commodity markets. China, India and other developing countries’ thirst for oil has been growing faster than producers can quench it, sending the price of oil up about 60 percent since 2006. Prices for oil and other commodities fell yesterday though they remain very expensive by any historical standard.

Expensive crude oil has translated into higher costs to heat a house or drive to work. The average middle-income household must spend $378 more per year on gasoline than it did in 2006 if it consumes the same amount, and an extra $38 on fuel oil.

Apparently the pro-war WaPo decided to skip over the pressure on oil prices caused by the second Gulf War and the obscene profits netted by oil companies the last few years. “It’s all China’s fault.” But at least they didn’t gloss over the difficulties caused by a Two Americas economy.

The rise in the basic cost of living means that inflation disproportionately affects those with modest incomes. For example, in 2006, the top 20 percent of households by income spent about twice as much on staples as households in the lower-middle bracket. But the top-earning families had almost six times as much income.

***

The pinch of inflation from energy, food and health care is a significant factor in softening consumer spending, which in turn is the reason economic growth is slowing sharply this year. It is not the only reason consumers are pulling back, however. Lower home prices, less credit availability and dropping stock market values are other likely factors.

Those different sources of weakness are affecting different groups of consumers. Poor and middle-income people are suffering the worst from inflation, middle- to upper-middle-income families are bearing the brunt of the softer real estate market, and the affluent are pinched the most by problems in financial markets.

Poor babies. But don’t worry. The Fed just promised them another $$$30BIL$$$ to help stabilize the market and it worked. For a couple of days.

Of course, that’s the fourth time $$$20-30Bil$$$ has been thrown at the investor class in an attempt to chivvy them into some semblance of sanity (the Bush Admin tossed them almost $$$200BIL$$$ just a couple of months ago) and each injection of cash calmed nervous investors for, like, a week before the next batch of bad economic news sent them into a tizzy of fret and foreboding, and Wall Street took another nose dive. It isn’t news that the effect of this latest give-away had just as temporary an effect.

Meanwhile, absolutely NO ONE is suggesting that maybe wages should be raised past the level of inflation or that maybe prices on staples should be frozen for a while, and the price of oil fixed. Or all three. None of those would chill weak investor nerves or put money in their pockets. So, even though such moves would be far more likely to stimulate a recessed economy than pouring more money down the financial sector rat hole, they won’t be coming our way any time soon.

The people who caused this disaster with their greed and unscrupulous, predatory practices are focused on saving their own asses at our expense.

And as usual, the Bush Administration is happy to oblige.

Welfare and Medicaid Cuts Raise Infant Mortality Rate

Conservatives kill babies.

Not with their own hands, of course. They don’t strangle them in their cribs. They let their anti-life policies do it for them.

For decades but especially for the last 12 years, the very same conservatives who scream that the removal of an unformed scut of cells in a womb is murder have been systematically depriving real life pregnant women who will be carrying to term of luxuries like food and adequate medical care because they’re “too expensive”.

At the Federal level, Medicaid and welfare have been consistently cut every year conservatives have ruled the roost in order to trim taxes to the nub for the rich, hand over $$$billions$$$ in corporate welfare to their masters campaign contributors, and prosecute a war nobody wanted on behalf of neoconservative imperialists too dumb to know enough to come in out of the rain. In primarily liberal Democratic states, some of that safety net has been replaced but in the predominantly-conservative Southern states, it hasn’t and the results are coming in. They’re not pretty, but then nothing much in conservative-run America is these days.

The policies of so-called “pro-life” conservatives are raising infant mortality rates in the South to the such a point that Third World countries have lower rates than parts of the US. Are we proud yet?

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Murdering the Homeless: Teens Obey Conservative Message

For 30 years, conservatives have been advocating Class Warfare, pitting one group against another for political advantage – whites against minorities, the poor against the middle-class, and the rich against everybody who isn’t. They have fueled their divisiveness with violent, eliminationist rhetoric and a relentless “blame the victim” ideology aimed at promoting guilt-free greed and self-supporting selfishness. They have succeeded beyond their wildest dreams.

The AP is reporting that five teenagers in Orlando, Florida, killed a homeless man for kicks.

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Sheila Holt-Orsted’s Crusade: Cancer, Racism and the Class War

There are times and places when the lines of culture, politics, science, and social conventions come crashing together, when the attitudes we’ve been ignoring and the problems we’ve refused to address converge to create a snapshot reality of where we are and where we’ve been. Call it Ground Zero-Prime.

In Dickson County, Tennessee, Sheila Holt-Orsted is living right smack dab in the middle of Ground Zero-Prime. In her family, and what happened to them, four of the major cultural strains of the past half-century collide: racism, the Class War, denial of environmental neglect, and pandering to corporate greed at the expense of public health and safety.

Sheila had breast cancer. Her father died of prostate and bone cancers. Her sister has had a form of colon cancer. And there’s more.

Three of Holt-Orsted’s cousins have had cancer. Her aunt next door has had cancer. Her aunt across the street has had chemotherapy for a bone disease. Her uncle died of Hodgkin’s disease. Her daughter, 12-year-old Jasmine, has a speech defect.

Why all this in one family? You’re recognizing the pattern, aren’t you? And you’re already suspecting that they lived near a toxic waste site. Well, you’re right – and wrong. It was toxic, alright, but it wasn’t supposed to be. The source of the cancers was a landfill – the County dump.

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Grant access to higher education

WHEN CONGRESS passed the Higher Education Act in 1965 , lawmakers were guided by the principle that no qualified student should have to for go college because of the cost. Shamefully, Congress has lost sight of this fundamental point.

Today, 400,000 qualified students a year don’t attend a four-year college because they can’t afford it. Twenty years ago, the maximum Pell Grant — the lifeline to college for low-income and first-generation students — covered more than half the cost of attendance at a typical four-year public college. Now, it only covers 32 percent. Because of the influence of big lenders, the federal student loan programs are now larded with inappropriate subsidies that benefit banks, but do little for students.

The cost of college has more than tripled over the past 20 years, and most families can’t keep up. Congress must work to fix the federal student aid system. Continue reading

Middle-Aged Bankrupts

Admit We Have a Problem
By BOB HERBERT

I suppose there are people who still believe that enormous tax cuts for the very wealthy will lead to the creation of millions of good jobs for working people. In the twilight of his first term, the president, stumping for votes in regions scarred by the demon of unemployment, continues to sing from the tattered pages of his economic hymnbook:

“The economy is strong,” he says again and again and again, “and it’s growing stronger.”

At a riverfront rally under cloudy skies in Davenport, Iowa, last week, Mr. Bush told a crowd of 5,000, “We are turning the corner and we’re not going back.”

In another four years, he says, “The economy will be better.”

His tax cuts, he insists, couldn’t have been better timed.

The true believers were jolted Friday by the news from the Bureau of Labor Statistics that employers added a meager 32,000 jobs in July. In an economy the size of America’s, that’s roughly equivalent to no jobs at all.


Despite the rosy rhetoric that comes nonstop from the administration, millions upon millions of American families, including many that consider themselves solidly in the middle class, are in deep economic trouble. Friday’s Wall Street Journal featured a page-one article with the ominous headline: “New Group Swells Bankruptcy Court: The Middle-Aged.”Personal bankruptcy filings in the U.S. are at an all-time high. The Journal story focused on “an emerging class of middle-age, white-collar Americans who make the grim odyssey from comfortable circumstances to going broke.” Among the villains of this disturbing piece are the unstable job market and staggering amounts of personal debt.

It’s getting harder and harder to close our eyes to the growing economic devastation. Elizabeth Warren, a Harvard law professor and co-author of “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke,” wrote in 2003:

“This year, more people will end up bankrupt than will suffer a heart attack. More adults will file for bankruptcy than will be diagnosed with cancer. More people will file for bankruptcy than will graduate from college. And, in an era when traditionalists decry the demise of the institution of marriage, Americans will file more petitions for bankruptcy than for divorce.”

The Century Foundation, in a recent study, addressed the problem of outstanding debt. For many families borrowing has morphed from a tool that, used judiciously, can enhance their standard of living into a nightmare that threatens to destroy their economic viability.

“Debt burdens,” the study said, “are at record levels because families have been stretched to the limit in recent years. With more income going to housing and other rising expenses related to medical care, education, vehicles, child care, and so forth, families are relying on credit as a way to meet everyday needs. Remarkably, a family with two earners today actually has less discretionary income, after fixed costs like medical insurance and mortgage payments are accounted for, than did a family with only one breadwinner in the 1970’s.”

There is no plan from the administration that I’ve heard of to brighten this bleak picture of the American economic landscape. John Kerry and John Edwards have an opportunity in the presidential campaign to offer their prescriptions. The first essential step for anyone serious about a search for solutions would be to recognize and acknowledge the sheer enormity of the problem.

Bush let down the little guy

The Atlanta Journal-Constitution
Published on: 07/11/2004

By now, Karl Rove and his minions had expected that improved jobs reports would have boosted the president’s election prospects immeasurably. After all, the stock market is doing just fine and corporate profits are going gangbusters. How come so many workers are still worried?

Well, most workers don’t get to share the bounty of those corporate profits. Even with the popularity of 401(k)s, which are replacing traditional pensions, only about half of all Americans own stock. The average American is still feeling what John Kerry and his running mate, John Edwards, call the “middle-class squeeze.”

Already, jobs growth, which picked up in March, has begun to slow considerably. The report from the month of June showed a disappointing 112,000 new jobs, fewer than necessary to keep pace with population growth. Even more telling is this: When President Bush came into office, 64.4 percent of all American adults were working. That figure has now dropped to 62.3 percent.

For those who are working, hourly wages have declined slightly over the last year after adjusting for inflation. And many of the manufacturing jobs that boosted generations of Americans into the middle-class are probably gone forever — lost to computers and Chinese workers.

Add to that soaring health care costs. Workers are having to pay more of their insurance costs, reducing their take-home pay. Or they are stuck with jobs that provide no health insurance.

As if that were not enough, Alan Greenspan recently raised interest rates and is expected to keep raising them for the next several months. As he does, many average Americans will find it harder to pay off their monthly credit cards bills or get a mortgage. During the recession, they had used those credit cards to keep up their standard of living (and buy the nation out of that recession). Many families now have substantial credit card debt.

Bush is not responsible for the global tidal wave that has swamped U.S. manufacturing or the credit card debt that threatens to bankrupt many families. The president didn’t create an out-of-control health care system or push down hourly wages. But his natural affinity for the wealthy and well-connected has produced policies that are much more in tune with their interests than with those of average working folk.

According to the U.S. Census Bureau, yearly median family income is $51,407. In terms of income distribution, the largest group of American families — nearly 21 percent — earn between $50,000 and $75,000 a year. Nearly 16 percent of families live off incomes between $35,000 and $50,000 annually. That paints a picture of a substantial midsection — nearly 37 percent of families — with incomes between $35,000 and $75,000 a year.

Now take a look at the distribution of the Bush tax cuts. The American families earning between $43,000 and $76,000 have received only a 17 percent share of the tax cuts, according to an analysis by the Urban-Brookings Tax Policy Center. By contrast, the top 1 percent of income-earners has received a 24.2 percent share.

I know, I know. Those wealthy Americans paid more of the taxes, so they deserve more of the tax cut, right? Actually, they got more than they deserved, even by that measure. And they haven’t used their tax cuts to produce substantial numbers of good-paying jobs for Americans. Wealthy investors are concerned only about increasing their profits. If replacing factory workers with robotic arms does that, they gladly install the robotic arms.

Much of the economy is beyond the control of any president. But shoring up the general welfare is not. Bush had a responsibility to expand the social safety net — extend unemployment benefits, create access to health care — for those Americans who are falling further behind, despite their best efforts.

Instead, the president has coddled the wealthy.

Cynthia Tucker is the editorial page editor. Her column appears Sundays and Wednesdays.