Happy Days Are Here Again?

At 55, I watch the stock market more than I used to.  Oh, not its daily ups and downs, which are like my cats chasing each other around the house: something spooks them and off they go.  But I have a graph in the back of my mind. I'm aware that my hopes of a retirement with Rona partly depend on the value of our retirement accounts.  When the line is going down, as it did in the Great Recession, we have to exercise patience.  When it's going up, we get to wonder how two children of working-class parents can grow up to be secure, even at a modest level.

That's why I take personally the question that James Surowiecki raised in a recent article in The New Yorker: "Boom or Bubble?"  The stock market has been going up, even though employment, housing, and income equality have lagged behind.  Is this really sustainable? 

The answer I get from reading the article is: unfortunately, yes.

The value of stock is based on the triumph of corporate power.  The last time what we now call "the 99%" could consistently force the wealthy to share the wealth we all created was when I was a teenager.  Since then:

• Corporate tax rates have fallen dramatically (and so have the rates that rich people pay as individuals).  
• Corporations have gone global. A study of "American" corporations that Surowiecki cites found "they got forty-six per cent of their earnings from abroad."
• Partly as a result, corporations have broken the power of unions and forced wages down.  (Retirement benefits, too.  If we had pensions instead of 401ks and IRAs, stocks would be lower, and we wouldn't care.)

And one more thing that Surowiecki doesn't mention but his colleague Elizabeth Kolbert makes clear: raping the planet is good for profits.  If the companies that our financial advisor has invested us in were to pay the full environmental cost of just the energy they use, then they--and we--would have far fewer dollars in our accounts.  But that is just what I would like to see.

I would like to see fewer new products and more days when the air is clear.  I would like to see lower profits and more social benefits.  We and the vast majority of other Americans would lead happier lives if corporate taxes went up instead of the stock market--and we used that tax money to pay for universal health care and a more generous retirement benefit for all.  No boom, no bubble, just lives of useful work and pleasurable leisure with friends, followed by an old age not hampered by concerns about my investments, your children's future, the fate of our earth.

What "Means Testing" Means for Average Americans

Usually, giving more to people who have less already is considered a progressive idea.  But according to today's Boston Globe:

1. Romney wants to give fewer Social Security and Medicare dollars to higher-income people.
2. Obama wants to keep  the benefits the same but make higher-income people pay more for them up front, in taxes.
3. Many progressives don't want to see either!  How can this be?

 "Means testing"--basing our eligibility for benefits on our income or wealth--is a great idea in the abstract.  Why give either millionaire who's running for President any benefits that they don't really need, for instance?  We could certainly find other uses for the money.

Historically, though, Social Security and Medicare were popular precisely because everyone paid in and everyone took out.  These "social insurance" programs look more like cooperative saving for the future than like handouts, and that's made them politically strong.  When Tea Party types hold signs that say, "Keep your government hands off my Social Security," they are terribly confused (since Social Security IS a government program)--but at the same time, they are showing how powerful the appeal of universal programs can be.

Means testing Social Security and Medicare would make them look more like programs for the poor, including food stamps, Medicaid, and TANF.  Now, I am all in favor of these programs, but many Americans are not.  So, means testing the programs would deprive them of political support.  That's why many progressives will fight to keep them universal--even if that means an older Mitt Romney and Barack Obama will be entitled to Medicare.

An Anti-Poverty Platform

Strategy 2: An Anti-Poverty Platform

Yesterday, I explained why all the work that agencies like the one I work for aren't enough to get everyone out of poverty and to a state of self-sufficiency. There just aren't enough well-paying jobs to go around, even with a whole lot of public benefits to reduce a family's need for cash. At minimum wage, a family would have to work 3-1/2 full-time jobs to reach self-sufficiency in Somerville. That's hard to do, with one or two adults.

People like me do our best at the family and city levels. What we need, though, are social and national changes. My boss, Jack Hamilton, has written that three policies would go a long way toward ending poverty:

1. A comprehensive, single-payer, universal plan for health coverage for all Americans;

2. A progressive reform of the tax system; and

3. An increase in the minimum wage, and the indexing of it to inflation.

Of course McCain is not in favor of any of the three policies. But neither is Obama. Yet. And he won't be, unless we can mobilize enough people to say long enough, loud enough, often enough, "Pass these policies or else!" In other words, we need more than self-sufficiency AND we need more than policy change. To achieve either of them, we need a social movement.

More about that tomorrow.

Up from Poverty?

When Lyndon Johnson called for a War on Poverty, what he really meant was an all-out effort to eliminate it. But poverty is not an enemy. It's more like a neighborhood. You can't demolish it through head-on assault. You end up destroying the people who live there in the process.

For the next three days, we will discuss three strategies for rebuilding America so poverty isn't a part of the architecture any more.

Strategy 1: Family Economic Self-Sufficiency.

The amount of money that it takes to "escape poverty" according to the federal definition of poverty is so small, you wonder why so many are poor. The feds say that a family of three (typically a mother and her two children) are out of poverty if she earns more than $17,600 (roughly $8.75/hour for a full-time worker). Surely that's possible?

Possible, but unlikely. Consider. The federal minimum wage is $6.55/hour. The Massachusetts minimum wage, which is essentially tied for the highest in the country, is $8/hour. Neither one of these is as high as the poverty threshold. A minimum-wage worker can work full-time all year round and still not make nearly enough to get her family out of poverty. (And of course, many people work seasonally, or part-time. They have to try to survive on even less.)

Before we get people out of poverty, we need to get them up to poverty!

But is the poverty threshold really enough to live on? Actually, no. Family economic self-sufficiency (FESS) means earning a lot more than the federal poverty level, depending on the ages and needs of your family members and the cost of living where you are. The Crittenton Women's Union in Boston has provided us with an online "self-sufficiency calculator" so we can figure out the FESS level for any city in Massachusetts. For my home city of Somerville, for instance, what would it cost that three-person family to live?

Just for housing, child care, food, transportation, and health care expenses, plus a small amount of miscellaneous necessities, a Somerville resident with two children has to earn somewhere between $36,761 (if both her children are teens) to $95,284 (if both children are infants). That's at least $17.41/hour, and as much as $45.12/hour.

Go and look through the want ads. Ask around at Human Resource offices. How many job openings are there for jobs that pay that much? There aren't enough to raise the one out of eight families that live in poverty up to the self-sufficiency level. And that level is bare bones. It doesn't allow savings for college, or even for a rainy day.

That's why:

1. We need to help people get the education and training to qualify for the high-paying jobs that exist.
2. We need to make sure people get all the public benefits they're entitled to, from food stamps to subsidized housing, so their need for income drops.
3. Even if we do all that, it will not be enough. Family economic self-sufficiency is a strategy for building up one family at a time. We need a strategy for developing a society without poverty.

More on that tomorrow!