Floodwater isn't the only thing rising

The poverty rate climbs for the fourth year in a row.


Aaron Kinney
August 31, 2005 2:52AM (UTC)

A report from Salon editorial fellow Aaron Kinney.

The television coverage of Hurricane Katrina provides a reminder of a fact you don't often see reflected on your television screens: There are poor people in America. In fact, as the Census Bureau reported Tuesday, the nation's poverty rate rose in 2004 for the fourth straight year. The number of Americans below the poverty line increased by 1.1 million to 37 million people, or 12.7 percent of the population. The number of Americans without healthcare rose only slightly to 45.8 million.

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It's one more sign that George W. Bush's single-pronged economic strategy of providing tax cuts to the well-off -- if you can call an ideological fixation a strategy -- isn't yielding benefits for a lot of Americans. In his column in Monday's New York Times, Paul Krugman examined why, despite modest economic growth, most Americans don't feel sanguine about the state of the economy. Job growth is not accelerating fast enough to make up for the rise in the working age population; wages aren't keeping up with the cost of living.

So who, then, is benefiting from the economy's growth? According to Krugman, apart from rising healthcare costs, the growth is "going to corporate profits and ... to a surge in the salaries and other compensation of executives."

In other words, trickle-down economics isn't working. Rather than pump the blood of capital throughout the entire body of the American economy, the Bush economic plan keeps the blood circulating only in the head (or perhaps the right middle finger), creating windfalls for wealthy individuals that don't translate into gains for those in the bottom tiers of American society.

But the disparity between rich and poor isn't all Bush's fault. The compensation of American CEOs has been rising for decades now. (The median compensation in 2002 for the CEOs of the 100 biggest U.S. companies was $33.4 million.) And while top CEOs make enough nowadays to purchase an archipelago of small islands, critics question whether their performance comes remotely close to matching their salaries. Some executives, like former Enron CEO Ken Lay, seem to think they can make millions yet take no responsibility for what happens on their watch.

It amounts to a question of values, and whether the egalitarian values of American mythology square with today's reality. In his July 17 article, "How Costco Became the Anti-Wal-Mart," Times reporter Steven Greenhouse documented how Costco CEO Jim Sinegal raised his company to elite status while keeping his pay down (just $350,000) and treating his employees well. For this behavior, Greenhouse wrote, Sinegal has drawn criticism from Wall Street: "He has been too benevolent," said one analyst. "It's better to be an employee or a customer than a shareholder," griped another.

That's America, where Wall Street's values -- investors, some of them speculators who pick and drop stocks without loyalty, are to be valued above employees -- have become mainstream values. Average Joes boost the sales rank of Jack Welch's avuncular memoirs, perhaps deluding themselves into thinking the ruthless former General Electric CEO would have hesitated for a moment to fire them for a drop in performance. American families are working harder and longer hours to send their kids to school and pay for their healthcare.

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Does any of this equate to a better life? As Krugman noted in a July 29 column titled "French Family Values," workers in France enjoy shorter workweeks than their American counterparts, take up to seven weeks per year in paid vacation and don't have to worry as much about medical costs because access to affordable healthcare is guaranteed. France's GDP growth can't match the United States' perhaps, but is an abstract figure like GDP the proper way to measure an individual's quality of life?

Bush didn't create the gap between rich and poor, but he's making it worse. Indeed, insofar as this widening chasm is the logical result of his policies, it's his intention. The rising tide of the economy hasn't lifted many boats, but it has raised the poverty rate. And even as the economy's pedestrian growth gains momentum, America's real estate bubble, exploding foreign debt and dependence on increasingly expensive foreign oil combine to form the threat of yet another recession. If Bush has a plan to help the poor, now is the time to deliver it.


Aaron Kinney

Aaron Kinney is a writer in San Francisco. He has a blog.

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