… And the Poor Get Poorer

The Federal Reserve just released its Survey of Consumer Finances, the only government survey of wealth in America. The Survey is conducted every three years. This survey, conducted in 2010, is the first one to reflect the effects of the Wall Street Meltdown in 2008.

How does it look? Bad. Really, really bad.

The median wealth of American families (meaning half above and half below) dropped from $126,400 in 2007 all the way down to $77,300 in 2010. That's a 39% slide. It puts the median net worth of American families at its lowest level since 1995, fifteen years earlier.

About 12% of American families have a negative net worth. Meaning that they're broke.

Among Americans with no high school diploma (15 percent of the adult population), median wealth plunged from $34,800 in 2007 to $16,100 in 2010, a 54% drop. That is the lowest level since at least the Fed's 1983 survey, maybe earlier. So three decades of progress have been wiped out.

Among minorities, median wealth plunged from $29,700 to $20,400. That is the lowest level since 1992. White median wealth is now 540% higher than minority median wealth.

The median value of American homes dove from $209,500 in 2007 to $170,000 in 2010. But the median mortgage was almost completely unchanged: $74,700 in 2007, $74,100 in 2010. So debt payments increased from 7% of income to 11% of income.

In 2007, the bottom 25% had a net worth of $14,800 or less. In 2010, the bottom 25% had a net worth of $8,300 or less, a 44% decline.

In 2007, the top 10% had a net worth of $955,600 or more. In 2010, the top 10% had a net worth of $952,500, a decline of less than 1%.

Let me sum it up for you: In the greatest economic crisis that the United States has faced since the Great Depression, the rich barely lost a nickel. But the poor definitely got poorer. And people in the middle were crushed.

If this continues any longer, then we can invite a priest to administer last rites to the American Middle Class.

Courage,

Alan Grayson

How You Can Tell When the Deficit is a Problem

A few days ago, I was stuck in the car for a long drive. Because of the complete absence of progressive talk from Orlando's airwaves, I had no real choice but to listen to the nasal maundering of Mark Levin on the radio. Levin was very upset about the federal deficit.

Interestingly, Levin was a high-level appointee in the Reagan Administration. Dick Cheney, who was Reagan's Defense Secretary and later the Vice President, said 10 years ago that "Reagan proved deficits don't matter."

I must concede that it is rather difficult to reconcile the conflicting statements of these two gentlemen, Messrs. Levin and Cheney. Evidently, they believe deficits are a terrible tragedy when a Democrat is President, and a wonderful gift when a Republican is President.

There has got to be a more objective standard than that.

Here's one: the federal deficit is a problem when long-term interest rates are high, and not much of a problem when long-term interest rates are low. The Federal Reserve dictates short-term interest rates, but long-term rates still are, pretty much, set by the market, in its usual ruthless fashion. (Which is why James Carville said that after he dies, he "want[s] to come back as the bond market. You can intimidate everybody.&quot

When long-term interest rates are high, a federal deficit competes against and "crowds out" private borrowing and investment. When long-term interest rates are low, the federal deficit is not taking away from borrowing by the private sector. On the contrary, the federal deficit is acting as a needed boost to aggregate demand in the economy, an action also known as "fiscal policy." When the economy is slack, every dollar of reduction in federal spending takes three or four dollars off of our gross national product.

So, by that test, where are we? Well, as I explained last week, long-term U.S. interest rates are at their lowest in history. So what does that tell you about the deficit?

Sorry – I didn't mention that there was going to be a quiz.

When Ronald Reagan was President, long-term interest rates sometimes exceeded 15% – ten times as high as long-term interest rates today. The market was screaming at the top of its lungs that the Reagan deficit was too high. And today? Silence.

Look around the world. The ten-year note in Greece yields a little less than 30%. Pakistan, 13%. Portugal and Venezuela, 12%. In those countries, the bond market is shouting, "Cut that out!"

Not here.

Thanks to all the deficit-mongering by Mark Levin, Rush Limbaugh, Fox "News," etc., a lot of Americans are scared by the federal deficit. The advice from Democratic pollsters is to go along with this hand-wringing. But there is an alternative: Explain to the American people when a federal deficit is bad, and when it is not.

Like I just did.

Courage,

Alan Grayson

11 Years Ago Today

As I mentioned on MSNBC last night, today marks 11 years since the Bush tax breaks for the rich were enacted. President George W. Bush signed the Economic Growth and Tax Relief Reconciliation Act on June 7, 2001.

Bush claimed (as right-wingers always do) that tax breaks for the rich would create jobs in the private sector. Well, they haven't. There were 110 million private sector jobs in America in 2001. There are 110 million private sector jobs in America today. Despite a population increase of more than 25 million, there are no more private sector jobs today than when the Bush tax breaks for the rich became law.

In the past 11 years, the number of Americans living in poverty has increased from 33 million to 44 million. The number of Americans receiving food stamps has risen from 18 million to 46 million. "Trickle-down" has not even been a trickle.

But what could we expect? We didn't give tax breaks to the poor; we gave tax breaks to the rich. And for the rich, the past 11 years has been one long party. According to the Paris School of Economics, the top 1% in America saw their share of national income increase by more than 13% from 2001 to 2010. The top 0.1% saw their share of income increase by 20%. The top 0.01% saw their share of income explode by more than 37%, from 2.4% of all of the income in America to 3.3%.

The Bush tax breaks for the rich have yielded the most unequal distribution of wealth in American history, more unequal even than that of 1929, just before the Great Depression.

The lurch toward inequality started decades ago; the Bush tax breaks for the rich only accelerated it. According to the nonpartisan Congressional Budget Office, since 1979, income for the top 1% has increased by $700,000 a year, while income for the bottom 90% has declined by $900 a year. Between 1992 and 2007, income for the richest 400 Americans increased by 392%, as their taxes dropped by 37%.

You see where this is going. The end-game of the Bush tax breaks for the rich is the end of the middle class in America. No jobs, no healthcare, no pensions, no home equity, no higher education. The rich get richer, and the poor get poorer.

The Bush tax breaks are due to expire in a few months. We are at a fork in the road.

No more tax breaks for the rich. No. No. No. No.

Courage,

Alan Grayson

"The rich get richer and the poor get laid off.
In the meantime, in between time,
Ain't we got fun?"

– Van & Schenck, "Ain't We Got Fun" (1921)

One Thing I Like About the Tea Party

I'm not exactly a fan of the Tea Party. When a debate among Republican candidates was marred by Tea Party members in the audience urging the uninsured to die, I called that "sadism." I said on national TV that: "It's the same impulse that led people in the Coliseum to cheer when the lions ate the Christians."

The year before, I said that teabaggers attending a Glenn Beck rally "were wearing sheets over their heads 25 years ago."

At around the same time, when a reporter compared Ron Paul libertarians to Tea Party members, I said: "Many of the libertarians are physicists, and many of the Tea Party people don't bathe. There's really not much in common there."

Nevertheless, there is one thing that I like about the Tea Party:

They get their people nominated. And often elected.

I had a ring-side seat to a Tea Party take-out in 2010, because I served on the same House Committee as Mike

Castle, a Republican candidate for the Senate. Castle had been the Governor of Delaware for eight years. Then he served nine terms in the U.S. House of Representatives. In the ninth most-Democratic state in America, Republican Castle won every House race after his first one by at least 17 points.

But the Tea Party deemed Castle disturbingly normal. So they dumped him in favor of Christine O'Donnell, who is not a witch. At least she says that she is not a witch.

Here are some other things that Christine O'Donnell said:

"It's not enough to be abstinent with other people. You also have to be abstinent alone." On the same subject: "If he already knows what pleases him and he can please himself, then why am I in the picture?"

"One of my first dates with a witch was on a satanic altar."

"There is just as much, if not more, evidence supporting" creationism as evolution. "You know what? Evolution is a myth."

Having women in the military "cripples the readiness of our defense."

"American scientific companies are cross-breeding humans and animals, and coming up with mice with fully functioning human brains."

Christine O'Donnell didn't pay her taxes. She didn't pay her mortgage. She used campaign contributions to pay her rent. She lied to the Federal Election Commission. She lied about her education.

And yet, for all of that, Christine O'Donnell defeated Mike Castle. Because for Tea Party members, all that mattered was that Christine O'Donnell was a Tea Party member, and Mike Castle was not.

Same thing with Robert Bennett and Mike Lee, in Utah. Same thing with Trey Grayson (no relation) and Rand Paul, in Kentucky. Same thing with Richard Lugar and Richard Mourdock, in Indiana. The Tea Party puts its own people in, and puts everyone else out.

I respect that.

I want to see more progressive Democrats in office. Not only more Democrats, but better Democrats.Tomorrow, there are primary races in California and New Mexico. There are good Progressives in many of those races, and they need our help to pull this off. I have told you a little bit about three of them:

Norman Solomon, who had an FBI file when he was 14. (I didn't tell you about the time that Solomon stood in the path of a freight train that had a nuclear weapon on board.)

Eric Griego, who grew up dirt-poor, and hasn't forgotten what that was like. (I didn't tell you that when Griego was asked to identify the most important issue today, he didn't say jobsjobsjobsjobsjobs like everyone else, but rather the iron control that corporate special interests have over politics and government.)

Lee Rogers, a distinguished doctor, professor and medical researcher. (I didn't tell you what an utter dirtbag Rogers is running against.)

The Tea Party puts worse and worse Republicans in Congress – selfish, bigoted tools. The only way that we can counter that is for us to put better Democrats in Congress, Democrats who will fight for justice, equality and peace.

These primaries are tomorrow. If you want to help, then click here.

Courage,

Alan Grayson

Yesterday: The Lowest Interest Rates in History

Yesterday, the 10-year Treasury note hit its lowest interest rate in history. For the third day in a row.

I didn't hear that reported. Did you?

Treasury notes started trading in substantial amounts during World War I, almost 100 years ago. Until Wednesday of this week, the lowest interest rate in history on 10-year notes was 1.672%. That was in February 1946, twelve years before I was born. (That rate re-appeared, for a few brief moments, last September.)

On Tuesday, the rate for 10-year notes closed at 1.73%. On Wednesday, the rate dropped past the all-time low, and kept going, finishing at 1.62%. Thursday set a new all-time low, finishing at 1.58%. On Friday, the rate for 10-year notes finished at 1.47%.

That's a 15% drop. In three days.

The yield on 10-year Treasury notes actually plunged all the way down to 1.44% during Friday trading. That's the new all-time low. Until Monday, at least.

Here are some questions that come to mind:

Why is this happening?

Is this good news or bad news? (Hint to Obama Administration: you can take credit for it.)

Will the trend continue?

What does it mean for the middle class? For mortgages and car loans? For corporate profits? For fiscal policy?

Who gains and who loses?

Unfortunately, there are no answers to any of these questions today, because reaching a 100-year low in interest rates is not considered news.

Here are the headlines yesterday from the Associated Press:

1. The unemployment rate rose from 8.1% to 8.2%.
2. The UN Human Rights Council voted to condemn Syria.
3. There was a large fire in New Mexico (video!).
4. A black bear wandered into a schoolyard (more video!).

Here are the headlines yesterday from ABC News:

1. A teacher slapped a student.
2. A roommate issued a humorous apology for taking someone else's milk from the fridge.
3. "Why Idiot Humans Are Best Cyber Weapon"
4. A new record was set for world's longest Ferris wheel ride.
5. A mother choked a bully.

I hate to be a scold. I really do. But important things are happening. Can someone in the media, or among our so-called leaders, please pay some attention? Please?

You can't lead people anywhere if your eyes are closed.

Courage,

Alan Grayson

I Know Something You Don't Know

I know something you don’t know, unless you happen to have been a Democratic Member of Congress. I know what happens in the House Democratic Caucus Meetings.[br /]
Contrary to popular belief among Fox News commentators, we don’t greet each other in those meetings as “Comrade” (although occasionally, the salutations of “Brother” and “Sister” may be heard). We do not begin the meetings with a Pledge of Allegiance to Karl Marx. We do not conduct responsive readings from the Communist Manifesto.  [br /]
Just as the other side doesn’t auction off tax breaks to special interests in their caucus meetings. At least, I don’t think so.  I’ve never been to one of those meetings. But I think that they do that some other way.[br /]
The House Democratic Caucus Meetings take place in a somewhat crowded conference room, underground.  No natural lighting. And the food I remember most is . . . cold pizza. Maybe that’s the food I remember because I can still taste it.[br /]
Anyway, the Leadership establishes the agenda and conducts the meetings. There always is an opportunity at the end for the rank-and-file to speak.[br /]
Some Members attend every meeting (the ones who like cold pizza, I guess). Some Members sometimes attend, normally if there is some hot issue that they want to hear about. Some Members never attend. (One Member once told that that he doesn’t attend the caucus meetings because “they don’t listen.” I said, “if you’re here, and everyone else is there, then they can’t hear you.”)[br /]
One of my main reasons for attending the House Democratic Caucus meetings is that I was hoping to glimpse something that didn’t happen very often, but was well worth the wait when it did. Something dramatic and vivid and just awesome. Something that I would enjoy at the time, and then think about for days afterward.[br /]
A speech by Congressman Jesse Jackson, Jr., the gentleman from Illinois.[br /]
The word “speech” doesn’t do it justice. More like thunder. More like a jackhammer.[br /]
A volcanic eruption of truth.[br /]
It wasn’t really loud, and it wasn’t long, either. It was just this explosive, overwhelming torrent of thoughts and facts and emotions and principles. It was so powerful that Jesse’s body literally quivered – vibrated – as he spoke.[br /]
Each Jesse Jackson, Jr. speech was different, but they were all the same. Whatever words that came out that day, it all came down to this: “For all the people who desperately need our help, let’s do the right thing. Let’s help them.”[br /]
In all those meetings, I never heard Jesse Jackson, Jr. ask for anything for himself, or for some special interest, or for some donor. It was always something for the ones whom his father mentioned, in a speech that I remember hearing on July 18, 1984. He always asked for something to help “the desperate, the damned, the disinherited, the disrespected, and the despised.”[br /]
You know. My kind of people.[br /]
Jesse Jackson, Jr. faces a primary challenge in Illinois next Tuesday. His challenger is a former Democratic Member of Congress. I want us to help him win.[br /]
I will confess to you. I have an entirely selfish motive. I want to be in Congress with Jesse Jackson, Jr. next year, and I want to hear more of those speeches. Someone needs to keep reminding us what it’s all about.[br /]
Please click here to help.[br /]
Courage,[br /]
Alan Grayson[br /]
“My constituency is the desperate, the damned, the disinherited, the disrespected, and the despised. They are restless and seek relief. They have voted in record numbers. They have invested the faith, hope, and trust that they have in us. The Democratic Party must send them a signal that we care. I pledge my best not to let them down.”[br /]

-Rev. Jesse Jackson, “The Rainbow Coalition” (1984).[br /]