Median income for Americans has fallen by 4.1% below what it was when he became president

The percent of Americans in poverty and without health insurance remains higher than when Obama became president and income for the median American keeps falling.  From the Financial Times:

The median income of American households dropped to its lowest level since 1995 last year, extending its decline during President Barack Obama’s tenure and highlighting the depth of the damage to the middle class inflicted by the recession and weak recovery.

According to annual data from the Census Bureau, median income adjusted for inflation – a closely watched measure of the financial health of average Americans – fell to $50,054 in 2011, or 1.5 per cent below its 2010 level and 4.1 per cent below its score when Mr Obama took office in 2009.

Although real median income had already started to slide beginning in 2008, before Mr Obama entered the White House, the fact that he was not able to reverse that downward trend could expose him to criticism from Mitt Romney, his rival, that his policies have not aided the middle class. In addition to the drop in overall median income, the data also showed a rise in income inequality last year. . . .

100% effective marginal income tax rate?

Here are two stunning figures from the liberal Urban Institute.  If someone is facing anywhere near a 100% marginal tax rate, would they actually go out and work harder?  There is in fact a wide range of income for this hypothetical family with two children where the effective marginal income tax rate is above 80% for the range of income from about $15,000 to over $40,000.  The effect on people's incentives to escape poverty is obvious.

This last figure here does a good job of summarizing the point.  If you go from earning the poverty level in Alabama to twice that level, a $17,000 increase in income, you effective spending power goes up by only $6,852 -- implying a 60 percent marginal tax rate.

$50,000+ fine for woman giving out free food to those in need

A woman with three kids of her own who also takes care of foster kids and runs a basketball program for neighborhood kids is being fined over $50,000 for giving out free food to others.  Good thing the government is there to make it a crime to give out free food to those who want it.

A woman may be fined $600 for each day she provided free food to children in a poor Philadelphia neighborhood for the past few months.Angela Prattis, 41, of Chester Township has been distributing free healthy lunches in a neighborhood that has a per capita income of $19,000 a year.Prattis made no money from the meal distribution, and gave out food provided by the Archdiocese of Philadelphia. The “lunch lady” ran the charity out of her garage, to which about 60 children came, five days a week.After the city council was alerted of the free lunches, it ruled that she would have to acquire a variance to give away food next summer – or pay a fine of $600 a day. The council considers Prattis’ deed a zoning violation. Three months of distributing food would instigate a fine of more than $50,000.“It’s not like I’m selling food,” she objected. “These kids are hungry. I’m not tearing down the community. I’m keeping the children out of harm’s way,” she said in a Fox News interview.But a variance to distribute food would also be costly. Administrative fees for a variance would cost up to $1,000.“You have houses here. The roofs are falling in, and they could be focused on a lot more serious issues than me feeding children,” Prattis said in response to the city council’s ruling. . . .

An update from Fox News:

A Pennsylvania woman has vowed to continue doling out free lunches to children in her hardscrabble neighborhood, even though officials there have threatened to fine her $600 a day.
Angela Prattis, 41, was ordered by the Chester Township Council to wind down the makeshift dining room she runs in the driveway of her modest home during the summer for the hungry kids who come to her daily in search of a good meal. Under pressure from the community, the local leaders agreed to let Prattis finish her mission this summer, but told her she would need a zoning variance to resume the operation next summer.
"I'm going to continue to feed the children," Prattis told FoxNews.com. "I'm just doing this for the kids. I don't want a big fight. . . . 

A video news report is available from Fox News here.

Are the rich getting richer and the poor getting poorer?: Exploding a myth

Sachs' amazing claims don't seem to hold water

The Economist Magazine points out that there might be a few problems with Jeffrey Sachs phenomenal claims.

Jeffrey Sachs of Columbia University argues that if public investment and foreign aid are big enough, they will boost household incomes, spurring savings and boosting local investment. They should also “crowd in” external investment by improving infrastructure.

Unlike most economists, Mr Sachs can put other people’s money where his mouth is. He set up the “millennium village project”, taking 14 places in rural Africa with about 500,000 people and, since 2006, making them the subjects of a $150m project run by his university and African governments.

The project—motto: “no single intervention is enough…we must improve them all”—carries huge hopes. Touring a village in Malawi, the UN’s secretary-general says he saw the potential of technologies such as smartphones and drip irrigation “to advance human well-being in ways that simply were not feasible even a few years ago”. George Soros, a financier, gave the project $47m and predicted that it would transform entire regions. . . .

The projects’ backers claim extraordinary results: a 700% increase in the use of antimalarial bednets; a 350% increase in access to safer water; a 368% increase in primary-school meal programmes. On closer inspection, though, these numbers turn out to be less dramatic. . . .

Michael Clemens of the Centre for Global Development, a think-tank, and Gabriel Demombynes of the World Bank says that a randomised trial is needed to disentangle what the millennium programme is doing from what is happening anyway. In such a trial, each village would be paired with a similar one not getting the same help—and the results compared. . . .

Now a Kenyan economist, Bernadette Wanjala of Tilburg University in the Netherlands, has raised further doubts about the project. She interviewed 236 randomly selected households in Sauri who had been offered the benefits and 175 randomly selected ones who had not. In a study with Roldan Muradian of Radboud University, she concluded the first group had raised their agricultural productivity by an impressive 70%. Yet she found that the impact on household income was “insignificant”, and that there had been little extra saving or investment. The villagers had grown more food—and eaten it. They became better nourished, but this did not affect the wider economy. . . .

Obama saved us?

Note that if one looks at only nonrecessionary periods, the increase in poverty under Obama is the largest percentage increase in poverty in the year after a recession.
Source: US Census Bureau. Click figures to make larger.

U.S. Poverty Rate Climbed to 17-Year High in 2010

The ranks of people in poverty increased to 46.2 million from 43.6 million. The last time the poverty rate reached 15.1 percent was in 1993. It climbed to 15.2 percent in 1983. Median household income in 2010 was $49,445, down from $50,599 the year before. [A decline of 2.3 percent] . . .
The number of those lacking health insurance increased to 49.9 million from 49 million, or about 16.3 percent of the population, a change the bureau said wasn’t statistically significant.
The income figures declined even as the U.S. economy expanded 3 percent in 2010. Growth has slowed this year to an annual rate of less than 1 percent, sparking concern that the financial struggles of families will continue to worsen and hamper the recovery. . . .

Note that over the first half of this year real per capita personal income has actually fallen, with GDP growth being less than population growth.


Source: US Poverty Rate. Click figures to make larger.

Obama Administration rejects trial experiment in NYC that would have temporarily stopped using Food Stamps on SweetenedSodas

There is a problem: the poor on food stamps are obese.

There is, on the other hand, a lot of evidence of obesity among the poor; their obesity rate is estimated at 36%, and the obesity rate among poor children seems to be about twice the rate among non-poor children. The poor people are eating more calories than they need. . . .

Apparently, there is some research claiming that soda and potato chips are the two worst foods for your weight.

So why not say if the government is going to pay for your food, we will restrict what you can buy. You are not allowed to use food stamps to buy alcohol, so why not some other types of drinks that are deemed wasteful?

Well, NYC tried, but the Obama administration said no. Possibly, they just don't want to discourage people from going on food stamps.

While sharing the goal of reducing obesity, an official with the nation's food stamp program said in a letter Friday addressed to the state Office of Temporary and Disability Assistance that the USDA had concerns about the plan's "potential viability and effectiveness."

Jessica Shahin, associate administrator of the program, wrote that the proposal lacked clear product eligibility guidelines, didn't take into account the burden that might be placed on city food retailers and failed to put forward a credible design for evaluating the effect on obesity and health. . . .

A "burden that might be placed on city food retailers"? How is that possible? If consumers change what they want to buy for any reason, why wouldn't food stores start stocking the new products that they want to buy?

Here is the weird thing. The Obama administration has no problems restricting what Americans in general eat, but that they don't want to restrict what those who the get their food costs paid by the government eat. Examples:

1) Salt:

The FDA, acting on a recommendation to be made by a task force of the Institute of Medicine of the National Academy of Sciences, is about to take the unprecedented step of regulating the salt content of processed foods. . . .

2) the FDA's New Calorie Count Regulations

There is no increase in inequality among 99 percent of the population

So much for concerns about the poor getting poorer than everyone else.

In a recent paper weaving together several strands of new research, Mr Gordon reports that improved use of income datasets "shows that there was no increase of inequality after 1993 in the bottom 99 percent of the population, and can be entirely explained by the behavior of income in the top 1 percent." So we are left needing an explanation for the rise of "the stinking rich", as Mr Noah calls them. But when it comes to rising inequality, that's all there is to explain. Maybe the subject doesn't merit a ten-part series after all.

Mr Gordon's surprising conclusion is based upon recent studies showing that measured income inequality has been overstated due to inadequacies in traditional methods for constructing price indices and estimating real income. In the latest version of a much-discussed paper Christian Broda and John Romalis find that

the relative prices of low-quality products that are consumed disproportionately by low-income consumers have been falling over this period. This fact implies that measured against the prices of products that poorer consumers actually buy, their “real” incomes have been rising steadily. As a consequence, we find that around half of the increase in conventional inequality measures during 1994–2005 is the result of using the same price index for non-durable goods across different income groups.

. . .

Using an updated price index, Christian Broda, Ephraim Leibtag, and David Weinstein find that

the real wages at the 10th percentile increased by 30 percent from 1979 to 2005. In other words, the real wages of low earners have not remained stagnant, as suggested by conventional measures, but actually have been rising on average by around 1 percent per year.

From the Broda et al. article:

Past research suffered from the problem of being unable to match data on prices paid with the households that actually make the purchases. As a result, prior work focused on inferring the linkages between prices paid and household characteristics—for example, by using approaches based on neighborhood effects and unit costs. Here, we first describe household-level data that allows us to look at the linkages between prices paid and household characteristic. We then use that data to reconsider the commonly held notion that the poor pay higher prices than those with high incomes and that this behavior is driven by the larger share in expenditure of the poor in high-priced convenience stores.

Obama administration wants to change how poverty is measured

Obama wants to define poverty as relative and not absolute levels of income.

This week, the Obama administration announced it will create a new poverty-measurement system that will eventually displace the current poverty measure. This new measure, which has little or nothing to do with actual poverty, will serve as the propaganda tool in Obama’s endless quest to “spread the wealth.”

Under the new measure, a family will be judged “poor” if its income falls below a certain specified income threshold. Nothing new there, but, unlike the current poverty standards, the new income thresholds will have a built-in escalator clause: They will rise automatically in direct proportion to any rise in the living standards of the average American.

The current poverty measure counts absolute purchasing power — how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. As the nation becomes wealthier, the poverty standards will increase in proportion. In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms.

The Left has promoted this idea of an ever-rising poverty measure for a long time. It was floated at the beginning of the War on Poverty and flatly rejected by Pres. Lyndon Johnson. Not so President Obama, who consistently seeks to expand the far-left horizons of U.S. politics. . . .