The Essay

Are We Being Played?
My friends and I continually marveled at how, during the Clinton era, we were supposed to be in the midst of a great economy. In the town I grew up in, the only influx of jobs we saw were the ones at the new mall. Despite our college degrees, the great economy left us un-phased. The shiny reports we kept hearing about the economy made us wonder why we were all barely surviving working two jobs.

Part of this, as it turns out, had to do with statistics. Nearly half of all poor American families lie above the official poverty line, according to John E. Schwarz, writing for the Atlantic Monthly. The reason for this is based on faulty statistics. The poverty line was intended as a barometer of the amount of money a family required to meet basic necessities. In 1955, the first year the poverty line calculations were made, the government based its figures on the amount of money a family would need to spend for food. Back then, the average family spent one third of its budget on food, whereas poorer families spent nearly half of their income on food. Statisticians then tripled that figure and then made adjustments to the poverty line based on inflation. The problem, however, as Schwarz argues, is that if we “reformulate the poverty line in the same way it was originally intended. . .the poverty line in 1994 should have been about $26,000—not $15,100.” Neither does the poverty line account for skyrocketing costs of housing ourselves (a particularly crushing expense in metropolitan America), nor does it account for the costs of childcare and transportation. Instead of measuring our basic needs, the poverty line currently measures only the economics for those living in utter penury.

No wonder we all puzzled at our poverty during the great economy. Now that the effects of a bad economy are making themselves felt across a wider demographic of America, those of us who were poor during the Clinton years have a bitter sense of vindication.

As reported here last week, Americans are becoming shorter, fatter and poorer. The correlation between the three may not be as preposterous as it first sounds. Too frazzled and overworked to cook, many of us exist on cheap “fast” food diets that may well account for the number of overweight Americans; while our shrinking height appears to some scientists to be the result of poor prenatal and early childhood diet.

Also reported last week: 63 percent of American corporations paid no taxes between 1996 and 2000, and that number is on the rise. Somewhat surprisingly, even Warren Buffet concurred that this tax situation was outrageous. “Tax breaks for corporations were a major part of the administrations’ 2002 and 2003 initiatives,” Buffet said. “If class warfare is being waged in America, my class is clearly winning.” The Guardian reports that while Enron reported profits of $2.3 billion on Wall Street, they reported a loss of $3 billion to the IRS. Any average American who so clearly violated the tax laws would be imprisoned. According to The Nation, under Bush’s administration, the IRS has preformed fewer corporate audits and prosecuted fewer corporate tax evaders than ever before.

Often these corporations (which, it should hardly need saying, have enormous bi-partisan influence) are the same ones that meet their bottom-dollar profit margin by downsizing employees, by moving to Mexico or setting up offshore headquarters and by cutting employee benefits. Observant 3N readers will remember that Costco stockholders recently were in a furor because employee benefits were cutting into their profit margin. Thankfully, Costco refused to cave.

Meanwhile, the average working class or middle class family is shouldering an enormous tax burden. And for the nation’s poorest families, Bush has proposed an increase in the hours worked by welfare recipients at the same time he has proposed freezing any child care assistance for the next five years. According to TomPaine.com “the president is raiding poverty programs for children and using that money to help pay for tax benefits for those who are at the very top of the income scale.”

Congress has refused to even vote on an increase in the minimum wage ($5.15 an hour, the rate established in 1997) and, as for those jobs which the Bush administration claims to have created, those are paying an average of $8,000 less, according to a speech recently made by Senator Edward Kennedy.

We have Right-to-Work states (yes, right to work for peanuts, right to work without health coverage, without labor insurance, without a break for as many hours as your employer sees fit) that have virtually stripped the worker of any and all rights. In short, we are living in one of the most worker-hostile environments since the days of the Triangle Shirtwaist Factory.

And, as if all this isn’t enough, Federal Reserve chairman Alan Greenspan has recently suggested that the American government is too over-committed to provide Americans with social security. “You don’t have the resources to do it all,” Greenspan said. Do it all? Social Security accounts for 4 percent of the yearly budget—hardly a staggering figure and, given that the trust fund for social security, according to The Nation, will have a surplus of $1.8 trillion next year. Sure, the government has borrowed on this amount, but they are legally obliged to pay back the money, in the same manner that they are required to back government bonds.

The scandal (and, to some extent, the lie of government) is that if government were to tax the rich and corporations as it taxes the middle classes, we’d have money for all the social programs. We could bear witness to the fruits of our labors and improve the quality of life for children, the disabled, the elderly, for single families. We could provide health care at no cost to the uninsured—in short, we could go a long way to improving the quality of life for all Americans.

One of the problems, however, is that we give credence to the lie of the trickle down theory (it’s trickling, all right). The economic justification behind this notion is that if the tax rate is cut for corporations and the wealthy, they will invest more money in the economy and this, in turn, will create more jobs. But there are basically two economic theories: supply-side and starve-the-beast. Supply side argues that you can make tax cuts without affecting public spending, while starve-the-beast (a term coined by Reagan’s budget director David Stockman) advocates that tax cuts should be made precisely to force cuts in public spending. “The starve-the-beast doctrine is now firmly within the conservative mainstream,” said Paul Krugman, writing for The New York Times Magazine. “George W. Bush himself seemed to endorse the doctrine as the budget surplus evaporated: in August 2001 he called the disappearing surplus 'incredibly positive news' because it would put Congress in a 'fiscal straitjacket.’''

What makes this theory even creepier is that its proponents find all New Deal legislation, which includes social security, as the beast that must be starved. The goal of the “beasters” is to starve government of all public responsibilities. That’s great news for corporations and the 5 percent wealthiest Americans. But where exactly does it leave the rest of us? Krugman argues that by placing an excessive tax burden on the middle class and thereby enraging them, they will consent to the breaking of public programs.

Sound like we’re being played to you? --A.M. McNary