Pay Higher Rent and Get Out of Poverty Quicker

New Orleans      At first this idea may sound really, really stupid.  Ben Carson, the secretary of Housing and Urban Development (HUD) responsible for financing the public housing and housing subsidy vouchers across the country has announced a plan in his words, “to give poor people a way out of poverty.”  His plan to achieve this is to raise the rent required to live in public housing.  His idea is that being forced to pay more rent will somehow force poor families to get out of poverty by making them work harder.  Somehow in his logic, paying more rent, thereby making a poor family poorer, will somehow make them richer.  So, if at first this idea sounds really, really stupid, once you really think about it for even a minute, it is difficult not to conclude that in fact this idea is in fact, really, really, really stupid.

A report from the DC-based research outfit, the Center for Budget and Policy Priorities done for the Associated Press found that in the 100 largest US metropolitan areas, lower income tenants would have to pony up an average of about 20% more for their rent.  This huge bite into lower income and working families’ income would impact four million people and raise revenue for HUD by $3.2 billion once fully implemented.  The Center found that 75% of the increase would be born by working families, the elderly, and the disabled.  I hope your following me closely.  Working families would pay more which would be an obstacle to their security and exiting poverty.  The elderly would pay more with most of them on fixed income facing an increase disproportionate to any inflation adjustment.  You get the picture.  What’s more the Carson Get-Out-of-Poverty-Through-Higher-Rent plan would also eliminate deductions from income calculations that have prevailed in situations where there were high medical bills or child care costs.

Looking at the Center’s state by state chart of families impacted there’s only one thing that one can say about this without any fear of correction:  this is an equal opportunity program since everyone in all states gets screwed.  Let’s just pull a couple out of the pile.  In Arkansas 45,000 families will be affected that include a total of over 89,000 individuals, including children obviously who account for 39,000 of that number, almost half.   13,000 elderly will have to come up with more money and almost 16,000 of the disabled will have to do so as well.  Arkansas isn’t hit as hard as many states.  The average increase will by $670 about $56 per month pushing $30 million collectively.   In Louisiana the average rental increase will be close to $800.  In Mississippi, it will be $830 per year, and on and on it goes.

Can families just save more and work a bit harder as Carson and HUD argue?  The AP reporters note that the increases are “about six times greater than the growth in average hourly earnings, putting poor workers at an increased risk of homelessness because wages haven’t kept pace with housing expenses.”  So, the Carson HUD plan will increase rents in order to increase homelessness.

We now have a HUD and its secretary promoting a pro-poverty plan!  America, what a country!

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The New American Aristocracy

Vancouver    “The Birth of a New American Aristocracy” is not exactly a catchy title for a piece in the current issue of The Atlantic, although it won’t surprise anyone when I say that it certainly caught my eye.  It’s one of those long-winded, multi-page things that about twenty of us around the country might read the whole way through.  Its author, Matthew Stewart, tries to hold peoples’ attention with the story of his great grandfather’s sketchy dealings in the Standard Oil combine and the Teapot Dome scandal in Wyoming, but that probably isn’t enough for many.  Nonetheless, Stewart makes the case that the 9.9%, essentially the upper-class with net worth between $1.2 and $10 million, controlling 60% of American wealth between the top 0.1% and the bottom 30%, despite all that might say to the contrary have effectively reinforced the ceiling on the wealth game to their own benefit, exacerbating inequality perhaps for generations to come, is so compelling that I tore the article out of the magazine as required reading for my next family vacation.

I won’t gild the lily, so here are some factoids from the article that make his points so powerfully.

  • Intergenerational earnings (IGE) which means the likelihood that children will have about the same wealth as their parents’ tracks increases in inequality. The American IGE is higher now than in almost every other developed country.  In terms of economic immobility, the US is closer to Chile and Argentina than to Japan or Germany.  Essentially, this means the upper middle class has consolidated wealth and is passing privilege along to the next generation at the expense of other people’s children.
  • Among college-educated households, the single-parent rate remains less than 10%.
  • Obesity, diabetes, heart disease, kidney and liver diseases are all two to three times more common in individuals who have a family income of less than $35,000 than in those with a family income of over $100,000.
  • In 1985, 54% of students at the 250 most selective colleges came from families in the bottom three quartiles of the income distribution.In the class of 201, that figure is just 33%.  According to a 2017 study, 38 elite colleges – among them five of the Ivy League schools – had more students from the top 1% than from the bottom 60%.
  • Only 2.2% of the nation’s students graduate from nonsectarian private high schools, and yet these graduates account for 26% of the students at Harvard and 28% of the students at Princeton.
  • The poorest 20% of Americans pays more than twice the rate of state taxes as the top 1% does, and about half again what the top 10% pays.
  • According to some economists, real estate alone my account for essentially all of the increase in wealth concentration over the past half century.

Stewart offers no solutions, just an indictment, and not one that he is all that interested in pursuing for himself or his family, but still he has assembled the pieces into a devastating critique, and sometimes he blurts out something that sounds like a call for change and having the 10%, or 9.9% as he calls it, take some responsibility.  For example, he says,

“We tend to overlook the fact that parenting is more expensive and motherhood more hazardous in the United States than in any other developed country, that campaigns against family planning and reproductive rights are an assault on the families of the bottom 90 percent, and that law-and-order politics serves to keep even more of them down.  We prefer to interpret their relative poverty as vice:  Why can’t they get their act together?”

It’s called blaming the victim, and Stewart is warning us that the 9.9% know what they are doing, but they can’t stop themselves, which leaves that task to the rest of us in the 90%.

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