Poverty gap in US has widened under Bush

The number of US citizens living in extreme poverty has dramatically increased since George Bush came to power, with the number of the severe poor increasing at a rate that is 56% faster than the overall segment of the population characterised as poor - about 37 million people in all according to the census data.

One in ten Americans now lives in poverty according the study's findings. And Reagan's theory of "trickle down economics" - enthusiastically embraced by Bush and his cohorts to justify their tax breaks for the rich - is exposed as the puerile garbage most of us always thought it was.

The causes of the problem are no mystery to sociologists and political scientists. The share of national income going to corporate profits has far outstripped the share going to wages and salaries. Manufacturing jobs with benefits and union protection have vanished and been supplanted by low-wage, low-security service-sector work. The richest fifth of US households enjoys more than 50 per cent of the national income, while the poorest fifth gets by on an estimated 3.5 per cent.

The average after-tax income of the top 1 per cent is 63 times larger than the average for the bottom 20 per cent - both because the rich have grown richer and also because the poor have grown poorer; about 19 per cent poorer since the late 1970s. The middle class, too, has been squeezed ever tighter. Every income group except for the top 20 per cent has lost ground in the past 30 years, regardless of whether the economy has boomed or tanked.

These figures are rarely discussed in political forums in America in part because the economy has, in large part, ceased to be regarded as a political issue - John Edwards' "two Americas" theme in his presidential campaign being a rare exception - and because the right-wing think-tanks that have sprouted and thrived since the Reagan administration have done a good job of minimising the importance of the trends.

They have argued, in fact, that the poverty statistics are misleading because of the mobility of US society.

The mobility of US society - "the American Dream" - is, of course, a myth. The rich continue to get richer and the poor continue to get poorer. The "dream", that it is easier in the United States to experience generational mobility than it is in any other country, is simply not borne out by the facts.

By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.

However, this dream - that intergenerational mobility is possible if you pull yourself up by your bootstraps - is being used, not only to deprive America's poorest of their share of their country's enormous wealth, it is now being used to ensure that even America's middle class enjoy a smaller share.

The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile ($122,880 and up) saw a reduction in the frequency of large negative income shocks. The median household was no more upwardly mobile in 2003-04, a year when GDP grew strongly, than it was it was during the recession of 1990-91.

The most bizarre aspect of all this is that American's faith in this dream seems to be expanding at the very moment that the figures reveal the actuality to be the opposite.

In the 1999 International Social Survey, 61 percent of U.S. respondents agreed or strongly agreed with the statement that “people get rewarded for their effort,” versus 58 percent in Australia, 49 percent in Canada, 41 percent in Japan, 40 percent in Austria, 33 percent in Great Britain and 23 percent in France (ISSP, 1999). In fact, the U.S. percentage was higher than that of each of the 26 other countries in the survey, with the sole exception being the Philippines (63 percent).

I have always admired the optimism of Americans, by which I mean the people I have met when I visited there rather than the political hoods that are currently running that country.

However, in this case, it would appear that their optimism is being used against them. And it is being used to facilitate a transfer of the country's resources and income towards a group of people who already have far too much of those resources and that income.

And if Republicans were right that rewarding the rich ensured a "trickle down" effect that benefited all, why - more than twenty years after Reagan initialised this bizarre theory - don't any of the figures show this "trickle down" taking place?

Indeed, all that the figures actually show is that the rich are getting richer and the poor are getting poorer. Which is what most of us thought Reagan was all about in the first place.

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Tags: US, Bush, poverty, Reagan, trickle down economics