Posts tagged with 'food stamps'
Weekly Audit: Grandparents Take on the Recession
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By Lindsay Beyerstein, Media Consortium blogger
Raising kids is never easy, but a recession only makes the job tougher. As more parents struggle to make ends meet, an increasing number of grandparents are stepping in to fill the void. One out of 10 U.S. kids lives with a grandparent, according to new research released by the Pew Charitable Trust, Katti Gray reports for ColorLines. About 40% of these children are being raised primarily by their grandparent(s).
Dawn Humphrey, a 51-year-old grandmother who is raising her 4-year-old grandson, describes her new role as challenging but deeply rewarding. Humphrey and her partner are making the best of a bad situation. Humphrey herself was laid off and her unemployment benefits ran out 3 weeks ago:
“Our situation would be ideal if I had a job,” Avion’s grandmother said. “We’re not materialistic people but this boy has needs. He looks to us for comfort and for love, when he’s hurt and needs help going to the bathroom. Just hearing him calling be ‘Grandma,’ I don’t know how to explain it. It’s just pure joy.”
Humphrey’s partner, Vernon Isaac, agrees:
“Yes, but, wow, grandparents like us could use some help.This recession, with things as tough as they are … I would love to give him the things I never got. But what I do give him is love. And that’s the most important thing.”
The magical thinking in free market ideology
When it comes to fingering culprits behind our economy’s current malaise, one could do worse than note just how poisonous so-called “free-market” ideology has been. That’s the diagnosis of financier Yves Smith, author of ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, who recently spoke to the Real News Network.
Smith argues that magical thinking about markets has wrecked the United States’ economy. The old view was that the economy needed to be managed so that businesses could thrive. The new dogma is that “free markets are good” and therefore whatever happens as a result of “market processes” must be better than what would have happened if the government had intervened. By definition, everything that happens in a market is the result of market processes. So, all is for the best in the best of all possible worlds! (It’s all fun and games until somebody needs a bailout.)
As Smith says:
[W]e then went to a model where everything that–anything that came out of, quote, “free markets”, even though free markets is–conveniently means something different, depending what context it’s in. But we have this kind of nebulous, flexible, free markets concept. But the idea is that anything that happens out of market activity is deemed to be virtuous, so if we go to less regulation, which–corporate interests took this free markets mantra and used it to justify deregulation–if we as a result of deregulated activity suddenly have a big trade deficit, well, we shouldn’t worry: that’s really the result of free markets, and somehow it will correct [itself].
Geico Gecko and Flo
What does it say about our economy that two of the most recognizable fictional characters on TV are insurance company mascots? For David Sirota of In These Times, the GEICO Gecko and Flo from Progressive Auto Insurance are chipper harbingers of economic death.
For Sirota, these ads epitomize everything that’s wrong with contemporary capitalism: Drivers are legally obliged to buy auto insurance. Instead of innovating or providing better service, GEICO and Progressive spend millions of dollars to poach each other’s customers with catchy TV ads.
Who can afford to retire?
There has been a lot of talk lately about the prospect of raising the retirement age from 65 to 69 to shore up Social Security. This proposed change has been vehemently opposed by progressives. Why raise the retirement age when we could just as easily raise the payroll tax ceiling? In Ms. Magazine former Harvard sociology professor Mariko Lin Chang argues that the inequalities of raising the retirement age pale beside the inequities that are already built into the system because of preexisting income differences.
The lower your wages, the longer you have to work to retire at a given level of Social Security benefits. The average American works for 40 years to collect full Social Security benefits. However, the average female worker earns only 77 cents per dollar earned by the average male. So, the average woman already has to work for 50 years to retire with the benefits the average man earns after 40 years.
Similar statistics apply to workers of color, who earn less on average than white workers.
Defending the official retirement age of 65 is a worthy endeavor, but we shouldn’t forget that the official criteria already obscure the brutal financial realities facing large segments of the workforce.
Southern anti-poverty programs at risk
Big Republican gains in state legislatures in the deep south may put poverty programs in jeopardy, Monica Potts of The American Prospect reports. In the midterm elections, Republicans took control of state legislatures in North Carolina and Alabama for the first time in a century. The GOP swept to power on a tide of anti-tax, anti-government spending sentiment. According to Potts:
Anti-poverty programs are among the most vulnerable because states have flexibility over how they spend federal money they receive for Temporary Assistance for Needy Families and food stamps. Rules for TANF, the program once known as welfare, require states to maintain a certain level of spending to keep their block grants, but how and on what they spend the money is largely up to them.
States are ordering off a menu of programs, for which they must provide matching funds if they choose to participate. Chris Kromm of the Institute for Southern Studies predicts that states will try to save money by cutting programs like prescription drug and dental care for the poor, rather than come up with their share of matching funds.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: DADT, Vampire Bees, and Other Hazards to Your Health
By Lindsay Beyerstein, Media Consortium blogger
Dr. Kenneth Katz recently published an article in the New England Journal of Medicine titled “Health Hazards of ‘Don’t Ask, Don’t Tell.” This week, he penned an op/ed for RH Reality Check about his experiences treating U.S. military at an STD clinic in San Diego. Dr. Katz sees the Pentagon’s “Don’t Ask Don’t Tell” rule for LGB members of the military as a huge roadblock to good medical care. He’s pretty confident that his military patients feel safe divulging their sexual histories to a civilian doctor like himself. But when those troops go overseas, they are cared for by military doctors. Technically, doctor-patient communication is exempt from DADT, but many patients don’t realize that they can tell their military doctors about gay sex without fear of reprisals (at least in theory). Dr. Katz’s patients have told him that they won’t go for recommended follow-up STD screening after they ship out because they’re afraid to be honest with their doctors. He worries about how many troops are suffering from treatable infections in war zones because they aren’t allowed to serve openly.
Food stamp use skyrockets, swordfish sales unaccountably flat
Monica Potts of TAPPED points to the alarming statistic that in the last month alone an additional 500,000 Americans went on food stamps. She notes that the right wing website Daily Caller is alarmed not by the fact that fellow citizens can’t afford food, but rather that there’s no gruel-only foodstamp program available:
Meanwhile, the conservative news site The Daily Caller is shocked, shocked, to learn that you can use food stamps to buy all manner of food. The government, apparently, doesn’t restrict you from purchasing an $18-per-pound swordfish steak from Whole Foods. But that kind of discovery, like almost everything else in the “debate” over food stamp use, is the sort of ridiculous one that comes from a person who’s never been hungry.
The Hyde Amendment
In Campus Progress, Jessica Arons and Madina Agénor call for the repeal of the Hyde Amendment for being an assault on the reproductive rights of poor women and women of color. The Supreme Court declared abortion to be a constitutional right in 1973, yet nearly 40 years later, the Hyde Amendment still prohibits nearly all federal funding for abortions. In practice, the women most affected by the Hyde Amendment are those who depend on government health care programs like Medicaid and the Indian Health Service:
Former U.S. Rep. Henry Hyde (R-IL), the law’s sponsor, admitted during debate of his proposal that he was targeting poor women because they were the only ones vulnerable enough for him to reach. “I certainly would like to prevent, if I could legally, anybody having an abortion, a rich woman, a middle-class woman, or a poor woman,” he said. “Unfortunately, the only vehicle available is the … Medicaid bill.”
Meanwhile, ultra-conservative Rep. Michele Bachmann (R-MN) is calling on Congress to de-fund the reproductive health provider Planned Parenthood, Andy Birkey reports in the Minnesota Independent. In an interview with a conservative news site, Bachmann doubled down on that idea, suggesting that all of health care reform be de-funded because it funds abortions. This is not true. The aforementioned Hyde Amendment guarantees as much. Furthermore, even though health reform never would have funded abortions, President Obama signed an eleventh-hour executive order guaranteeing that health care reform would not fund abortions.
Brooklyn bees gorge on maraschino cherry run-off
Home beekeeping is the hottest new trend for health-conscious locavores. New York City recently changed the law to accommodate beekeepers in the five boroughs. Just because you live in an industrial neighborhood in Brooklyn is no reason to miss out on this sweet action, right? Well, actually, there is a catch. That nice honey at the farmers’ market tastes like lavender because that’s what those rural bees ate. What do bees in Red Hook, Brooklyn eat? Run-off from a maraschino cherry factory. The overindulgent bees “look like vampires” according to one local keeper and their honey runs bright red. Maraschino honey sounds like a delicious mash-up of high and low culture. Unfortunately, Sarah Goodyear reports in Grist that the end product doesn’t taste nearly as good as it looks. Arthur Mondella, the owner of Dell’s Maraschino Cherries, wants to do right by the beekeepers. He initially suggested putting out vats of different colored syrup to “help” the bees make rainbow honey. His proposal was not well-received by the crunchy set. Instead, he has agreed to work with the beekeepers to keep the bees out of the vats next year.
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Bloomberg Shaking up Soda Pop with Politics
by Lindsay Beyerstein, Media Consortium blogger
New York City Mayor Michael Bloomberg is asking the USDA to approve a pilot program that would prevent his city’s residents from buying sugar-sweetened soda with food stamps. Some have called the proposal paternalistic. However, at In These Times, Terry J. Allen argues that Bloomberg’s proposal makes sense.
Allen notes that New Yorkers may spend up to $135 million in food stamp benefits on sodas. Nationwide, the food stamp program funnels about $4 billion into the pockets of soda manufacturers. Sugary carbonated drinks are artificially profitable for Big Pop because they are sweetened with high-fructose corn syrup, a heavily subsidized by-product of our broken agricultural system.
There are already restrictions on what you can buy with food stamps. Nobody thinks it’s patronizing that alcohol is off-limits, even though alcoholic beverage are a potential source of calories. A little discussed benefit of ending the soda subsidy within the food stamp program would be the incentive it gives to small storekeepers in poor neighborhoods to devote less floor and refrigerator space to carbonated drinks and more room to real food. Many low income New Yorkers struggle to buy healthy food in their neighborhoods. Soda subsidies only make the “food desert” problem worse.
Impatient to die
Prisoners on Death Row in Texas spend 23 hours a day in solitary confinement. The death house in Texas is one of the most restrictive in the nation. Conditions are so bad that many inmates are actively looking forward to their execution day to put an end to the crushing isolation, Dave Mann reports in the Texas Observer. There is a growing consensus among psychiatrists that solitary confinement is a form of torture. Some experts, and many inmates, believe that solitary confinement is literally driving Texas death row inmates insane.
Daniel Lopez is in a hurry to die: “I don’t see no point in waiting 20 years for them to finally decide to execute me.” That’s the first thing he tells me when I sit down to interview him. We are seated in the Polunsky Unit’s visiting room. Lopez is encased in a small booth. We are separated by thick, soundproof glass and talk through phones. [...] [Lopez] says he has no desire to remain on death row. He says he’s looking forward to execution day. He doesn’t want to live much longer in his small cell. “I don’t think that’s a life for somebody,” he says.
Health reform and the courts
Suzy Khimm of Mother Jones takes a closer look a the legal challenges to health care reform. Republicans in Virginia have been given the green light to challenge the constitutionality of the individual mandate in court. In October, a U.S. District judge in Detroit refused to issue a preliminary injunction to stop the implementation of health care reform in Michigan. On Monday, a U.S. District judge in Lynchburg, VA, dismissed Liberty University’s anti-health reform lawsuit. Another Virginia judge says he will rule on a similar suit by the State Attorney General by the end of the year.
The current crop of politically motivated lawsuits challenging the individual mandate are legally tenuous at best. Aziz Huq wrote in The Nation: “Among constitutional scholars, the puzzle is not how the federal government can defend the new law, but why anyone thinks a constitutional challenge is even worth making.”
As Columbia law professor Gillian Metzger explained to Chris Hayes of The Nation earlier this year, the constitutionality of the individual mandate is basically a “no-brainer.” The way the Affordable Care Act is written, everyone who doesn’t have health insurance from some provider has two options: Buy subsidized health insurance or pay a tax. The federal government obviously has the right to collect taxes. The case is expected to go all the way to the Supreme Court, but it seems unlikely to prevail. The real fear is that a lower court will paralyze the implementation of health care reform while the decision is pending.
Crisis pregnancy center bill
Shakthi Jothianandan of Ms. Magazine has the latest on proposed legislation that would force so-called crisis pregnancy centers (CPCs) in New York City to disclose that they are not real reproductive health clinics. The New York City Council held a hearing on the proposed legislation in mid-November, which brought together officials from the Department of Mental Health and Hygiene, Planned Parenthood, Concerned Clergy for Choice and staff from CPCs around the city. The representatives for the CPCs claimed that the bill violates their free speech rights, but the head of the New York Civil Liberties Union testified that requiring organizations to disclose that they are not real health care facilities and don’t provide a full range of services does not infringe on any First Amendment right.
CeCe Heil, senior counsel with the Christian anti-abortion group American Center for Law and Justice, claimed the legislation was unnecessary because women are already smart enough to know that “abortion alternatives” means “alternatives to abortion.” Many of the CPCs have “life” in their name, which should signal to potential clients that they do not provide abortion or abortion referrals. But if it’s really so obvious that CPCs are just anti-choice ministries posing as reproductive health clinics, why oppose a law that simply requires all facilities to disclose the obvious?
Boehner meets with anti-choice extremist
Future Speaker of the House Rep. John Boehner (R-OH) met with anti-abortion extremist Randall Terry, as Miriam Perez of Feministing reports. Terry is the founder of the radical anti-choice group Operation Rescue, which has a long record of advocating violence against abortion providers. After Dr. George Tiller, one of the country’s last high-profile late-term abortion providers, was assassinated, Terry called Tiller a “mass murderer” who “horrifically, reaped what he sowed.”
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Audit: One Nation with No Jobs
by Lindsay Beyerstein, Media Consortium blogger
Tens of thousands of Americans rallied for jobs and justice at the Lincoln Memorial in Washington, D.C. on Saturday. Organizers say that 175,000 people turned out for the One Nation Working Together rally, which was organized by labor unions, the NAACP, and other progressive groups. In an interview with GritTV’s Laura Flanders, AFL-CIO president Richard Trumka, a leader of the One Nation coalition, summed up the agenda: “Jobs, jobs, and more jobs.”
America isn’t working
In total, 8 million jobs have been lost in this recession and 2.5 million homes have been repossessed. According to the official figures, about 10% of Americans are unemployed. The true number may be much higher because the official stats don’t count those who have given up looking for work. In AlterNet, NAACP President Benjamin Todd Jealous, another featured speaker at One Nation, points out that the black unemployment rate is nearly twice that of whites. Another 11 million Americans are underemployed, according Trumka.
No end in sight
An already bleak job market is about to get even bleaker. Last week, Senate Republicans scuttled a popular emergency fund to create jobs and an extension of long-term unemployment insurance benefits, as Andy Kroll reports in Mother Jones.
Steve Benen of the Washington Monthly offers more details on the now-defunct job creation program known as the Temporary Assistance for Needy Families (TANF) emergency fund. The fund provided cash to create jobs in the public and private sectors. Over 240,000 people in 32 states and the District of Columbia worked at jobs created with TANF subsidies. Last week, Senate Democrats lost their fight to extend the program for another 3 months. With the TANF money gone, layoffs will soon follow.
The Department of Labor will release the its monthly unemployment statistics on Friday. One group of independent analysts predicts that September’s unemployment rate will be higher than the previous month, according to Brian Beutler of Talking Points Memo. Unemployment rose from 9.6% in July to 9.7% in August and experts surveyed by Bloomberg News expect the trend to continue. It’s doubtful that the economy produced enough new jobs to make up for all the census workers whose temporary jobs ended.
Job skills for America
On the bright side, President Barack Obama is scheduled to unveil a new job training program this week, Annie Lowrey reports in The Michigan Messenger. The program is called Skills for America’s Future. The goal of the project is to encourage partnerships between community colleges and corporations. Colleges and companies will work together to identify areas of rapid job growth and train students to fill those jobs. So far, five companies have agreed to participate in the program, including the Gap., Accenture, United Technologies, PG&E and McDonald’s.
Lowrey argues that this kind of training program will do little to help unemployment in the short term. Right now, companies aren’t hiring because there’s an economy-wide lack of demand, not because they can’t fill positions for lack of trained workers. Demand is low because unemployment is high. Quite simply, people buy less when they don’t have jobs, or fear that they will lose their jobs. It’s a Catch-22. The jobs won’t come back because not enough people have jobs.
Food stamps are stimulus
At the most basic level, an economic stimulus package is designed to break the no jobs/no demand/no jobs impasse by injecting large amounts of cash into the economy. Extending unemployment benefits makes for very effective stimulus because the unemployed typically spend their money quickly. Food stamps are another very efficient stimulus because recipients redeem them right away. To give you some indication of how quickly, consider the Wal-Mart at Midnight effect, which Lowrey discusses in the Washington Independent.
Wal-Mart managers are noticing that increasing numbers of customers are buying staples like bread, milk, and baby formula at midnight on the first of the month. That’s because state governments directly deposit welfare and food stamp benefits into debit accounts at midnight. Wal-Mart says it brings in extra staff to keep up with the influx of customers during this period.
By contrast, tax cuts are an inefficient stimulus, especially if the cuts go to people who are already wealthy. In tough times, people who already have everything they need may prefer to save their extra money instead of blowing it on luxuries. Rich people will not throng Best Buy at midnight on tax refund day, no matter how big their checks are.
The high cost of economic inequality
It would be nice to think that unemployment is part of a cyclical downturn, but there is mounting evidence that short-term unemployment is a symptom of a deeper problem: pervasive and growing inequality. Sam Petulla of the American Prospect interviews economist Jacob Hacker and political scientist Paul Pierson about their new book, Winner Take All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class.
The authors note that the U.S. has greater inequality than other industrialized countries. Since the 1970s, the richest Americans have gotten much richer while the rest of us lagged further behind. The authors found that almost 40% of household income gains from 1979-2007 went to the richest 1% of households. The trend is accelerating: the top 1% of households pocketed over half of the economic gains of the 2000s. Hacker and Pierson blame tax cuts for the wealth, lax financial regulations that allow the wealthy to rake in unprecedented profits, and stagnating middle class wages for the widening gap between the ultra-rich and the rest of society.
This brings us back to the old demand/jobs paradox. Contrary to the platitudes of trickledown economics, shoveling an ever greater share of society’s resources to the ultra-rich doesn’t make everyone else better off. Shocking, right?
Right wing economists say that letting the ultra-rich accumulate still more wealth is good for the economy as a whole because the rich have more money to invest in businesses, which are the main source of jobs. The ultra-rich aren’t stupid, however. They aren’t going to start businesses unless they foresee demand for goods and services; and everyone knows that demand is flat because there are no jobs. Trying to stimulate the economy by making the rich richer is like shoving money into a black hole. The tried and true way to end a recession is to create jobs and provide social services for people who need the money enough to spend it.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Sharron Angle Mocks Insurance for Autism; The Fight to Save Food Stamps
by Lindsay Beyerstein, Media Consortium blogger
The woman gunning for Sen. Harry Reid’s (D-NV) job doesn’t believe that autism exists.
Yes, you heard right. Sharron Angle believes that the neurodevelopmental disorder know to medical science as “autism” is actually a government-backed hoax to redistribute wealth from hardworking health insurers to pesky kids and their greedy parents.
Angle was caught on tape promising to abolish mandatory insurance coverage for autism. “Everything that they want to throw at us is covered under ‘autism’,” Angle told the American Association of Underwriters this summer, tracing scare quotes with her fingers as she said “autism.”
Care2′s Kristina Chew, the mother of a 13-year-old boy with autism, responds to Angle’s airy dismissal:
…By saying that you don’t think there should be health care for autism, I take it that you don’t think that children, and individuals, with disabilities are in need of such things—living with their families and in their communities, healthy and safe, being loved and cared for? Being treated as we would all like to be? (more…)
Weekly Audit: Congress Caves to Bank Lobby on Foreclosures
by Zach Carter, TMC MediaWire Blogger
On Thursday, lawmakers bowed to pressure from the bank lobby and killed a crucial piece of anti-foreclosure legislation, poisoning the economy in an effort to keep money flowing to Wall Street. Meanwhile, jobs continue to disappear, retirement accounts are evaporating and families are struggling to cope with economic hardship.
Last week’s turn of events proved that the U.S. Senate remains utterly beholden to the financial predators that created the current mess. You might think that after destroying the economy, bankrupting itself and then going on corporate welfare, the banking industry’s clout on Capitol Hill would have diminished. But you’d be wrong.
The American News Project’s Lagan Sebert recorded a lobbying strategy session at the Mortgage Bankers Association annual meeting in Washington, D.C. This is the lobbying team that torpedoed the anti-foreclosure legislation, which would have given judges the power to revise the terms of unaffordable mortgages in court—a process the bankers refer to as a “cram-down”—and level the playing field for homeowners. As it stands, when borrowers fall behind, banks can use the threat of foreclosure to deny a sustainable long-term loan modification and continue to squeeze them for high monthly payments.
Snippets from the bank lobby meeting seem like some absurd surrealist parody of the U.S. political system, with lobbyists urging other bankers to give money to politicians and claiming credit for holding the economy hostage. “The cram-down vote may come tomorrow, and wouldn’t it be beautiful for it to go down to defeat while we’re up on the Hill,” says an animated David Kittle, Chairman of the Mortgage Bankers Association.
Such bad behavior on Wall Street, of course, has lead to the worst economic downturn since the Great Depression. The unemployment rate currently stands at 8.5% and is likely to go much higher when the Department of Labor makes its monthly report on the job market this Friday. As Emily Steinmetz explains for High Country News, high unemployment levels are much more than a statistic: They mean real hardships for ordinary people. In Arizona, food banks and churches have been overwhelmed by those seeking basic necessities like food and diapers. Steinmetz profiles St. Mary’s Food Bank, which distributed upwards of 19,000 emergency food boxes across the state in September alone. The boxes contain bare-bones items like canned vegetables, jars of peanut butter and bags of rice for families that cannot afford to eat.
In the below video, GRITtv’a Laura Flanders interviews Heather Boushey, senior economist at the Center for American Progress, about how the unemployment crisis is impacting families based on gender. Typically women are much more likely than men to dropout of the labor force when they lose their jobs, but in the current recession, record numbers of men are being laid off.
That’s creating not just a loss of income, since women still face a significant pay gap, but serious schisms when men find themselves unable to perform the role in the family they’re accustomed to playing. It’s also sowing seeds for political unrest: when people find themselves out of a job thanks to structural economic forces beyond their control and facing problems at home as a result of being laid off, it generates a lot of anger.
As University of Texas Economist James Galbraith writes for the Texas Observer, evaluating the economy means examining the links between the lives of ordinary workers and the operation of major institutions like the banking industry and government. When we pretend that there is no public interest in overseeing economically critical firms, when bank regulators hold press conferences in which they literally attack stacks of regulations with a chainsaw, Galbraith says, a resulting calamity for workers and families is predictable.
If this crisis has taught us anything, it is that what Galbraith refers to as “the ritual confidence of public officials and the dry numerical optimism of business economists” simply cannot be trusted without a deeper analysis of the plight of everyday citizens. Powerful people on both Capitol Hill and Wall Street spent the last decade insisting that everything was just fine, when in fact the entire financial system was falling off a cliff.
Writing for Mother Jones, James Ridgeway sketches a brief history of the retirement industry, revealing the steady migration from employer-provided pensions to 401(k) plans outsourced to Wall Street professionals. Ridgeway makes it hard to view the 401(k) industry as anything but a decades-long scam that has been shielded from serious scrutiny by the stock market growth from the early 1980s to 2007. Even the name “401(k)” comes from a covert loophole that was originally designed to help big banks avoid paying taxes.
In 401(k) accounts, workers have their money invested in stocks and bonds picked by a Wall Street fund manager, rather than receive guaranteed benefits from their employer. In return for this precious investment advice, the fund manager takes a bite out of any profits the worker’s 401(k) fund reaps, in some cases as much as 50% of the actual gains. This might not be so egregious if the fund manager made amazing stock picks that garnered huge returns for the worker, but most of these funds underperform index funds. Even high-performing funds are subject to the often arbitrary movement of financial markets. So when, say, stocks take a beating thanks to years of excessive risk-taking on Wall Street, worker accounts are devastated.
This continued influence of the banking establishment in Washington imperils not only our economy but our political legitimacy. When an industry transforms itself into a vehicle for economic destruction, the appropriate response is to crack down on abuse with new rules and regulations. Instead, lawmakers have ignored public cries for accountability and capitulated to the culpable elite, making it increasingly difficult to view Congress as a group of representatives acting for the public good.
This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.
