A Christian Liberal is NOT an oxymoron.

Posted by XT on February 11th, 2008 in US News

Michael Cox and Richard Alm, of the Federal Reserve Bank of Dallas, want us to know that being poor isn’t so bad. Their proof:

The top fifth of American households earned an average of $149,963 a year in 2006. As shown in the first accompanying chart, they spent $69,863 on food, clothing, shelter, utilities, transportation, health care and other categories of consumption. The rest of their income went largely to taxes and savings.

The bottom fifth earned just $9,974, but spent nearly twice that — an average of $18,153 a year. How is that possible? A look at the far right-hand column of the consumption chart, labeled “financial flows,” shows why: those lower-income families have access to various sources of spending money that doesn’t fall under taxable income. These sources include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts.

I’m not sold, forgive the expression. Spending twice as much as earned is not a sustainable situation. “Drawing down a bank account” for instance, is fine for a month or two. But bank accounts have a way of becoming exhausted. And few, if any, people draw down their bank accounts when they have a choice. What that represents is a desperate attempt to keep family life on a normal keel when means of support is inadequate.

Cox and Alm also blythely speed by perhaps the greatest division among Americans – those of us for whom there is no extra income and those for whom there is enough extra income to account for an entire family’s income. If a bank account is being drawn down, then it can hardly function as a rainy day fund anymore, can it? A person does not both draw down and build up savings at the same moment. The real picture the authors neglect is that of one-fifth of the population keeping miserly watch over half of all income, slowly accumulating even more savings and property, while one-fifth gets by on a pittance and must use everything they’ve managed to save from more affluent times just to get by.

As well, the top fifth managed to spend almost seventy thousand dollars on the same necessities for which the lowest income earners get by on less than twenty thousand dollars. If there is so little difference between rich and poor, then why do the rich need three-and-a-half times more to meet the same basic needs? Something is wrong with the measurement, it would seem. If only the richest fifth would simply live like the poorest fifth, they could bank another $40,000 a year and more!

Alm and Cox are plying nothing but the traditional argument of the miserly right – there is no real poverty in America, only the jealous who simply don’t have as much as the rich. To make this myth work, they build an image of the richest Americans being just like you and I. It’s a lie. Even if someone making $150,000 a year has a tight budget because of debt, they still have income that can be juggled. For someone making under $10,000 a year, there is nothing there to juggle.

Need to go to the doctor? A family with higher income can decide not to pay a bill, if worse comes to worse. A poorer family, even if they skip paying a bill, may not be able to afford the doctor.

So let me ask – if there is really so little difference between the rich and the poor, then why are the rich so hesitant to part with what they have? If there is no benefit to being rich, then why do so many still aspire to it?

More to the point, if the right can only build a myth of prosperity by defying common sense, then when will people wake up and smell the coffee?

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