Category Archives: Politics

New Census definition of poverty behind the rise of poverty in the US?

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While media outlets have spread the recent news from the Census Bureau that poverty has increased in the United States, some conservatives question whether this is a true change or reflects a change in the measurement of poverty:

The new Census measure suggests that the ranks of the poor – at 49 million – are 3 million larger than previously thought. The increase comes in the new way poverty is measured. The new Census report for the first time includes government subsidies and benefits such as food stamps as a part of household income, but it also factors in rising costs, such as health-care expenses. The result creates a new poverty line and a new view of who in the US is poor.

The new threshold for poverty for family of four, for example, is $24,343, as opposed to $22,113. And the revision reveals greater poverty trends among Asians, Hispanics, whites, and the elderly, and declining poverty for blacks and children, who tend to be greater beneficiaries of food stamps…

Sociologists say the new numbers give greater nuance to the portrait of poverty in the US, highlighting the degree to which government programs are keeping struggling Americans afloat. Critics counter the numbers are engineered precisely to make government assistance appear indispensable and to pave the way for a broader redistribution of American wealth toward the poor…

The Census changes are the first revisions to how the poverty rate is calculated since 1963. Since then, it has been gauged solely by cash income per household. But the new figures give a larger sense of what impact government spending has on poverty, says Timothy Smeeding, an economist at the University of Wisconsin in Madison.

Can’t really say I’m surprised that these figures are politicized. But, then again, the measurement of poverty has been a contentious topic for decades.

Increasing gap in wealth between older and younger generations in America

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It isn’t too surprising that older Americans have more wealth than younger Americans but perhaps the bigger story is that this gap has increased in recent decades:

The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.

The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.

While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.

The median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring wealth broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the analysis by the Pew Research Center.

The analysis in the story suggests that this growing gap is indicative of tougher economic conditions brought about by difficulties in finding a job, the delaying of marriage, growing college debt, and less of an ability to purchase a home when younger.

I wonder how this gap might translate into social or political action. Older Americans are well known for their relatively high voting turnout compared to younger Americans who are more fickle. Would younger Americans vote consistently about down-the-road issues like the national debt, Social Security, and other things they may be several decades from personally experiencing? Is this less consistent voting behavior among younger Americans the reason that there aren’t more safety nets for younger adults? Are Millennials, and not “Walmart Moms,” the next major voting bloc to emerge?

How much of this should raise concern about the economic welfare of younger Americans now or should we be more worried about how this later, rougher start in life will lead to less wealthy Americans (with its impact on American society) decades down the road?

It would be interesting to tie this to information about the demographics of the Occupy Wall Street protests. Media reports have tended to portray many of the protestors as college students or just our of college – how true is this? In public support for the movement, how much is based in the younger ages versus older demographics (who might support the Tea Party more?)?

Claim: 2012 election will be decided by “Walmart Moms”

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Each new election cycle seems to bring about claims about a previously underappreciated demographic group that candidates need to pay attention to. Several pollsters argue that “Walmart Moms” will help decide the 2012 elections:

From the Hill: “Republican pollster Neil Newhouse and Democratic pollster Margie Omero are going shopping at Walmart. For voters. The pair told attendees at a Christian Science Monitor breakfast this morning that a key demographic in 2012 will be a group of voters they call Walmart Moms. The successors to Soccer Moms and Hockey Moms, Walmart Moms are female voters with children 18 or younger who shop at the discount retailer at least once a month. According to Newhouse and Omero, these women make up 14% of the electorate.”

Laugh at their clothes. Laugh at their fashion faux pas. They’ll see you on Election Day.

I wonder how much these “Walmart Moms” line up with the suburban independent demographic that Joel Kotkin argued has determined the outcome of the last few national elections.

More on what “Walmart Moms” care about when voting:

Walmart Moms are more interested in microeconomic issues such as college affordability than macroeconomic concerns such as the debt ceiling. The literature the pollsters distributed at the breakfast said, “It will be important for candidates to clearly communicate how their policies or ideas will personally impact these women and their households for the better.”

So it is about household economics and basic middle-class consumer items (groceries + college educations). Is there a politician that could effectively link these micro and macroeconomic concerns so that the American public understands the relationship between the two?

h/t Instapundit

Contrasting styles: Emanuel vs. Daley in with whom they meet and consult

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The Chicago Reader has an interesting piece looking at who Mayor Rahm Emanuel meets with – and how this differs from Mayor Richard M. Daley’s approach:

In many ways, Emanuel’s schedule strikingly contrasts with his predecessor’s. Richard M. Daley is a Chicago guy, born and raised. Except for his college years in Providence, Rhode Island, he’s stayed here all of his life. And it shows in the people who had his ear: in addition to pols and big-shot business leaders, his meeting schedule was packed with the ministers of small churches, local school leaders, and owners of neighborhood businesses like the local sausage shop (see “Daley’s A-List”).

Emanuel, on the other hand, grew up in the north suburbs, went to college in New York, and spent the better part of the last two decades in Washington, first as an aide in the Clinton White House, then as a congressman, and finally, for almost two years, as Obama’s chief of staff.

Much of his mayoral schedule is taken up by meetings and calls with wealthy out-of-towners, many of whom have donated to his campaign. Indeed, it seems Emanuel has learned from his mentor, President Clinton. Under Clinton, the White House was open to big donors who got to spend the night in the Lincoln bedroom. In Emanuel’s case, he either invites them into his City Hall office or makes time to hang out at one of his favorite haunts…

Some days, Emanuel meets with more multimillionaires within an afternoon than most of us will cross paths with during our entire lives. On June 30, for example, after the mayor spent 30 minutes in his City Hall office with U.S. Treasury secretary Timothy Geithner, he took 15 minutes to meet with Marc Lasry, the billionaire CEO of Avenue Capital Group, a hedge fund operation. That was followed by 45 minutes with Stephen Ross, a New York-based real estate mogul and owner of the Miami Dolphins.

There could be two ways to view this:

1. This is good for Chicago. Due to Emanuel’s connections outside of Chicago, the city will benefit. The new mayor may spend a lot of time with out of town millionaires but these people could bring money and jobs into Chicago through this connection.

2. This is bad for Chicago. Emanuel is less involved with the “little people” of Chicago that are important for getting things done and working the patronage machine. Emanuel is more of a corporate mayor (having less time for local leaders) while Daley at least mingled with the commoners and neighborhood leaders knew they could meet with him at certain points.

I wonder how much of this should be chalked up to different styles of leadership, personal history, or simply a shift in what it means to be a politician today where Daley was following the example of his father while Emanuel is operating under the idea that politicians and businesses need to work together (perhaps the Bill Clinton model?).

President Obama vs. Mitt Romney on dealing with housing crisis

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Even though President Obama and Mitt Romney are not officially running against each other yet, they have presented contrasting plans to deal with the housing crisis. Yesterday, President Obama offered a new “revamped refinancing program” that would help 1 to 1.5 million homeowners:

Under Obama’s proposal, homeowners who are still current on their mortgages would be able to refinance no matter how much their home value has dropped below what they still owe…

At the same time, Obama acknowledged that his latest proposal will not do all that’s not needed to get the housing market back on its feet. “Given the magnitude of the housing bubble, and the huge inventory of unsold homes in places like Nevada, it will take time to solve these challenges,” he said…

Presidential spokesman Jay Carney criticized Republican presidential candidate Mitt Romney for proposing last week while in Las Vegas that the government not interfere with foreclosures. “Don’t try to stop the foreclosure process,” Romney told the Las Vegas Review-Journal. “Let it run its course and hit the bottom.”

“That is not a solution,” Carney told reporters on Air Force One. He said Romney would tell homeowners, “‘You’re on your own, tough luck.'”

How much of these proposals is about looking for votes versus actually seeking out a plan that will help ease dropping home values, foreclosures, and a housing glut?

At the same time, the Washington Post reports that government efforts in recent years haven’t helped much:

President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure.

Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people. Housing prices remain near a crisis low. Millions of people are deeply indebted, owing more than their properties are worth, and many have lost their homes to foreclosure or are likely to do so. Economists increasingly say that, as a result, Americans are too scared to spend money, depriving the economy of its traditional engine of growth.

The Obama effort fell short in part because the president and his senior advisers, after a series of internal debates, decided against more dramatic actions to help homeowners, worried that they would pose risks for taxpayers and the economy, according to numerous current and former officials. They consistently unveiled programs that underperformed, did little to reduce mortgage debts owed by ordinary Americans and rejected a get-tough approach with banks.

Too risky meaning that it was politically untenable when more people are concerned with risk and deficits?

The conversation about housing could play an interesting role in the 2012 elections as both parties look to claim the mantle of defenders of the American middle-class dream of homeownership.

Occupy Wall Street in Naperville

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National coverage of the Occupy Wall Street groups has emphasized the city gatherings. But Occupy Wall Street has even made it to conservative Naperville:

About 50 people joined the event, forming a group just slightly larger than the one gathered outside a nearby Apple Store, for demonstrations modeled after the Occupy Wall Street encampment that began last month in lower Manhattan.

Organizers said they will return each Saturday from 10 a.m. to noon until their demands are met. It’s a list that includes increased regulation of banks, rollbacks on the rights of corporations and forgiveness for student loans…

“Well, there’s at least a couple dozen people over there, and there’s what? Maybe (140,000) people here in town? I’d say that’s probably an accurate representation” of support for the demonstrators’ agenda, said Eloe, grinning.

Alesch began planning the event last week with a few friends at a Wheaton coffee shop after hearing about an Occupy Aurora demonstration.

This reminds me of research I’ve seen regarding the diffusion of riots in the 1960s. How widespread are the Occupy Wall Street protests? Is it unusual to find one in a suburb like Naperville that has over 140,000 residents? Are suburbanites more or less likely to support the movement?

If this group continues to protest in Naperville, it will be interesting to see how onlookers and the community responds. An Occupy Aurora protest might make more sense since Aurora is more diverse and less wealthy. But would a continuing protest in Naperville draw more attention?

The Beatles on immigration in “Get Back”

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One discussion topic among The Beatles during the late 1960s would have some bearing on current discussions: immigration. Their hit single (#1 in both the US and Britain) “Get Back” was originally about immigration though lyric changes obscure the initial message.

Here is what the Wikipedia entry on the song “Get Back” has to say:

“Get Back” is unusual in the Beatles’ canon in that almost every moment of the song’s evolution has been extensively documented, from its beginning as an offhand riff to its final mixing in several versions. Much of this documentation is in the form of illegal (but widely available) bootleg recordings, and is recounted in the book Get Back: The Unauthorized Chronicle of the Beatles’ Let It Be Disaster by Doug Sulpy and Ray Schweighardt…

Around the time he was developing the lyrics to “Get Back”, McCartney satirised the “Rivers of Blood speech” by former British Cabinet minister Enoch Powell in a brief jam that has become known as the “Commonwealth Song”. The lyrics included a line “You’d better get back to your Commonwealth homes”. The group improvised various temporary lyrics for “Get Back” leading to what has become known in Beatles’ folklore as the “No Pakistanis” version.This version is more racially charged, and addresses attitudes toward immigrants in America and Britain: “…don’t need no Puerto Ricans living in the USA”; and “don’t dig no Pakistanis taking all the people’s jobs”. In an interview in Playboy magazine in 1980, Lennon described it as “…a better version of ‘Lady Madonna’. You know, a potboiler rewrite.”

On 23 January, the group (now in Apple Studios)[ tried to record the song properly; bootleg recordings preserve a conversation between McCartney and Harrison between takes discussing the song, and McCartney explaining the original “protest song” concept. The recording captures the group deciding to drop the third verse largely because McCartney does not feel the verse is of high enough quality, although he likes the scanning of the word “Pakistani”. Here the song solidifies in its two-verse, three-solo format.

Watch and listen to the never-released song, “Commonwealth,” here:

Last weekend, when I wasn’t delivering meals to the homebound, I was “researching” Beatles bootlegs. And I discovered the so-called “Commonwealth Song.” It’s not so much a song as it is an extended improvisation during the interminable “Get Back” studio sessions in 1969 (in fact, some theorize that “The Commonwealth Song” is a prototype for “Get Back”). “Commonwealth” name-checks Enoch Powell (the Tom Tancredo of his day, or Thilo Sarazin, if you prefer a German reference), who had delivered his anti-immigrant “Rivers of Blood” speech the previous year. “Commonwealth” was Paul McCartney’s mocking response. All of which shows that the sun never sets on some issues. It’s also nice to know that as late as 1969, Lennon and McCartney could still crack each other up, especially when John interjects his high-pitched “Yes!”

But the Beatles were not in support of Enoch Powell or anti-immigration policies – they were trying to satirize the debate:

The most infamous of the unreleased Get Back versions is known as No Pakistanis, and contained the line “Don’t dig no Pakistanis taking all the people’s jobs”. While mostly unfinished, the song did include a mumbled rhyming couplet which paired the words ‘Puerto Rican’ with ‘mohican’.

Various demo versions of this early version were recorded, one of which contains the following lines:

Meanwhile back at home too many Pakistanis
Living in a council flat
Candidate Macmillan, tell us what your plan is
Won’t you tell us where you’re at?

Despite being satirical in nature, it didn’t prevent accusations of racism being levelled at McCartney for years to come, after the Get Back bootlegs became public.

When we were doing Let It Be, there were a couple of verses to Get Back which were actually not racist at all – they were anti-racist. There were a lot of stories in the newspapers then about Pakistanis crowding out flats – you know, living 16 to a room or whatever. So in one of the verses of Get Back, which we were making up on the set of Let It Be, one of the outtakes has something about ‘too many Pakistanis living in a council flat’ – that’s the line. Which to me was actually talking out against overcrowding for Pakistanis… If there was any group that was not racist, it was the Beatles. I mean, all our favourite people were always black. We were kind of the first people to open international eyes, in a way, to Motown.
Paul McCartney
Rolling Stone, 1986

Today, could a popular musical act speak openly about controversial issues or would they, like the Beatles, have to tone down some of their lyrics and ideas in order to not be misunderstood by the mass market? If the Beatles were opposed to immigration, would people have different opinions about them or does the quality of their music overshadow some of their political leanings? And how many Beatles fans had any idea of what “Get Back” was actually about?

Why paying off all of the American debt in the early 2000s might have caused problems

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Many people would suggest that the United States needs to tackle its growing debt problem. But a government report from the early 2000s suggests that paying off all the debt could have some negative consequences:

If the U.S. paid off its debt there would be no more U.S. Treasury bonds in the world…

But the U.S. has been issuing bonds for so long, and the bonds are seen as so safe, that much of the world has come to depend on them. The U.S. Treasury bond is a pillar of the global economy.

Banks buy hundreds of billions of dollars’ worth, because they’re a safe place to park money.

Mortgage rates are tied to the interest rate on U.S. treasury bonds.

The Federal Reserve — our central bank — buys and sells Treasury bonds all the time, in an effort to keep the economy on track.

If Treasury bonds disappeared, would the world unravel? Would it adjust somehow?

“I probably thought about this piece easily 16 hours a day, and it took me a long time to even start writing it,” says Jason Seligman, the economist who wrote most of the report…

In the end, Seligman concluded it was a good idea to pay down the debt — but not to pay it off entirely.

So which party or movement would support this? Would it be best to have a more flexible debt (small to large depending on the more immediate economic circumstances) or would it be better to have a more stable, small amount of debt?

I don’t know the intricacies of how this might all play out but it is a reminder of the globalization of finance: doing something that might be viewed as desirable in the United States would not only affect other sectors of American life but how other countries can operate. It would be interesting to know how we got to this point. Does every major country basically have some debt that other countries are counting on?

Senate proposal to reward immigrants who would buy $500k in housing

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The down housing market is leading to some interesting ideas including one from two Senators which involves rewarding immigrants who are willing to buy expensive homes:

The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.

The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S.

Foreigners have accounted for a growing share of home purchases in South Florida, Southern California, Arizona and other hard-hit markets. Chinese and Canadian buyers, among others, are taking advantage not only of big declines in U.S. home prices and reduced competition from Americans but also of favorable foreign exchange rates.

To fuel this demand, the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out…

International buyers accounted for around $82 billion in U.S. residential real-estate sales for the year ending in March, up from $66 billion during the previous year period, according to data from the National Association of Realtors. Foreign buyers accounted for at least 5.5% of all home sales in Miami and 4.3% of Phoenix home sales during the month of July, according to MDA DataQuick.

This seems like it would be part of a discernible shift in the immigration conversation: primarily letting rich or educated immigrants into the United States.

The real question: does this really help the housing market? What kind of impact are we talking about – a 1% boost, 10% boost? As the article suggests, wealthy foreigners are already buying property in other countries. I’ve highlighted a couple of stories where wealthy Chinese buyers have purchased homes in New Zealand and Vancouver, Canada. When this happens, locals have mixed reactions. Would this proposed policy simply promote more foreign investment or would it push people to actually move to the United States and work here?

Would this bill also only help more wealthy areas, such as big cities or coastal/vacation regions? Would this primarily benefit people with bigger, more expensive homes?

Conservatives getting behind mortgage modifications?

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A journalist argues that conservatives are starting to argue that the federal government should step in and help homeowners stay in their homes:

Mortgage modifications have been a key pillar of the progressive response to the economic downturn–and they’ve been one focus of the Occupy protests that have sprung up across the country lately. The Obama administration offered its own such program in 2009, though it has helped far fewer homeowners than anticipated, thanks to a flawed design. But until lately, conservatives had by and large opposed the idea, arguing, as Santelli did, that taxpayers shouldn’t be forced to pay for borrowers’ bad decisions, and that banks shouldn’t have their actions constrained by government.

So what’s changed? By and large, policy hands and political leaders alike recognize that the economy isn’t going to get better on its own, at least not any time soon,. There’s a widespread consensus that until the United States tackles the massive overhang of housing debt–American homeowners’ wealth has fallen by a stunning 40 percent since 2006–the economic recovery won’t gain steam. As Feldstein wrote: “The fall in house prices is not just a decline in wealth but a decline that depresses consumer spending, making the economy weaker and the loss of jobs much greater.” Rogoff, too, views the crushing volume of personal debt as an unaffordable drag on growth. “Simply put, you can’t operate an economy where huge numbers of people are desperately in debt and have no real way out,” he argues.

Hubbard originally offered a modification plan in 2010 as a way to avoid another “costly stimulus package” designed to spur consumer demand. But he, too, may also recognize that mortgage modification, though necessary for the health of the economy, is likely to be politically unpopular. If so, better to have President Obama take the hit, rather than a future Republican president—like, say, President Romney.

Of course, right and left don’t see entirely eye-to-eye on the issue. Dean Baker, an economist with the liberal Center for Economic and Policy Research, last week slammed Feldstein’s plan as too soft on banks and a bad deal for struggling homeowners. And it’s hard to imagine that Republicans in Congress would react favorably to an aggressive mortgage modification proposal from the Obama administration.

So if this is true – and “three instances” doesn’t a trend make even as this journalist suggests – what is happening?

1. Conservatives are recognizing that the mortgage debt is holding up the larger economic recovery. If people can’t move, they can’t go to the open jobs. The debt doesn’t allow them to spend on other consumer items. If government involvement can move people past this logjam, then the “free market” can work again. Desperate times mean that political ideology has to be bent a little.

2. As the journalist suggests, they only back this when a Democrat is in charge.

3. This is pandering for votes. American culture has a dream of homeownership – neither party wants to be against that.

This bears watching. Of course, the devil is in the details: who is actually going to support what? Who is going to pay for this? How many homeowners could be helped?