Poverty
What did the Congressional Budget Office Really Say About the Stimulus?
Submitted by Jonathan on Sun, 2009-02-08 00:19I got a reminder today about the importance of reading your news from a variety of perspectives.
An example (not today's) is opinions about the underlying causes of the current economic crisis. If you only pay attention to a certain set news outlets, blogs, and message boards you'll "know" that it's all the liberal's fault for creating the Community Reinvestment Act and forcing banks to make loans to people who couldn't afford them. From another set of news sources, blogs, and message boards you might learn that half the sub-prime loans came from institutions not covered by the CRA, that institutions that were covered by it did less (not more) of the risky lending, that it wasn't the debt itself but the selling of the debt (bad debt chopped up and marketed as mortgage-backed securities to financial institutions). They'll tell you it was actually the inevitable consequence of the Rght's march to deregulate, deregulate, deregulate (for example, the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street, is significant in this mess). They probably won't tell you much about the Democrats' role in that deregulation. Two claims in stark opposition. Half of the population has been told and believes one; half believes the other. Almost certainly the real truth is somewhere in between. Even if it's not, you really need to hear both sides (someday I'll do something with this).
Today's example relates to interpreting the message of the non-partisan Congressional Budget Office's statement about the proposed stimulus package. I Googled "cbo stimulus." The first link is to a US News & World Report article. The second is to a Washington Times article. There third is to the actual letter written by the CBO. The letter is here. Read it for yourself and decide what you think it's key message is.
When Amanda Ruggeri read the letter, she got the message that the CBO was saying "Stimulus Bill Could Meet Obama's Job Creation Goal in Short Term" and wrote an article for US News & World Report saying so (here).
When Stephen Dinan of The Washington Times read the very same letter, he got the message that the CBO was saying that "Obama stimulus [will be] harmful over long haul" and wrote an article saying so (here). The implication of the Washington Times piece is that the CBO thinks the stimulus package is a bad idea...and I saw that very statement echoed, for example, on a certain "Grace Centered" message board.
What do I think the CBO's real message is? Well, it's partly that the stimulus will almost certainly have a positive effect in the short term (h/t Amanda). It's also partly that taking on such massive debt will probably have some negative consequences in the long run (no duh!) (h/t Stephen). However, I think it's a gross over-simplification to say that the CBO was saying that the stimulus is a bad idea. Let me point out that the CBO letter the emphasizes that...
...many things that make people better off do not appear in GDP at all. For example, healthier children or shorter commute times can improve people’s welfare without necessarily increasing the nation’s measured output in the long run (though spending in those areas would still provide short-run stimulus). Even legislation explicitly intended to affect output may also seek to accomplish other goals and can be evaluated accordingly.
That's the key to my take on the CBO letter. The CBO's predictions about short-term positive effects on jobs and long-term effects on GDP (the cold, hard financial facts) are interesting and important but only part of the story. A friend pointed out that this situation can be seen as an example of the "old approach" of making easy choices, delivering immediate benefits and quick payoffs at the expense of "real change"...an approach Obama has often condemned. OK, maybe...but sometimes the immediate benefits are worth some long-term difficulty. Next time I have surgery, I could decline the anesthesia in order to avoid it's (relatively) long-term negative consequences...but I think I'll probably take the anesthesia so I'll be spared the agonizing pain of the knife cutting my flesh in exchange for feeling a bit woozy later. Needless to say, I don't know enough about economics and our economy to have a strong opinion about what should be done about the crisis, but I don't think it's absurd to fear that there will be a whole heck of a lot of human suffering in the short-term if the the economy collapses and that a slightly lower GDP in 2019 might be worth it to mitigate that pain. The CBO's predictions about GDP are important to consider, but it's not as simple as just that.
That's what I think.
Benevolence
Submitted by Jonathan on Fri, 2008-07-18 21:23Today a friend said:
If budgets are moral documents then Hell is going to be over-crowded with church folk.
and another replied:
also pretty much most families. Do you have a budget? Do you look to the interests of others before the interests of your own?
I have been thinking a bit about church budgets lately. It started when I heard that the U.S. set a new record for charitable giving last year despite the economic downturn (from an article by Philip Rucker in the Washington Post):
Americans donated $306 billion to charities in 2007...most of the donations, about $229 billion, came from individuals...giving from private foundations increased 7 percent and through personal bequests 4 percent, adjusted for inflation...international aid agencies, environmental groups and human service charities saw the largest increases in charitable gifts. Gifts to international groups, which were so small 20 years ago that the category was nonexistent in the survey, have grown steadily, increasing by 13 percent last year to $13 billion.
I've mentioned before that Robert Reich has argued that most charitable donations are made by the rich to institutions that serve the rich:
This year's charitable donations are expected to total more than $200 billion, a record. But a big portion of this impressive sum -- especially from the wealthy, who have the most to donate -- is going to culture palaces: to the operas, art museums, symphonies and theaters where the wealthy spend much of their leisure time. It's also being donated to the universities they attended and expect their children to attend, perhaps with the added inducement of knowing that these schools often practice a kind of affirmative action for "legacies."
It turns out that only an estimated 10% of all charitable deductions are directed at the poor.
I started thinking about churches as charitable institutions and how church-spending typically fits this pattern too. What fraction of American's "charitable giving" to church actually goes to the poor and needy? Churches have ministers to pay and facilities to maintain, so what fraction of a typical church's budget goes to benevolence? For us, it's about 7 %. I'm not saying that the other 93 % doesn't go to good things too, but much of it isn't charity as I would define it.
I'm glad Americans are setting giving records again this year, but I wonder if our priorities couldn't use some adjustment.
Charity
Submitted by Jonathan on Sat, 2007-10-13 12:46In recent years I've been confused by a couple things I've read.
On the one hand, I read that Americans lead the world in charitable giving, setting a record in 2006 by giving $300 billion.
On the other hand, I read that America is near the bottom of the industrialized nations in terms of foreign aid as a fraction of its GNP. That is, it's total giving is big but not so much as a fraction of its economy. The $20 billion number quoted in the Wikipedia article is a lot smaller than the $300 billion mentioned above. From this I assumed that the US is a great giver but mostly gives to itself.
An editorial in the LA Times by Robert Reich (Is Harvard a charity? Most donations go to institutions that serve the rich; they shouldn't be fully tax-deductible) reveals another side of this issue.
This year's charitable donations are expected to total more than $200 billion, a record. But a big portion of this impressive sum -- especially from the wealthy, who have the most to donate -- is going to culture palaces: to the operas, art museums, symphonies and theaters where the wealthy spend much of their leisure time. It's also being donated to the universities they attended and expect their children to attend, perhaps with the added inducement of knowing that these schools often practice a kind of affirmative action for "legacies."
It turns out that only an estimated 10% of all charitable deductions are directed at the poor.
Kids face cutbacks in health coverage
Submitted by Jonathan on Tue, 2007-03-13 18:55From an article of the same title in USA Today by Richard Wolf:
A 10-year-old national program that has helped 6.6 million children get health insurance faces cutbacks here Sunday, and more states could follow unless Congress grants new funding.
Georgia's PeachCare for Kids program, part of the national Children's Health Insurance Program (CHIP), will freeze enrollment because of a federal funding shortfall that threatens 13 other states. New Jersey, Iowa, Mississippi and other states say cuts may be required later this year.
The program — which provides subsidized insurance for children whose families are not eligible for Medicaid — has helped trim the percentage of uninsured kids nationwide to 11.2% in 2005 from 15% in 1997. It is running out of money because of inflation, higher enrollment and program expansions.
Democrats in Congress want to add $745 million to a bill funding the Iraq war to take care of this year's shortfalls. Unless the federal government raises its $5 billion annual stake, however, 35 states could face shortfalls by 2012, and 1.5 million children could lose coverage.
Advocates see the program as a precursor to universal coverage. Sen. Edward Kennedy, D-Mass., and others want to spend $60 billion over five years to enroll an additional 6 million eligible children whose families are either unaware of the program or have chosen not to join. President Bush wants to add $4.8 billion over five years but refocus on poor children. Fourteen states cover adults under the children's program.
There's a shortage of funding but states are covering adults under the children's program?
America has poor excuse for poverty
Submitted by Jonathan on Tue, 2007-03-06 20:58From an article of the same title by Jesse Jackson in the Chicago Sun-Times:
We glimpsed misery in America during Katrina, as the poor were stranded in the storm. But those shocking pictures were misleading. America has a growing poverty problem, but it doesn't look like New Orleans.
Most poor people are not black or brown. Most poor people are white. They are disproportionately young, female and single. Most of them are not on welfare. They work every day that they can -- but they still cannot lift their families out of poverty.
An analysis of 2005 census figures by Tony Pugh for McClatchy Newspapers revealed almost 16 million Americans living in "deep or severe poverty," with the percentage of the poor living in severe poverty reaching a 32-year high. Our rich are getting richer and our poor, poorer.
Severe poverty is defined as half the federal poverty line, or an annual income of less than about $10,000 for a family of four, and about $5,000 for an individual. With food stamps, tax credits and food and clothing banks, the extremely poor can survive -- but not much more than that.
We spend a smaller percentage of our resources on federal anti-poverty programs than other industrial nations. Only Russia and Mexico do a worse job of reducing poverty through government intervention.
Americans are a generous, not a mean, people. We support private charities, particularly in the wake of human catastrophes like Hurricane Katrina. But this conservative era has taught many to disdain government and to be suspicious of any program of support for the poor. Somehow the billion-dollar subsidies to big oil companies enjoying record profits do not generate the anger that is sparked by programs to lift poor mothers and children out of poverty.
Racial divides no doubt play a part. In Sweden or Finland, the poor are not distinguished by color or race. It is easier, perhaps, for citizens of those countries to think that there, but for the grace of God, go I. In the United States, most poor people are white, but most images and reporting on the poor centers on black and brown people in our inner cities. It is easier to think these people are undeserving, alien and unworthy of support.
So the numbers of the desperately poor grow, the level of support declines, and the gulf between rich and poor yawns ever wider. We are a better country than that. Or at least we'd like to think so.
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