Subsidies and the Fiscal Cliff

I did it! Less than one year after losing one job in an economy where the jobless usually need 1.5 years to find another job, I had a job with a regular paycheck and benefits, including health insurance. Unfortunately the salary was no higher than what I had earned more than 15 years ago, back in a time when a loaf of bread, a gallon of milk, and a tank of gas cost much less.

Then after ten months of renting a room, including kitchen privileges in a minimalist kitchen (so small the refrigerator is in the hall) and bathroom shared with two other housemates, I found an apartment within my budget of $400 per month for all housing costs (25% of my take home wage; one week’s income). The $300 deposit was manageable, but then I learned I would need electric for lights, cooking, and electronics. I went to Harrisonburg Electric; the deposit was $300 per month, a month and a half of grocery money.

“Don’t worry; you will get that back after a year. And if you sign up for automatic withdrawal, the deposit will be a bit smaller,” the clerk said.

Total move in costs: $1,000. About 63% of my monthly take home pay. More than three times what I spend in a month for my room.

Yet, in many ways, I am a fortunate member of the hidden poor. I at least have a heated room in which to live, and access to a kitchen and a bathroom. I no longer juggle three and four part-time jobs to make ends meet, as I had done for the past three years, I now have retirement benefits. And for the first time in nine years, I have access to good health care. (In the middle of that nine- year period, there was a year when I had health insurance, but no transportation to a clinic or hospital.)

Unfortunately I can’t eat healthcare benefits and I can’t live in a retirement account. So I looked into Section VIII housing. Alas! Foiled again.

“In general, the family's income may not exceed 50% of the median income for the county or metropolitan area in which the family chooses to live.” http://portal.hud.gov/hudportal/HUD?src=/topics/housing_choice_voucher_program_section_8.

Where I live 50% of the median income is $12,500 and the average apartment, including Section VIII housing, is $600 per month, 35% of my take home pay. Usually utilities are not included in the rental fee. At $27,000 per year, however, my income is more than double the maximum income level for Section VIII. Even my take home pay of $20,800 per year, what I actually have to live on, is too high. And how does someone making $12,500 come up with nearly $1,000 just for deposit fees?

Yet according to the U.S. government, I am not poor. The poverty index is $11,702. Statistics indicate that 15% of Americans eek by at that income level, although they receive and are dependent on governmental services. Those with earnings above the poverty level yet unable to afford an apartment, transportation, food, or health care are not included in that 15%. http://www.economist.com/news/briefing/21565956-americas-poor-were-little-mentioned-barack-obamas-re-election-campaign-they-deserve.

If poverty were redefined not by a number unchanged for decades, if a definition of poverty actually included those who are unable to afford basic housing, food, and medical care, how high would the percentages be? The only online article addressing that question stated that one out of four Americans earns less than $10 per hour and 59% live in a household where at least one person receives some sort of governmental assistance. Unfortunately, that article does not define the term “governmental assistance”.

And defining that term is not easy. Some definitions of “governmental assistance” include government backed student loans, which theoretically will be repaid. Some include Social Security benefits, a fund the recipient contributed to. Still others include only benefits such as SNAP, WIC, and assistance other than loans or funds paid into and available for tapping into at a later time. No definition includes benefits disguised under such terms as economic development grants, tax and oil subsidies, government bailouts, or other government assistance provided to large corporations.

http://www.globalresearch.ca/unemployment-and-poverty-in-america-75-economic-numbers-from-2012-that-are-almost-too-crazy-to-believe/5316546

Discussions on solutions to the fiscal cliff don’t give any serious attention to the hidden poor. According to the Wall Street Journal, anticipated tax increases in 2013 by tax category are:

Ave Inc	Inc Amt	% of Increase
50,000 - 75,000	2,399	4.8% to 3.20%
75,000 - 100,000	3,688	4.92% - 3.69%
100,000 to 200,000	6,662	6.66% - 3.33%
200,000 - 500,000	14,643	7.32% - 2.93%
500,000 to $1 mil	38,969	7.79% - 3.9%
More than $1 mil	254,637	25.46%

Incomes below $50,000 aren’t even listed in the table but the Wall Street Journal's financial calculator will tell you. See http://blogs.wsj.com/economics/2012/12/19/tax-increases-coming-whether-fiscal-cliff-is-averted-or-not/?mod=e2tw

 For someone making an annual gross income of $27,000, the increase would be $540, here the equivalent of about one and a half weeks’ of the average take home salary. But remember: $540, as explained before, comes from someone who cannot afford an apartment unless they pay well above the typical financial expert’s recommended 25-33% for housing costs, one for whom the question of whether to give up food, rent, or transportation is a very real question. A savings account was most likely sacrificed long ago.

And that $540 additional tax won’t just provide food assistance for a homeless child. It also subsidizes the income of the billionaire with yachts, palatial homes, automobile collections, and jets.