Wednesday, August 31, 2005

Incomes Stagnant

The Census Bureau just released an Income Report indicating that US incomes were stagnant between 2003 and 2004. It also reports "the nation’s official poverty rate rose from 12.5 percent in 2003 to 12.7 percent in 2004."

I was getting ready to say some really nasty things about Bush, until I realized that this report was comparing 2003 and 2004. This time frame is too close to the tax cuts to say if the increase in the poverty rate was due to the tax cuts, or if it was a result from the stock bubble burst and 9/11 trauma.

The BLS has more current data, the BLS shows a steady rise in hourly earnings. It shows a big drop in the number of jobs after the stock market burst ... but with a steady gain in jobs for the last two years. The BLS shows the number of jobs peaking at 132,546,000 in 2/2001. We dipped to a low of 129,827,000 in May 2003. We reached the 2001 level of jobs again February 2005 at 132,873,000.

The BLS Data indicates that the 2004-2005 report might be better. 'course, we won't know the answer to this question for another year.

Regardless, an increase in the poverty rate brings to light the issue of how to organize society so that we minimize the poverty rate. I suspect that this report will surface in quite a few publications demanding more social spending. I tend to lean to the people talking about the ownership society. It seems to me that the best way to decrease poverty is to define policies that increase the base of ownership.

Unfortunately, I am really not sure if Bush had structured his debt fed tax decreases to foster ownership, or if the tax breaks simply favored the rich. Citizens for Tax Justice has some due criticism for Bush's 2003 tax break, and the spending policies.

A regressive tax break funded by a huge build up in debt would end up increasing poverty and further fuel the gap between rich and poor. Mr. Bush, to create an "ownership society" you need to do things which increase ownership. Regressive tax cuts won't hack it.

Unfortunately, I the 2003-2004 report is too close to 2003 tax break to judge the affects of the policy.

2 comments:

Randy L said...

Kevin:

First I'm not really sure what tomorrow holds, however politicians,economists and preachers keep telling me things are going to keep getting better.

My father made three times what I'm making and had no debt. I live three times better have alot of debt and make one third what he made in his prime.

I have degrees and an MBA, but have made so little money that I'm embarrassed to say. It's hard for me to imagine giving more breaks to the rich in taxes and estate taxes, but let's face it, there is little chance the course of events is going to change much without major problems like a depression.

The media can always point to the rest of the world and how great we have it here. The real question is about freedom and whether the rest of America is willing to be at the mercy of the few who truly will control the wealth of the entire nation without policies to redistibute the wealth.

Kevin said...

Politicians usually say the world is getting worse. Or at least the minority parties say that.

The individual debt problem is the single biggest problem of our country. That is why I support medical savings accounts, personal accounts and anything that can help people get out of that debt cycle.

I think the worst thing that happened in the Reagan admin was that Reagan changed education funding from a scholarship scheme to a student loan program. This effectively improverishes our children and throws them into an unending debt cycle.

The debt cycle does two things, it makes people dependent on their jobs, and it concentrates the ownership of industry into a very small number of hands.