Economics

Subterms

    More stories

    • 138 Shares169 Views

      in US Politics

      Low-income Americans face a ‘hunger cliff’ as Snap benefits are cut

      by

      Gina Melton is facing a dilemma. Like millions of other Americans, Melton and her family relied on food assistance benefits boosted by Congress to help them through the pandemic. Now that extra cash is gone.The reduction has hit them hard. Three of her family members are disabled and one of her daughters works to take care of them through an agency. They had already relied on credit cards to pay for medical equipment that wasn’t covered by the federal health insurance schemes Medicare or Medicaid but have had to stop paying a couple of them in order to afford food.“When you have to choose between feeding your family and paying a credit card bill, you have to choose food,” said Melton, 62.Around 42 million Americans are currently enrolled in Supplemental Nutrition Assistance Program (Snap) benefits. Congress increased Snap benefits in response to the Covid-19 pandemic in March 2020. The last extra payments went out at the end of February in the remaining 32 states that were still issuing them, in addition to the District of Columbia, Guam and the US Virgin Islands.The emergency allotments were authorized in tandem with the Covid-19 emergency declaration in March 2022, but in December 2022, Congress passed a law to end the allotments.The lapse in the additional benefits will reduce Snap allotments for the average recipient by $90 a month, with some households losing $250 a month or more. Older adults at the minimum benefit level will see their monthly Snap benefits drop from $281 a month to $23.Though Melton’s husband, a diabetic, is still recovering from a recent surgery, he has been considering going back to work part time at the age of 65 as the family struggles to afford basic necessities, including healthy food. They’ve cut back on food purchases and buy what’s on sale or in reduced-price bins.“The extra food allotment was helping us a lot,” said Melton. “We’ve started shopping at lower-priced stores that don’t bag your groceries, but for a disabled person like myself, that requires me to go with a helper. We’ve also cut back on some more expensive necessities and are relying on the local food pantry more.”The end of the expanded benefits comes at a time when US consumer debt has been on the rise, with 20.5 million Americans currently behind on their utility payments and nearly 25 million behind on credit card, auto loan or personal loan payments, the highest number since 2009. Low-wage workers in the US, who make less than $20 an hour, have experienced drops in wage growth compared with other workers in recent months.Food prices have and are expected to continue to significantly rise in 2023 as well. The US Department of Agriculture estimated that all food prices will increase by 7.9% in 2023 – and they were already 9.5% higher in February 2023 compared with February 2022.With so many Americans receiving Snap benefits because of low wages, unemployment and underemployment, the sudden end of the emergency allotment has been characterized as a “hunger cliff”.Ellen Vollinger, Snap director for the nonprofit Food Research and Action Center, said: “The cliff is aptly named because this a very abrupt change in what people are going to have in their food budget and it’s affecting tens of millions of people.“When the federal government doesn’t provide as much support for food, it doesn’t mean that hungry people all of a sudden are better off, or no longer need assistance, or they go away. The hunger is still there, people are still there, the need is there, but the federal government is too abrupt in shifting the burden and costs of dealing with that downstream, to states [and] localities, and puts a greater burden on charities.”Vollinger noted that the end of emergency allotments leaves low-income families facing difficult choices around food, from forgoing meals and purchasing less to buying cheaper food.“There’s a lot of stress, that’s why we call it a hunger cliff. It’s very precipitous,” she added.Food banks have been bracing for a surge in demand as the expanded Snap benefits expire, with state agencies directing recipients to food pantries to help cope with the reduction in benefits.Studies have shown that the extra payments worked. The Urban Institute found that the increased Snap benefits during the Covid-19 pandemic kept 4.2 million Americans out of poverty in the fourth quarter of 2021, reducing poverty by 9.6% and child poverty by 14% in states with emergency allotments. They also have a wider economic benefit. Every $1 invested in Snap benefits yields between $1.50 and $1.80 in economic activity during economic downturns.A 2022 survey conducted by Propel found that among Snap recipients, there was a significant level of higher food insecurity in states where emergency allotments were cut off. In a January 2023 survey, there was an increase in the number of Snap recipients who reported skipping meals, eating less, visiting food pantries or relying on family or friends for meals compared with December 2022.The end of the emergency Snap allotments also coincides with a push from Republicans in Congress to cut regular Snap benefits this year, despite the majority of Americans having favorable views of the benefits. A January 2023 survey conducted by Purdue University found that seven out of 10 respondents supported permanent expansions of the Snap program.But an expansion looks very unlikely in the current Congress. In the meantime, recipients are facing tough choices.“I just received the last one last week,” said Patricia Ameral, 67, of Massachusetts, referring to the Covid emergency benefits. “I am certain it will mean the difference between consuming less fresh produce and less meat, fresh or frozen.” More

    • 175 Shares99 Views

      in US Politics

      US banking system 'remains sound' despite bank collapses, says treasury secretary Yellen – video

      by

      Janet Yellen, the Treasury secretary, informed Congress that the recent collapses of two US banks, Silicon Valley Bank and Signature Bank, does not reflect on the overall strength of the US banking system. Yellen told Congress the US banking system ‘remains sound,’ claiming that the government’s swift response to the failures helped to restore public confidence in the banking system. ‘I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,’ she said More

    • 163 Shares179 Views

      in Elections

      US banking system 'remains sound' despite bank collapses, says Janet Yellen – video

      by

      Janet Yellen, the US treasury secretary, told Congress that the recent collapses of two US banks, Silicon Valley Bank and Signature Bank, does not reflect on the overall strength of the US banking system. She told Congress the US banking system ‘remains sound’, claiming that the government’s swift response to the failures helped to restore public confidence in the banking system. ‘I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,’ she said More

    • 163 Shares169 Views

      in US Politics

      Trump pick for World Bank chief makes early exit after climate stance misstep

      by

      Trump pick for World Bank chief makes early exit after climate stance misstepDavid Malpass’ decision comes after running afoul of White House for failing to say whether he accepts global warming consensus World Bank president David Malpass on Wednesday said he would leave his post by the end of June, months after running afoul of the White House for failing to say whether he accepts the scientific consensus on global warming.Malpass, appointed by Donald Trump, will vacate the helm of the multilateral development bank, which provides billions of dollars a year in funding for developing economies, with less than a year remaining in a five-year term. He offered no specific reason for the move, saying in a statement, “after a good deal of thought, I’ve decided to pursue new challenges”.Treasury secretary Janet Yellen thanked Malpass for his service in a statement, saying: “The world has benefited from his strong support for Ukraine in the face of Russia’s illegal and unprovoked invasion, his vital work to assist the Afghan people, and his commitment to helping low-income countries achieve debt sustainability through debt reduction.”Yellen said the United States would soon nominate a replacement for Malpass and looked forward to the bank’s board undertaking a “transparent, merit-based and swift nomination process for the next World Bank president”.By long-standing tradition, the US government selects the head of the World Bank, while European leaders choose the leader of its larger partner, the International Monetary Fund (IMF).Pressure to shake up the leadership of the World Bank to pave the way for a new president who would reform the bank to more aggressively respond to climate change has been building for over two years from the United Nations, other world leaders and environmental groups.In November 2021, special adviser to the UN secretary-general on climate change Selwin Hart called out the World Bank for “fiddling while the developing world burns” and said that the institution has been an “ongoing underperformer” on climate action.Pressure on Malpass was reignited last September when the World Bank chief fumbled answering a question about whether he believed in the scientific consensus around climate change, which drew condemnation from the White House.In November, special envoy on climate change John Kerry said he wants to work with Germany to come up with a strategy by the next World Bank Group meetings in April 2022 to “enlarge the capacity of the bank” to put more money into circulation and help countries deal with climate change.More recently, Yellen has launched a major push to reform the way the World Bank operates to ensure broader lending to combat climate change and other global challenges.Malpass took up the World Bank helm in April 2019 after serving as the top official for international affairs at US treasury in the Trump administration. In 2022, the World Bank committed more than $104bn to projects around the globe, according to the bank’s annual report.A source familiar with his thinking said Malpass had informed Yellen of his decision on Tuesday.The end of the fiscal year at the end of June was a natural time to step aside, the source said. The World Bank’s governors are expected to approve the bank’s roadmap for reforms with only minor changes at the spring meetings of the IMF and World Bank set for mid-April.Still, World Bank sources said they were surprised by his decision to step down before the joint meetings of the World Bank and the International Monetary Fund (IMF) in Morocco in October.TopicsWorld BankEconomicsGlobal economyUS politicsnewsReuse this content More

    • 125 Shares179 Views

      in World Politics

      Vietnam and India Are Now Acting to Contain Aggressive China

      by

      The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

    • 63 Shares159 Views

      in World Politics

      The Truth About US Democracy

      by

      The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

    • 150 Shares159 Views

      in US Politics

      Fed announces smallest interest hike in a year as inflation ‘eases somewhat’

      by

      Fed announces smallest interest hike in a year as inflation ‘eases somewhat’Quarter-point increase to a range of 4.5% to 4.75% signals a slowdown in Fed’s fight against soaring inflation The US Federal Reserve signaled a slowdown in its fight against soaring inflation on Wednesday, announcing its smallest hike in interest rates in almost a year.After its latest meeting, the Fed announced a quarter-point increase in its benchmark interest rate to a range of 4.5% to 4.75%, the smallest increase since March last year. “Inflation has eased somewhat but remains elevated,” the Fed said in a statement adding that “ongoing increases” will be appropriate as it seeks to bring prices down.“We covered a lot of ground, and the full effects of our rapid tightening so far are yet to be felt. Even so, we have more work to do,” said Fed chair Jerome Powell.Inflation in the US has been running at levels unseen since the 1980s, triggering a cost of living crisis as the price of everything from eggs to gas and rent has shot up.In order to tamp down inflation the Fed has aggressively hiked rates as it seeks to cool the economy and bring prices back under control.A year ago the Fed rate – which affects the interest rates on everything from business and personal loans to mortgages and credit card rates – was close to zero. After the most rapid series of rises since the 1980s, it is now at a level last seen in 2007.There are signs that prices are coming down. In December, the annual rate of inflation fell to6.5% from 7.1% in the previous month, the sixth straight month of yearly declines and well below the peak of 9.1% it hit in June, its highest rate since 1982.Consumer spending – the largest driver of the economy – fell 0.2% from November to December. The housing market has slowed and many of the major tech companies have announced large job cuts as they have moved to rein in spending.But inflation remains well above the Fed’s annual target rate of 2% and the central bank has said it will keep rates high until price stability is achieved. The Fed also continues to worry about the jobs market. The unemployment rate was 3.5% in December, a 50-year low and on Wednesday the labor department announced there were 11m job openings in the US in December – almost two available jobs for every person looking for one and an increase from November.The tight labor market has driven up wages and Powell, has made clear that the central bank believes rising wages threaten to spur on inflation – a so-called wage-price spiral. “You don’t see that yet, but the whole point is, once you see it, you have a serious problem. That means that effectively in people’s decision-making, inflation has become a real salient issue,” said Powell. “That is what we can’t allow to happen.”TopicsFederal ReserveUS economyJerome PowellEconomicsUS politicsInflationnewsReuse this content More

    • 200 Shares169 Views

      in US Politics

      Republicans aren’t going to tell Americans the real cause of our $31tn debt | Robert Reich

      by

      Republicans aren’t going to tell Americans the real cause of our $31.4tn debtRobert ReichThe rich used to pay taxes. Now they loan money to the US government – at a profit that everyone else pays for The dire warnings of fiscal hawks are once again darkening the skies of official Washington.They’re demanding that the $31.4tn federal debt be reduced and government spending curtailed – thereby giving cover to Republican efforts to hold America hostage by refusing to raise the debt ceiling.It’s always the same when Republicans take over a chamber of Congress or the presidency. Horrors! The debt is out of control! Federal spending must be cut!When they’re in power, they rack up giant deficits, mainly by cutting taxes on corporations and the wealthy (which amount to the same thing, since wealthy investors are the major beneficiaries of corporate tax cuts).Then when Democrats take the reins, Republicans blame them for being spendthrifts.Not only is the Republican story false, but it leaves out the bigger and more important story behind today’s federal debt: the switch by America’s wealthy over the last half century from paying taxes to the government to lending the government money.This backstory needs to be told if Americans are to understand what’s really happened and what needs to be done about it. Republicans won’t tell it, so Democrats (starting with Joe Biden) must.A half century ago, American’s wealthy helped finance the federal government mainly through their tax payments.Tax rates on the wealthy were high. Under Republican president Dwight Eisenhower, they were over 90%. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.Since then – courtesy of tax cuts under Ronald Reagan, George W Bush and Donald Trump – the effective tax rate on wealthy Americans has plummeted.Not only has their income tax rate dropped but other taxes that hit them hardest, such as the corporate tax, have also declined.Even as the rich have accumulated unprecedented wealth, they are now paying a lower tax rate than middle-class Americans.Trump’s 2017 tax cut – largely a handout to the rich – helped push the tax rate on the 400 wealthiest households below the rates for almost everyone else.By 2018, the 400 wealthiest American households paid a lower total tax rate – including federal, state and local taxes – than any other income group. Their overall tax rate was only 23%. It had been 70% in 1950.Middle-class and poor families didn’t benefit from the drop in income and corporate taxes. They now pay more in payroll taxes (which finance Medicare and social security) than previously, so their overall taxes have remained fairly flat.One of the biggest reasons the federal debt has exploded is that tax cuts on corporations and wealthier Americans have reduced government revenue.In the first full year of the Trump tax cut, the federal budget deficit increased by $113bn while corporate tax receipts fell by about $90bn, which would account for nearly 80% of the deficit increase.Meanwhile, America’s wealthy have been financing America’s exploding debt by lending the federal government money, for which the government pays them interest.As the federal debt continues to mount, these interest payments are ballooning – hitting a record $475bn in the last fiscal next year (which ran through September). The Congressional Budget Office predicts that interest payments on the federal debt will reach 3.3% of the GDP by 2032 and 7.2% by 2052.The biggest recipients of these interest payments? Not foreigners but wealthy Americans who park their savings in treasury bonds held by mutual funds, hedge funds, pension funds, banks, insurance companies, personal trusts and estates.Hence the giant half-century switch: the wealthy used to pay higher taxes to the government. Now the government pays the wealthy interest on their loans to finance a swelling debt that’s been caused largely by lower taxes on the wealthy.This means that a growing portion of everyone else’s taxes are going to wealthy Americans in the form of interest payments, rather than paying for government services that everyone needs.So, the real problem isn’t America’s growing federal budget deficit. It’s the decline in tax revenue from America’s wealthy combined with growing interest payments to them.Both are worsening America’s already staggering inequalities of income and wealth.What should be done? Isn’t it obvious? Raise taxes on the wealthy.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      TopicsRepublicansOpinionUS politicsDemocratsUS economyEconomicscommentReuse this content More