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Prologue: Some times you nail things right at the moment. That I post this the day the front page of the New York Times announces George W. has now decided to stress the economy (why do I get the impression this GOP campaign reminds me more and more of Al Gore in 2000 than Karl Rove?), seems a fascinating parallel.
In the summer of the 2004 presidential election the American Political Science Association issued one of the most important reports of our times. Two years later, that report, “American Democracy in an Age of Rising Inequality,” should still be required reading for every American, but my guess is not only haven’t you read it, but you never heard of it. Through the summer and fall of the 2004 campaign that report was totally ignored even though the questions it posed were probably the most important ones raised during that critical year and still have yet to be addressed by either party.
Two years later the award for the most ignored critical report goes to two related studies from the Brookings Institution, one of America’s truly priceless assets. In many ways these two reports serve as interesting follow-ups to the APSA report for like them they aim straight to the heart of Liberal America’s basic belief that government exists to keep the playing field level and that social and economic justice is a critical cornerstone supporting that level playing field.
The first Brookings Report “From Poverty, Opportunity,” details what the Counterrevolution has cost the poor of this country, but it also offers some constructive suggestions about how to alleviate what some press stories about the report are terming the “ghetto tax.” The report notes, “Today’s poverty opportunity is not a new one, but it is much greater in scope and importance today than at any time in the past.”
It goes on to detail over 80 pages why it is so hard for the poor to move up the economic ladder. In simple terms, being poor means you pay much more than the average American for everything from home and car loans to the price of groceries. Together, these extra costs add up to hundreds, sometimes thousands, of dollars unnecessarily spent by lower income families every year. Here are some examples:
- Nationwide, lower income consumers pay, on average, two percentage points more in interest for an auto loan than the average, higher income consumer.
- In 2004, the average APR on a first mortgage for lower income households was about 6.9 percent. By contrast, households earning between $60,000 and $90,000 paid an average rate of about 6.0 percent.
- In Wisconsin, it is estimated that a $200 television might cost as much as $700 at one of the rent-to-own businesses in the state, after interest.
- Nationwide, 4.2 million lower income homeowners pay, on average, a percentage point more than higher income households in interest for their mortgage.
- Holding other factors constant, homeowners in lower income neighborhoods can pay as much as $300 more for home insurance than those in higher income neighborhoods.
- Lower income tax filers are nearly three times more likely than higher income households to buy refund anticipation loans. These advance payments on tax refunds are accompanied by interest rates between 70 percent to more than 1,800 percent.
The Report paints a grim picture of life for low income Americans, a life that sounds more like scraping by in an undeveloped country than living in the United States. Those of you who have read Barbara Ehrenreich’s masterful Nickel and Dimed know how tough it is to live on little better than the minimum wage. Unfortunately, as the Brookings Report points out, life for the poor isn’t just about the country’s increasing income disparities it is about the rip-offs and shady, even criminal enterprises that have arisen in the Bush “market-driven” economy not to help the poor but to fleece them for every dollar they can get. There is a Dickensian chart of pawnshop loan rates in 12 major cities that can run as high as 20-25% per month.
Estimating that low income households have over $650 billion in buying power, Brookings proposes several solutions including better enforcement of existing laws to encouraging businesses to build in low-income areas. But have you heard any politicians or media reports (or even blog reports) talk about this? Do you know how your candidates stand?
The second Brookings Report, “Where Did They Go: The Decline of Middle-Income Neighborhoods in Metropolitan America” paints an extremely disturbing picture of the two class society our country could become: the Haves and the Have Nots. The Depression had its Hoovervilles; we might call the new two-class cities Bushtowns. The bullet points from this study shoot more holes in the notion that the Counterrevolution has helped the average American:
- Middle-income neighborhoods as a proportion of all metropolitan neighborhoods declined from 58 percent in 1970 to 41 percent in 2000.
- Between 1970 and 2000, lower-income families became more likely to live in lower-income neighborhoods, and higher-income families in higher-income neighborhoods.
- Only 23 percent of central-city neighborhoods in the 12 large metropolitan areas had a middle-income profile in 2000, down from 45 percent in 1970.
- These trends suggest increased sorting of high- and low-income families into neighborhoods that reflect their own economic profiles, and increased vulnerability of middle-class neighborhoods “tipping” towards higher- or lower-income status.If our cities are becoming two-class societies can the rest of the country be far behind?
Although Brookings has yet to study this, anyone who lives in suburban American knows that the suburbs themselves have a pecking order not that different from those city neighborhoods. Their are the gated communities full of only the very rich, upper-middle income communities, and blue collar suburbs. It is becoming less common to find mixes of housing styles or incomes in the same area. As we know this has consequences for everything from education to basic services.
If the basic tenet of Liberal America is keeping the playing field level, then these two reports show how far social and economic justice has tilted under the Bush Administration. We are not only becoming two Americas, but we are becoming a society that is increasingly segregated by dollar bills. I titled this post the “Brookings Time Bomb” because ticking away in all those statistics and charts lies an explosive charge in America’s growing inequality and class segregation that something like the much-discussed breaking of the housing bubble could ignite into a social and political explosion. George W. Bush could make Herbert Hoover seem tame.
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