Economy

Our path to third world nation status continues:

The number of Americans living in poverty reached a record 49.1 million in 2010, according to a new broader measure of poverty released by the U.S. Census Bureau on Monday.

That figure contrasts with an official poverty measure released in September that said there were 46.2 million poor people in the United States.

The new measure is designed to provide a fuller picture of poverty by including the government benefits poor people receive and the expenses they pay. The official benchmark focuses more narrowly on cash wages.

That's almost 1 in 5 Americans and there seems to be no end in site with this from Pew Research:

Older adults have made dramatic gains relative to younger adults in their economic well being during the past quarter century, according to a new Pew Research Center analysis of data from two key U.S. Census sources.

Trends in household wealth reveal the pattern most vividly. In 2009, the median net worth (all assets minus all debts) of households headed by an adult ages 65 or older was 42% more than that of their same-aged counterparts in 1984. By contrast, the net worth of a typical household headed by an adult under the age of 35 in 2009 was 68% less than that of their same-aged counterparts in 1984.

Want to know what the outrage is about? Look no further than this:

Fifty percent of U.S. workers earned less than $26,364 last year, and those earning less than $200,000 per year - roughly 99 percent of Americans - saw their earnings fall a collective $4.5 billion.

There were fewer jobs, and overall pay was trending down -- except for the nation's wealthiest, who saw a boost.

While the incomes of the top 1percent of the country rose slightly in 2010 (from $1,909,874 in 2009 to $2,196,124 last year), their collective wage earnings rose dramatically, by about $120 billion.

Those earning at least $1 million a year (93,725 of Americans) reported payroll income totaling $224 billion - a rise of 22 percent above 2009.

And during this time American corporations have seen record profits and not been putting that money back into the economy. And how does the right (and some on the left) respond to this? They want to further decrease the tax burden of this 1% and shift that burden to the 99% who are struggling and watching their wages go down.

Class warfare? Hell yeah there’s a class warfare going on, but it’s not the one Eric Cantor wants you to think – it’s the exact opposite! The top 1% of this country is bilking the middle class for everything they got and the people are finally fed up with it. I just wish the rest of the country would wake up and stop listening to people like Rush Limbaugh (sitting comfortably in that 1%) and instead look at the facts. Limbaugh isn’t looking out for your interests or the interests of the country, he’s looking out for his own!

My heart weeps for this poor fellow:

Rep. John Fleming (R-LA) appeared on MSNBC with Chris Jansing this morning to attack President Obama’s new deficit reduction plan, which includes some tax increases on the wealthy. Taking up the typical GOP talking point, Fleming said raising taxes on wealthy “job creators” is a terrible idea that kills jobs because many of these people are small business owners who pay taxes through personal income rates.

Fleming is himself a businesses owner, so Jansing asked, “If you have to pay more in taxes, you would get rid of some of those employees?” Fleming responded by saying that while his businesses made $6.3 million last year, after you “pay 500 employees, you pay rent, you pay equipment, and food,” his profits “a mere fraction of that” — “by the time I feed my family, I have maybe $400,000 left over.

We should tax the middle and lower class more, take away healthcare for poor children, close schools and dismantle government just so this man from the party of the “common man”, the Tea Party can survive. 

Welcome to the sick and twisted views of America’s Tea Party. They champion people who complain about living on only $400k a year, yet insult those who only make $20,000 all while saying they believe in Jesus. The Tea Party isn’t a “party” – it’s a god damn mental illness!

Bob Cesca has posted the following chart, showing how the share of income labor sees is at a historic low:

What's interesting is how much the share dipped during the Bush years. During Clinton's term, the rate was on the rise, after a substantial fall during the Reagan and Bush 41 years.

So what does all that mean? Trickle down works!

Of course the trickle down I'm talking about isn't the one Republicans push. Instead it's one that see's the wealth of America rapidly decrease as the money trickles down to the mass population.

And speaking of Republican economics, this highlights another problem. Look again at the big dip in the Bush years. Republicans constantly told us how bigger tax cuts to corporate America would mean more jobs and better wages. Care to re-think that position?

In a world of supply side economics, the equating factor is simple - if the people have more money then they will buy more goods. Instead Republicans want you to think that if the big corporations have more money, they'll hire more people and put out more goods, even if those goods won't sell. It's that kind of thinking that will keep us in a recession and cause our middle class to keep declining. It's that kind of thinking that the media and right wing has pushed for years and so many Americans now buy into it, despite the historic numbers showing something totally different.

It certainly isn’t if you have CEO behind your name and you work for a big corporation:

Compensation received by chief executives of the biggest US companies surged 11 percent over the past 12 months -- to $9.3 million on average, The Wall Street Journal reported.

Citing a study conducted for the newspaper by management consultancy Hay Group, The Journal said the increase was largely due to decisions by company boards to reward CEOs for strong profit and share-price growth with bigger bonuses and stock grants.

The survey covered the 350 biggest companies that filed their statement between May 1, 2010, and April 30, 2011.

So while middle America is struggling, the fat cats are still raking it in. Really – why shouldn’t they? Employment works much like the economy, based on supply and demand. Right now we have an over abundance of workers (supply), so they can hire people for less than normal wages. A lot of companies are even getting rid of the higher paid employees just to bring in lower paid ones. Is it right for this to occur? Nope, but it is what happens.

Of course there is also a real bad side to this. Income disparity will be even greater. Our middle class is being pushed into non-existence and our standing as the industrialized nation with the highest rate of income disparity will remain in tact. Also this increase will point to a growing payroll in America, which is only the case for about 1% of the working population. For the other 99% payroll has either remained flat or sunk, which the cost of living has continued to rise.

The nation’s largest private employer is seeing troubling times:

Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

"We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

If this goes on, Wal-Mart could be faced with either cutting hours and laying off employees. That too will add to our economic doom and gloom. It’s just a shame that our leaders in Washington, on both sides of the aisle, are to worried about petty crap and not focused on jobs or rising costs.

Yesterday, while speaking at a college in Virginia, President Obama laid the blame of high oil prices at the feet of speculators:

Obama said that global oil supply is adequate and that speculators are driving up prices significantly.

"It is true that a lot of what's driving oil prices up right now is not the lack of supply. There's enough supply. There's enough oil out there for world demand," Obama said.

"The problem is ... speculators and people make various bets, and they say, you know what, we think that maybe there's a 20 percent chance that something might happen in the Middle East that might disrupt oil supply, so we're going to bet that oil is going to go up real high. And that spikes up prices significantly."

Obama's comments echoed those of members of the Organization of the Petroleum Exporting Countries, which insists that markets are well supplied and that speculation drove oil to $127 a barrel for Brent crude and $113 a barrel for U.S. crude earlier this month.

Saudi Arabia said earlier this week that markets were actually oversupplied, forcing it to cut production by 800,000 barrels per day in March to counter slowing demand -- a strong signal the cartel would not act to quell soaring prices.

In an interview with ABC, President Obama gave his views of opening the U.S. oil reserves to combat high oil prices:

"We are monitoring the situation very closely. The strategic petroleum reserve was designed for when oil actually shuts off," Obama told ABC.

"The reserves, I think, are something that we've got to be very careful about. And what we don't want to do is catch ourselves in a situation, particularly when things are uncertain in the Middle East, where we're using it now and it turns out we need more later."

While I shed a tear every time I fill up, I have to agree with the President on this. The oil reserves aren’t a silver bullet to high prices. Once the reserves are gone, they have to be refilled. What if prices are even higher then? Well that’s more we have to pay out to the reserves.

Another, very plausible scenario is the instability in the Middle East right now. We are talking about a region that 100 or 1,000 year uprisings are not uncommon. If we opened up the reserves now, we don’t know what might happen tomorrow or next year. We could see some major uprising or war that shuts off a big chunk of the supply. With depleted reserves, we would be stuck with even higher prices.

Sadly there isn’t a simple solution to the current oil prices. Some say we should start drilling here, but even if we started today, we wouldn’t see anything pumping out for at least 10 years.