Half of Americans Are in or Near Poverty While the US Government Lost Nearly $1 Trillion In FY2017
October 18, 2017
Paul Buchheit / Nation of Change & Tyler Durden & Simon Black / ZeroHedge
In the past 20 years median household expenses increased by 25 to 30 percent, while wages stagnated. As a result, 3 out of 5 Americans spend more than they earn, not on frivolous extras, but on essential needs. People are working longer for decreasing wages and benefits. There are a handful of countries in the world today -- places like Greece -- which are so bankrupt they cannot even afford to pay for basic public services. But the country that has the most unsustainable public finances, by far, is the US.
Yes, Half of Americans Are in or Near Poverty: Here's More Evidence
Paul Buchheit / Nation of Change
(October 16, 2017) -- "Fact checker" Ballotpedia said that presidential candidate Jill Stein's claim that "one in two Americans remain in or near poverty" was "untrue according to most conventional measures and definitions of near poverty."
But a responsible fact-checker should know that an issue of this magnitude demands more than a cursory look at "conventional measures" of poverty.
Furthermore, Ballotpedia may have been engaging in fake-fact checking. The service is run by the Lucy Burns Institute, a right-wing Koch–funded organization that has every incentive to avoid popular resistance by convincing Americans that they're not really poor.
The definitions of poverty are way out of date
The poverty threshold is still based on a formula from the 1960s, when food expenses were a much greater part of the family budget. It hasn't kept up with other major expenses. Since 1980, food costs have gone up by 100%, housing 250%, health care 500%, and college tuition 1,000%.
The Congressional Research Service (CRS) says, "If the same basic methodology developed in the early 1960s was applied today, the poverty thresholds would be over three times higher than the current thresholds." Three times higher!
The median household income in the U.S. in 2016 was $59,039. The Economic Policy Institute's 2015 Family Budget Calculator determined that the median budget for a two-parent, two-child family is $63,741. As CRS concluded, that's about three times higher than the current poverty threshold.
In 2014, according to Bureau of Labor Statistics data, median household expenses were $36,800, against income of about $54,000. But that includes very little for wealth-building investments, such as short- and long-term savings, college education, and life insurance. After accounting for annual outlays for these essential and/or typical family expenses, the median household in the lower third was $2,300 in debt.
For the middle third of households, which reaches well into the "middle class," only $6,000 remained for wealth-building and other discretionary expenses. That $6,000 dissipates quickly. Says Pew Research: "Because income is measured before taxes, some families will have had even less slack in their budgets than this figure implies."
Expenses Beyond the Essentials:
Getting Higher & Higher
In the past 20 years median household expenses increased by 25 to 30 percent, while wages have stagnated. As a result, 3 out of 5 Americans spend more than they earn, not on frivolous extras, but on essential needs.
Housing, in particular, is crushing Americans. Nearly HALF of renters are cost-burdened, paying 30 or more of their income to their landlords. Renters in the poorest third of American households spend nearly HALF OF THEIR INCOME on housing.
Child care is another essential but overwhelming cost. The median American household in most states would have to spend over 10 percent of its income just to send a 4-year-old to full-time preschool. Children bear the brunt of a breakdown in society. The Center for Children in Poverty confirms that nearly half of our nation's children live "dangerously" close to the poverty line.
Numerous other expenses are conveniently overlooked by the poverty skeptics: taxes; medical emergencies; car repairs; plumbing problems; appliance breakdowns; phone costs; work expenses, especially for members of the gig economy.
As economist Constantin Gurdgiev puts it: "Quite frankly, it is idiotic to assume that gross median income matters to anyone. What matters is after-tax income net of the cost of necessities required to earn that income."
Americans Are Working Hard . . . Just to Survive
People are working more hours for decreasing wages and benefits. A Princeton study concluded that a stunning 94 percent of the nine million new jobs created in the past decade were temporary or contract-based, rather than traditional full-time positions.
It's estimated that over three-quarters of Americans are living paycheck to paycheck, and about half of this group has reported "material hardship" (running out of food [or worrying about running out of food], not being able to afford a place to live or medical treatment, or having utilities turned off).
Worse yet, most people who survive paycheck to paycheck are ill-prepared for the future. Only a third of workers are putting money into a 401(k). The median working-age couple has saved only $5,000 for retirement, and almost 70 percent of Americans have less than $1,000 saved.
The American dream, fading away for half of America
We still have our houses and cars, right? Maybe not. The poorest 50% of American adults had an average net worth (home and financial assets minus debt) of just $7,500 in 2016. A year earlier it was $9,000, but the richest 1% took it away, gaining an average of $1.5 million in that single year.
A revolution has to come. A peaceful revolution, ideally, toward a Guaranteed Income for everyone, paid for by a financial transaction tax and the removal of outlandish tax subsidies for the wealthy. Too many Americans have been cheated out of opportunities to share in our nation's prosperity. Too many remain in poverty, or have fallen into poverty, or are beginning to experience its frightening symptoms.
The US Government Lost Nearly $1 Trillion In FY2017 . . . Again!
Tyler Durden & Simon Black / ZeroHedge
(October 6, 2017) -- There was a time, centuries ago, that France was the dominant superpower in the world. They had it all. Overseas colonies. An enormous military. Social welfare programs like public hospitals and beautiful monuments. Most of it was financed by debt.
France, like most superpowers before (and after), felt entitled to overspend as much as they wanted. And their debts started to grow. And grow.
By the eve of the French revolution in 1788, the national debt of France was so large that the government had to spend 50% of tax revenue just to pay interest to its lenders.
Yet despite being in such dire financial straits the French government was still unable to cut spending. All of France's generous social welfare programs, plus its expansive military, were all considered untouchable. So the spending continued. In 1788, in fact, the French government overspent its tax revenue by 20%, increasing the debt even more.
Unsurprisingly revolution came the very next year.
There are presently a handful of countries in the world today in similar financial condition -- places like Greece, which are so bankrupt they cannot even afford to pay for basic public services. But the country that has the most unsustainable public finances, by far, is the United States.
The US government's 'Fiscal Year' runs from October 1st through September 30th. So FY2017 just ended last Friday. During that period, according to the Department of Treasury's financial statements, the US government took in $2.95 trillion in federal tax deposits.
And on top of that, the government generated additional revenue through fees and 'investments', including $62 billion in interest received on student loans, and $16 billion from Department of Justice programs like Civil Asset Forfeiture (where they simply steal property from private citizens).
So in total, government revenue exceeded $3 trillion.
That sounds like an enormous amount of money. And it is. That's more than the combined GDPs of the poorest 130 countries in the world. But the US government managed to spend WAY more than that -- the budget for the last fiscal year was $4.1 trillion.
So to make up the shortfall they added $671 billion to the national debt -- and this number would have been even larger had it not been for the debt ceiling fiasco. Plus they whittled down their cash balance by $194 billion.
So in total, the federal government's cash deficit was $865 billion for the last fiscal year. And, again, that number would have been even worse if not for the debt ceiling that legally froze the national debt in place.
Just like in 2016 (where the cash deficit was $1 trillion), this past fiscal year saw no major recession. No full-scale war. No financial crisis or bank bailout. It was just another year . . . business as usual. And yet they still managed to overspend by nearly $1 trillion, with costs exceeding revenue by more than 20% (just like the French in 1788).
What's going to happen to these numbers when there actually is a major war to fund? Or major recession? Banking crisis?
More importantly, they've been overspending like this for decades without any regard for the long-term consequences. That's why the national debt exceeds $20 trillion today. And including its pension shortfalls, the government estimates its total 'net worth' to be NEGATIVE $65 trillion.
Thousands of people are joining the ranks of Social Security and Medicare recipients each day, pushing up the costs of those programs even more. Yet their Boards of Trustees warn that both Social Security and Medicare are quickly running out of money, raising the specter of a major bailout. Plus there's trillions of dollars more in needed spending to maintain the nation's infrastructure. The list of long-term expenses goes on and on.
The obvious truth is that none of this is sustainable.
From the Roman Empire to the French in 1788, history tells us that the world's dominant superpower almost invariably spends itself into decline, ignoring the consequences along the way. It would be foolish to presume that this time will end up any different . . . especially given that there's zero sign of any changes to the trajectory.
Congress has already put forward a new spending bill for this Fiscal Year -- another 4+ trillion, not including any emergency spending that might arise (like hurricane relief, for example). So we're already looking at another nearly $1 trillion loss for the coming fiscal year, especially given that there's almost no growth to tax revenue.
Don't take this the wrong way -- the sky is definitely not falling. The world isn't coming to an end. And the US isn't going to descend into financial chaos tomorrow morning. But at a certain point, a rational person has to take note of such obvious and overwhelming data, and take some basic steps to reduce your exposure to the consequences.
For example, if your country is objectively insolvent, it probably doesn't make sense to keep 100% of your assets and savings within its jurisdiction . . . . especially if your government has a proud history of Civil Asset Forfeiture, AND you happen to be living in the most litigious society that has ever existed in the history of the world.
It's easy (and incredibly cost effective) to move a portion of your savings to a safe, stable jurisdiction overseas that's out of harm's way. Or to hold physical gold and silver in a safety deposit box overseas. Or even cryptocurrency as an alternative.
This isn't some crazy idea for tin-foil hat-wearing doomsayers. Rational, reasonable, normal have a Plan B. And in light of the circumstances and all the data, it would be truly bizarre to NOT have one. Do you have a Plan B?
Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.