14. The Myth of Poverty
Throughout history, the inequality between haves and have-nots has been the dry tinder of many wars, resulting in the deaths of both perpetrators and innocents. The inherent biological inequalities, tethered to environmental disparities, have presented ongoing challenges. Moral and cultural norms have yielded to a panoply of economic and political systems to address these inherent economic inequalities. This paper does not intend to solve the differences in nature and heredity but rather to expose the Census Bureau’s statistical inaccuracies about the state of poverty in America and raise the question of why and at what expense.
In their book The Myth of American Inequality (MAI), Ekelund, a liberal economist; Gramm, a conservative economist; and Early, a statistician, reveal the Census Bureau's falsehoods about poverty to the American public. They suggest that, through two significant omissions, the census is falsely perpetuating the cottage industry that makes a living off of poverty, including many politicians. First, let's discuss the Census Bureau's significant misrepresentations through two omissions.
The Census Bureau uses money income before taxes and does not account for capital gains or non-cash benefits, which are significant. The poverty threshold for a family with two children and one grandparent in 2022 was $35,801, adjusted annually by the CPI. The Census Bureau states that 11.5% of our population is below the poverty level in 2022. Moreover, the top 20% of earnings make 16.7 times what the bottom 20% of earnings make. Does this suggest a significant discrepancy between the top and bottom quintiles, and is it correct?
MAI asserts that $1.9 trillion of the $2.8 trillion in welfare paid annually to the poor is not counted as income. Furthermore, the 81% of taxes paid by the top quintile is not subtracted from income. When these two changes are made, the poverty rate drops to 2%, and the income discrepancy between the top and bottom quintiles shrinks from 16.7 times to 4 times. By counting $1.9 trillion of welfare payments as income received, poverty is reduced from 11.5% to 2% for the calendar year 2022. Additionally, when removing the 81% of federal taxes paid by the top 20%, the income discrepancy between the rich and the poor decreases from 16.7 to 1 to 4 to 1 based on net income and in-kind transfers—a dramatic difference!
Although MAI does not consider capital gains, which would likely increase the “4 to 1” income ratio of the top to the bottom 20%, the reality is that when you add the $1.9 trillion to the bottom group, the poverty rate drops to 2%, and when you subtract 81% of federal income taxes paid by the top 20%, the Census Bureau's stated income discrepancy of 16.7 to 1 is hugely overstated. Why aren't we doing a victory lap for winning the war against poverty?
In order to achieve this substantial reduction in poverty, a number of unwanted consequences have emerged, presenting new challenges today. Let’s take a look at some of them:
Since the advent of welfare in 1965, obesity has increased from 13% to 43%, and overweight is now 70% of the population, leading to lower high school graduation rates and higher unemployment (from two studies: BRFSS & NHANES).
Since 1965, single-parent families have increased from 7% to 37% (NY Times, "Explosive Rise of Single Parent Families," Sept. 17, ’23). Others estimate that up to 42% of all families are single-parent. Government payments to unwed women to have children have upended the traditional family unit, leaving 25 million children less likely to shed their dependence on the government.
The latest international PISA test, given to 15-year-olds, shows a decline, with the U.S. scoring 37th in math, despite paying the second-highest in the world for K-12 education.
From the surge in federal debt, $6 trillion to $34 trillion, and the printing of money by the Federal Reserve, the currency has exploded from $4.6 trillion in circulation to $19.5 trillion this century. Every second, our nation goes $79,000 further in debt, with no political change in direction.
Social security buying power has declined by 36% after cola increases this century, acting as a proxy for the decline of the middle class. In this new reality, the bottom three quintals (60%) of the population have been income-equalized at a lower level. The extent of federal printing and borrowing this century has severely impacted the middle class.
Finally, the value of life is not as cherished and is reduced to material in government actions, such as hospice care, assisted suicide, vital organ transplants, and abortion, to which many citizens have acquiesced.
Today, the top 40% of earners are paying 95% of the federal income tax, with 50% of the population contributing merely 2.26% (NTUF—2020). With over 25 million children in single-parent families, the path to upward mobility has been stifled. Neither hope nor opportunity is prevailing over dependence. Citizens are being demoted into a caste system and class mentality. Americans are less in control of their lives than ever before. In this atmosphere, the last thing we need is for our federal agencies, through omission, to misrepresent data in a manner that will only increase the polarity between haves and have-nots.
Have a blessed week!
Tony Christ