Poverty & Wealth

The Weeklies

Flickr/Steve Schroeder
Flickr/Steve Schroeder F rom the outside, it is hard to know that people live in the Ramada Inn. The parking lot is always empty. The hotel sits facing a wide suburban boulevard called Kipling Street, just off Interstate 70 in Wheat Ridge, Colorado. The interchange where Kipling meets the freeway is packed mornings and evenings with daily commuters going to or coming from Denver and with skiers heading west into the Rockies. Hotels dot I-70 as it cuts through the 764-square-mile stretch of suburbia that runs from the city into the mountains, but at the intersection with Kipling is a cluster of seven budget-savers that travel websites warn tourists away from. The hotels advertise low prices—ranging from $36 to $89 a night—on neon signs next to gigantic flags that whip in the Front Range wind. Most offer even lower weekly or monthly rates. The Ramada is farther from the frontage road than the other hotels and is harder to notice, with its plain yellow stucco and dimly lit red sign...

Take Social Security and Medicare Off the Bargaining Table

Flickr/Adam Fagen
P rominent Democrats—including the president and House Minority Leader Nancy Pelosi—are openly suggesting that Medicare be means-tested and Social Security payments be reduced by applying a lower adjustment for inflation. This is even before they’ve started budget negotiations with Republicans—who still refuse to raise taxes on the rich, close tax loopholes the rich depend on (such as hedge-fund and private-equity managers’ “carried interest”), increase capital gains taxes on the wealthy, cap their tax deductions, or tax financial transactions. It’s not the first time Democrats have led with a compromise, but these particular pre-concessions are especially unwise. For over thirty years Republicans have pitted the middle class against the poor, preying on the frustrations and racial biases of average working people who can’t get ahead no matter how hard they try. In the Republican narrative, government takes from the hard-working middle and gives to the undeserving and dependent needy...

Cyprus's Big Bluff

AP Photo/Petros Karadjias
The Cyprus banking crisis presents, in microcosm, everything that is perverse about the European leaders’ response to the continuing financial collapse. And bravo to the Cypriot Parliament for rejecting the EU’s insane demand to condition a bank bailout on a large tax on small depositors. If this crisis threatens to spread to other nations, it’s a good object lesson. Here is the punch line of this column: It's time for Europe’s small nations, who are getting slammed into permanent depression by the arrogance of Berlin and Brussels, to think about abandoning the euro. At least the threat would strengthen their bargaining position, and if they actually quit the euro, the result could hardly be worse than their permanent sentence to debtors’ prison. More on that in a moment. The back story: Cyprus, with just over a million people, is not a poor country. Its per capita GDP is actually above the European Union average. Cyprus has only used the euro since 2008. Once Cyprus was in the...

The Making of the "Other" Chicago

AP Photo/M. Spencer Green
AP Photo/M. Spencer Green A makeshift memorial at the site where 6-month-old girl Jonylah Watkins and her father, a known gang member, were shot on March 11. The girl, who was shot five times, died Tuesday morning. Her father, Jonathan Watkins, remains in serious but stable condition. J anuary was the deadliest month in Chicago in more than a decade. Forty-two people lost their lives on the city’s streets, most of them to gun violence. For 2012, the total number of homicides was 509, of which 443 involved firearms. While most of the shootings could be attributed to gang feuds, innocent people were caught in crossfire that often erupted in broad daylight and on public streets. Hadiya Pendleton’s shooting death, which took place only a week after the 15-year-old honors student performed at the presidential inauguration, is the latest tragedy to reinforce the perception that Chicago is the murder capital of the nation. Pendleton was killed when a gunman opened fire on a group of high-...

Forty Years Behind on Sick-Leave Policy, But Catching Up

AP Photo/Mary Altaffer
AP Photo/Mary Altaffer Emilio Palaguachi, center, speaks at a rally at New York's City Hall to call for a vote on paid-sick-days legislation, which has been held up by I t’s too late for Tonisha Howard , the mother of three in Milwaukee who was fired for leaving work to be with her hospitalized two-year-old. And for Felix Trinidad , who was so afraid of losing his job at Golden Farm fruit store in Brooklyn that he didn’t take time off to go to the doctor—even after he vomited blood. Trinidad, a father of two who had stomach cancer, continued to work until just days before his death at age 34. But for workers in Portland and perhaps Philadelphia, paid sick days just got much closer to becoming reality. Last Wednesday, the city council in Portland, Oregon, voted unanimously for a bill granting most employees up to 40 hours of paid sick leave per year. On Thursday, the Philadelphia City Council passed a similar law—and, with only one vote short of a veto-proof majority, advocates are...

Healing a Broken Catholic Church

Flickr/Doug88888
Because of its sins, the Roman Catholic Church is broken. The capital C in church is important; it signifies the institution, not the faithful. A wise Jesuit, the late Cardinal Avery Dulles, once wrote that the church can be viewed in different ways: as a herald, as a mystical communion, as an institution. It is the institution I am talking about. The Catholic Church is my church, and what it has done saddens me. The institution has protected pedophile priests. It has lifted the excommunication of bishops in an ultra-conservative society that seeks to undo the reforms of the Second Vatican Council. One of the bishops is a Holocaust denier. Members of the Roman Curia, the governing body of the institution, have engaged in corruption, intrigue, and struggles for personal power that would shame Machiavelli. At the same time, the Vatican Bank has failed to meet Council of Europe standards on fighting financial crimes, including money laundering and tax evasion. If that weren’t enough, the...

Why We Still Need Section 5

AP Photo/Harold Valentine
With the Supreme Court expected to strike down a key piece of the Voting Rights Act later this year, now is a crucial moment for discussing Section 5's inarguable successes both in terms of civil rights and in improving the economic lives of Southern blacks. Gavin Wright, a professor of American economic history at Stanford, has spent his career studying the economics of slavery, segregation, and the historical Southern economy. His recent book, Sharing the Prize , documents the economic impact that the civil rights acts of the mid-1960s had on Southerners, black and white. Presentations of Wright’s work are available here and here , and a summary of his writings can be found here . While his book has some technical arguments, Wright’s ideas can be easily understood as a chronicle of the often overlooked economic consequences of the struggle for civil rights. It’s difficult not to look at the large wealth and income disparities between blacks and whites today and conclude that the...

When Public Is Better

Flickr/Mirsasha
L ong before we thought of founding The American Prospect in 1989, I came to know Paul Starr through a prescient article titled “Passive Intervention.” The piece was published in 1979, in a now-defunct journal, Working Papers for a New Society . As Paul and his co-author, Gøsta Esping-Andersen, observed, the American welfare state is built on terrible, even disabling compromises. Progressives often lack the votes to pass legislation to deliver public benefits directly. So they either create tax incentives or bribe the private sector to do the job, thus inflating a bloated system. “The problem is not too much government activism,” they wrote, “but too much passivity.” Their two emblematic examples were housing and health care. In housing, tax advantages became an inflation hedge for the affluent and drove up prices. Low-income homeownership programs, run through the private sector, had huge default rates. In health care, the political compromises necessary to enact Medicare excluded...

Bull Market for Stocks, Bear Market for Workers

Flickr/Michael Aston
Today the Dow Jones Industrial Average rose above 14,270 — completely erasing its 54 percent loss between 2007 and 2009. The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then. Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains sky-high. Why is the stock market doing so well, while most Americans are doing so poorly? Four reasons: First, productivity gains. Corporations have been investing in technology rather than their workers. They get tax credits and deductions for such investments; they get no such tax benefits for improving the skills of their employees. As a result, corporations can now do more with fewer people on their payrolls. That means higher profits. Second, high unemployment itself. Joblessness all but eliminates the bargaining power of most workers—allowing corporations to keep wages low. Public policies that might otherwise reduce unemployment—a new WPA or CCC to hire the...

How to Survive a Miracle

A World AIDS Day display in Mississippi on Dec. 1, 2009. (AP Photo/MSU, Kenny Billings)
This week, a baby from Mississippi was “functionally cured” of HIV after doctors treated her aggressively from the time of her birth with anti-retroviral medications. It's the first time a patient’s system has been cleared of the disease with a regular HIV treatment regimen designed to disrupt the ability of the virus to replicate itself. It opens the door for new research that could, theoretically, lead to a cure for AIDS. But while the breakthrough illustrates how far we’ve come in treating the virus since it was first identified three decades ago, it's also a stark reminder of how little progress we’ve made in fighting the spread of the disease. In the dark days of the 1980s, AIDS patients often found themselves turned away from emergency rooms by fearful hospital administrators, and politicians debated putting HIV-positive people into permanent quarantine. The Oscar-nominated documentary “ How to Survive a Plague ,” which has recently been optioned by ABC for a mini-series, shows...

Sequestration Nation and Remembering Robert Kennedy

Flickr/Kemon01
With the sequester now beginning, I find myself thinking about Robert F. Kennedy—and 46 years ago when I was an intern in his Senate office. 1967 was a difficult time for the nation. America was deeply split over civil rights and the Vietnam War. Many of our cities were burning. The war was escalating. But RFK was upbeat. He was also busy and intense—drafting legislation, lining up votes, speaking to the poor, inspiring the young. I was awed by his energy and optimism, and his overriding passion for social justice and the public good. (Within a few months he’d declare his intention to run for president. Within a year he’d be dead.) The nation is once again polarized, but I don’t hear our politicians talking about social justice or the public good. They’re talking instead about the budget deficit and sequestration. At bottom, though, the issue is still social justice. The austerity economics on which we’ve embarked is a cruel hoax—cruel because it hurts those who are already hurt the...

The Maximum Impact of the Minimum Wage

AP Photo/Mike Groll
Cristina Romer, Berkeley economics professor and the former head of President Obama’s Council of Economic Advisers, passed judgment on the merits of raising the minimum wage in Saturday’s New York Times , and in the process made clear why she wasn’t a member of the president’s de facto council of political advisers. She argued, as some mainstream economists do, that the merits of a heightened minimum wage were slight—that it may, for instance, raise prices, offsetting the gain to low-wage workers. The better solution, she argues, is to raise the earned income tax credit (EITC)—the government’s payment to the working poor—and to support universal pre-K education. “Why settle for half-measures,” she concludes (by which she means raising the minimum wage), “when such truly first-rate policies [by which she means the EITC and pre-K schooling] are well understood and ready to go?” Ready to go? Congressional Republicans are rarin’ to increase government spending on the working poor and...

The Titanic Wealth Gap Between Blacks and Whites

Brandeis University
The gap between black and white wealth is nothing new. Researchers have studied it for decades, people have lived it for longer, and comedians—from Chris Rock to Dave Chappelle—have used it to craft biting humor. What's novel is the extent to which its has exploded over the last 25 years. According to a recent study from the Institute on Assets and Social Policy at Brandeis University, in which researchers followed 1,700 working-age households from 1984 to 2009, "the total wealth gap between white and African-American families" has nearly tripled, "increasing from $85,000 in 1984 to $236,500 in 2009." And more than 25 percent of the gap is attributable to homeownership and other policies associated with housing. Indeed, the disproportionate influence of housing on black wealth is reflected in this staggering statistic: "Overall, half the collective wealth of African-American families was stripped away during the Great Recession." It's fitting Brandeis released this report during a...

The Five Most Terrifying Things about the Sequester

AP Photo/J. Scott Applewhite
The latest fiscal showdown concerns the “sequester”—across the board cuts to (almost entirely) discretionary spending that will total just over $1 trillion in the next decade, and which are set to take effect on March 1. What should those who have better things to do with their life than follow fiscal policy debates know about the sequester? 1. The sequester will hurt job-growth As we pointed out during the debates raging in the run-up to the “fiscal cliff," the sequester was the second-most damaging component of the austerity bundle set to take effect on January 1, 2013. The worst component was the non-renewal of the payroll tax cut, which is already dragging substantially on the economy . All told, if the sequester kicks in the economy will likely end the year with roughly 500-600,000 fewer jobs than if it were repealed. These are jobs the economy desperately needs . To be clear, the sequester alone won’t drive the U.S. economy back into outright recession, but it surely will make...

Trading The Blame Game for The Bully Pulpit

Flickr/Neon Tommy
The White House apparently believes the best way to strengthen its hand in the upcoming “sequester” showdown with Republicans is to tell Americans how awful the spending cuts will be and blame Republicans for them. It won’t work. These tactical messages are getting in the way of the larger truth, which the president must hammer home: The Republicans’ austerity and trickle-down economics are dangerous, bald-faced lies. Yes, the pending spending cuts will hurt. But even if some Americans begin to feel the pain when the cuts go into effect Friday, most won’t feel it for weeks or months, if ever. Half are cuts in the military, which will have a huge impact on jobs (the military is America’s only major jobs program), but the cuts will be felt mainly in states with large numbers of military contractors, and then only as those contractors shed employees. The other half are cuts in domestic discretionary spending, which will largely affect lower-income Americans. There will be sharp...

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