Friday, October 26, 2012

Top Romney Adviser: If You Own A Microwave, You Aren’t Really Poor


A top adviser to Mitt Romney’s presidential campaign denied the nation’s income inequality gap in a Wall Street Journal editorial on Thursday, brushing off the growing concentration of wealth in the hands of the very wealthy by arguing that lower-income Americans are buying more consumer goods.
“Today we hear that the gains from economic growth accrue to the highest-income earners while the standard of living of the poor and middle America stagnates and the gap between the richest and the poorest grows ever wider,” Kevin Hassett and Aparna Mathur argue. “That portrait of the country is wrong“:
Yet the access of low-income Americans—those earning less than $20,000 in real 2009 dollars—to devices that are part of the “good life” has increased. The percentage of low-income households with a computer rose to 47.7% from 19.8% in 2001. The percentage of low-income homes with six or more rooms (excluding bathrooms) rose to 30% from 21.9% over the same period.
Appliances? The percentage of low-income homes with air-conditioning equipment rose to 83.5% from 65.8%, with dishwashers to 30.8% from 17.6%, with a washing machine to 62.4% from 57.2%, and with a clothes dryer to 56.5% from 44.9%.
The percentage of low-income households with microwave ovens grew to 92.4% from 74.9% between 2001 and 2009. Fully 75.5% of low-income Americans now have a cell phone, and over a quarter of those have access to the Internet through their phones.
But this argument, a favorite of conservative think tanks like the Heritage Foundation, is highly misleading. Appliances and commonly used consumer gadgets like cell phones are necessities in the 21st century and are significantly cheaper today than they were just decades earlier. In fact, were families to sell their appliances in order to help pay for food and other basic necessities, many would still struggle — for while prices on microwaves and air conditioners have fallen, “the real everyday basics such as quality child care and out-of-pocket medical costs” are “squeezing the budgets of the poor and middle-class alike.”
Hassett argues that safety net programs like “unemployment insurance, food stamps, Medicaid” help families afford basic needs, further shrinking the nation’s income gap. But these programs are already failing to keep up with need and Romney and Ryan have proposed massive cuts to the safety net in order to pay down the deficit and finance a tax cut plan that is heavily skewed towards the rich.
Their approach would only exacerbate the differences between the rich and poor — a gap that has grown dramatically since the late 1970s. Indeed, compared to the 34 countries in the Organization for Economic Co-operation and Development (OECD), the United States has a Gini coefficient — a number that measures the distribution of income on a scale of 0 (perfectly equal) to 1 (perfectly unequal) — of 0.47 and ranks near the very bottom in inequality. America also suffers from the absolute highest “percentage of national income that went to the top 1 percent” and “has seen income inequality increase at a much faster rate than most other countries.”
This trend is already devastating the American democratic ideals of equal opportunity and upward mobility. Unfortunately, neither Romney nor his advisers can see the problem or offer the kind of tax and economic policies that will help solve it.

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