The Failure of American Capitalism: Forty-four million Living in Poverty in the US

Published on Global, by Patrick Martin, September 18, 2010.

Firsts my comment:

  • in any way it’s never an only President who can change any situation, it’s the million of this people having still not learned to join unite and change a system. This system can do nothing against millions of people, so why this million is waiting for one man’s Presidential acts?
  • Joining Uniting to decide together and act directly on the system means begin to move yourselves? You still not get that Obama needs YOU to change this system? You are still waiting for Daddy Obama instead of moving youself your a… NOW.
  • Do not just wait for the next election, as then you will loose all?

The number of people living in poverty in America rose to 43.6 million in 2009, the US Census Bureau reported Thursday. This is the largest number since the agency began making such estimates 50 years ago and represents an increase of 3.8 million compared to 2008 … // 

… Equally significant is the large number of Americans just barely above the official poverty line, subsisting on incomes that are completely inadequate for a decent life. Extended unemployment benefits, for example, kept 3 million families above the poverty line last year. These benefits were allowed to expire three times this year already, and are likely to end completely after the November election, plunging millions of working people into destitution.

Commenting on the poverty figures, Isabel Sawhill of the Brookings Institution, a liberal think tank, noted, “This adds 6.3 million new people to the ranks of the poor since 2007, before the recession began. The problem will get much worse long before it gets better.”

Sawhill added that her research suggested the recession would add 10 million people to the poverty rolls, including 6 million children, by the middle of this decade.

There is ample reason to believe that the actual poverty level is far higher than that reported by the Census Bureau. The official poverty threshold is set ridiculously low, at an annual income of $22,050 for a family of four or $10,830 for a single adult. It is not adjusted for geographical location, and accordingly greatly understates the poverty level in high-cost areas like New York City, Boston, Washington DC and California.

The census survey excludes significant sections of the population: more than 2 million prisoners, elderly people living in nursing homes and long-term-care hospitals, and students living in college dormitories. Many if not most of these would be classified as poor if they were not living in institutional settings.

The poverty line is also grossly out of date, since it is based on a 50-year-old formula derived from a period when food was the single largest expense in family budgets, most women did not work outside the home, most young people did not attend college, and the typical family had only one car. It therefore understates the impact of rising costs for health care, education, child care, transportation and other necessities.

In addition, as the census report noted, there has been a large increase in the number of individuals and families doubling up, mainly for economic reasons. Combining several families or unrelated individuals into a single household has the effect of reducing the official poverty rate, which is calculated on a household basis.

“If the poverty status of related subfamilies were determined by only their own income, their poverty rate would be 44.2 percent,” David Johnson, chief of the Housing and Household Economic Statistics Division at the US Census Bureau, told the Wall Street Journal. “When their poverty status is determined based on the resources of all related household members, it is about 17 percent.”

The number of multifamily households increased by 11.6 percent from 2008 to 2010, and the proportion of adults 25-34 living with their parents rose from 12.7 percent in 2008 to 13.4 percent in 2010. The poverty rate for these young adults was 8.5 percent when they were considered part of their parents’ household, but would have been 43 percent if they had been living on their own.

The poverty figures demonstrate both the bankruptcy of American capitalism and the failure of the Obama administration. The White House greeted them with a perfunctory nod.

Obama issued a five-paragraph statement conceding that the census data “illustrates just how tough 2009 was,” while boasting that the stimulus bill adopted early last year had prevented an even worse situation from developing.

“A historic recession does not have to translate into historic increases in family economic insecurity,” he argued. “Because of the Recovery Act and many other programs providing tax relief and income support to a majority of working families—and especially those most in need—millions of Americans were kept out of poverty last year.”

“It could have been worse” is the only argument the Obama administration can make heading into the fall election campaign, but it is doubtful that the millions of workers who have lost their jobs, health insurance and homes over the past two years draw any comfort from it … (full text).

More articles:

Trapped in the Spiral of Basel III: Tightening the Noose on Credit Spells Disaster, Punishing Your Local Bank for Wall Street’s Misdeeds, by Dr. Ellen Brown, Sept. 18, 2010.

Asia and the Financial Crisis: Asset Price Bubbles and Capital Controls, by Kavaljit Singh, Sept. 18, 2010.

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