Tuesday, December 27, 2011

Toil and Trouble

(AP) WASHINGTON - Squeezed by rising living costs, a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.

The latest census data depict a middle class that's shrinking as unemployment stays high and the government's safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.

"Safety net programs such as food stamps and tax credits kept poverty from rising even higher in 2010, but for many low-income families with work-related and medical expenses, they are considered too `rich' to qualify," said Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty.

That's half of all Americans. That's stunning... and probably explains why inflation stays low despite the massive expansion of the US monetary base (the Fed printing money). I'm sure it includes retired people that live on fixed incomes, and may be skewed by the baby boomers. A more useful measure would be the shift of Americans into that category over time.

Of course, the way the "safety net" programs are setup, it encourages people on the margin to stop working to qualify. Much of the increase in US debt is due to those programs, which are obviously vital. It seems to me that it should scale better to relatively higher incomes... and ya, changing the tax rates back to what they were during the Clinton administration, or even the Reagan administration, would help.

Half of all Americans are low income or worse. Unbelievable.

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