Cut to Federal Nutrition Assistance Impacts Families and Children in Every PA County

By Chris Lilienthal, Third and State

A major funding cut to the Supplemental Nutrition Assistance Program (SNAP) took effect November 1, impacting 1.8 million Pennsylvanians.

SNAP, formerly known as food stamps, is our nation’s first line of defense against hunger and a powerful tool to help keep families out of poverty. Benefits are modest, offering many Pennsylvania families a crucial bridge in this slow economic recovery.

The November 1 cut is the result of an expiring provision in the American Recovery and Reinvestment Act (ARRA) that temporarily boosted SNAP to strengthen the economy and ease hardship in the wake of the recession. The cut totals $5 billion nationwide for the remaining months of the federal fiscal year (November 2013-September 2014), including $183 million in Pennsylvania.

Nearly 66 cents of every dollar cut in Pennsylvania ($120 million) will reduce the benefits of households with children. Another 37 cents out of every dollar cut ($68 million) will reduce benefits for Pennsylvanians who are elderly or living with disabilities. Click here or on the map below to view how many people, households, and children are impacted by the cut to SNAP in each of Pennsylvania’s 67 counties.

PA County Map

In addition to helping to feed hungry families, SNAP is one of the fastest, most effective ways to spur the economy. Every $1 increase in SNAP benefits generates about $1.70 in economic activity. Benefits boost demand for farm produce, helping to keep our nation’s farms strong.

The cuts may force some Pennsylvanians to choose between food and other priorities. Ruth Vesa, a 78-year-old widow in Pittsburgh, said in August when the cuts were announced: “I’m very thankful for the food stamp program because it enables me to have good food to eat and not be worried about my medical prescriptions. Otherwise I would have to make a choice. Any cuts to the program would be hurtful to me personally.”

For a family of three, the cut will likely mean a reduction of $29 a month – $319 for the remaining 11 months of the fiscal year. This is a serious loss for families whose benefits, after this cut, will average less than $1.40 per person per meal. It is the equivalent of taking away 21 meals per month for a family of four or 16 meals for a family of three.

That’s the bad news. The even worse news is that additional cuts to SNAP could be on the way. In September, the U.S. House narrowly approved legislation that would cut $39 billion in SNAP funding over the next decade. The Senate has not taken up the bill.

If enacted, a cut that large would deny SNAP to approximately 3.8 million low-income people in 2014 and to an average of nearly 3 million people each year over the coming decade, according to Congressional Budget Office (CBO) estimates. Those who would be thrown off the program include many low-income children, seniors, and families that work for low wages.

Nearly 1.8 Million in PA Will See Food Assistance Cut

SNAP helps nearly 1 in 3 U.S. children get enough to eat. All of them will see their benefits cut in November.By Chris Lilienthal, Third and State

Nutrition assistance is our nation’s first line of defense against hunger and a powerful tool to help keep families out of poverty. Come November, this critical federal assistance will be cut, making it that much more difficult for 1.8 million Pennsylvanians to put food on the table for themselves and their families.

The November cut to the Supplemental Nutrition Assistance Program (SNAP), the program formerly known as food stamps, will impact all of the more than 47 million Americans, including 22 million children, who receive benefits. It will likely amount to a reduction of $29 a month in benefits for a family of three — $319 in all through September 2014. This is a serious loss for families whose benefits, after this cut, will average less than $1.40 per person per meal.

To put the cut in some perspective, the Center on Budget and Policy Priorities estimates it will equal out to 21 lost meals per month for a family of four or 16 lost meals per month for a family of three.

A majority of those who receive SNAP benefits are children and the elderly, for whom food assistance is essential. SNAP helps nearly one in three children in the U.S. get enough to eat. All 22 million of them will see their benefits cut in November.

Elderly Pennsylvanians will also be affected. People like Ruth Vesa, a 78-year-old widow in Pittsburgh and Just Harvest client, who said: “I'm very thankful for the food stamp program because it enables me to have good food to eat and not be worried about my medical prescriptions. Otherwise I would have to make a choice. Any cuts to the program would be hurtful to me personally.”

In addition to helping to feed hungry families, SNAP is one of the fastest, most effective ways to spur the economy. Every $1 increase in SNAP benefits generates about $1.70 in economic activity. Benefits boost demand for farm produce, helping to keep our nation’s farms strong.

So why is it being cut? The cut is the result of an expiring provision in the American Recovery and Reinvestment Act (ARRA) that temporarily boosted SNAP benefits to strengthen the economy and ease hardship in the wake of the recession. This small increase has been a lifeline for many Pennsylvanians, a majority of whom work but earn low wages. It has allowed them to stay afloat during the worst economic crisis since the Great Depression.

Even though the economy is still weak and families are still struggling, Congress has not acted to extend the modest increase in nutrition assistance beyond November. In fact, the U.S. House of Representatives could vote on cutting the program by $20 billion or more in the coming weeks. If enacted, such cuts could leave many families and their children without assistance to put food on the table when they need it most.

That is the wrong path for the wellbeing of our nation, the health of our families, and the growth of our economy.

Sequestration Looming Again

Government by crisis has become the hallmark of the Tea Party.  One thing has become indelible the past four years:  Republicans, controlled by Tea Party radicals, cannot govern.  Manufactured crisis after manufactured crisis is harming the economy.  Every time we near a debt ceiling negotiation or a budget crisis the economy contracts, people lose jobs and tax revenues decline.  March 1st is yet another deadline with an extreme sequestration crisis created by Members of Congress and the Senate.  Some, like Jim Gerlach, left Washington with this situation looming.  Pennsylvanians who voted for this extremely dysfunctional system of governing are Lou Barletta, Charlie Dent, Mike Fitzpatrick, Gerlach, Mike Kelly, Tom Marino, Pat Meehan, Tim Murphy, Joe “He’s The” Pitts, Bill Shuster and Glenn Thompson.  

What to Make of the Fiscal Cliff Deal?

By Sharon Ward, Third and State

Tell us what you think about the Fiscal Cliff deal. Take our two-question survey.

The agreement reached by President Obama and Congress on January 1 was both historic and disappointing – and it leaves much unsettled. The urgency of the Fiscal Cliff has dissipated, but significant threats remain to federal funding for state and local services as well as refundable tax credits for low-income working families, Medicaid, Medicare and Social Security.

There is much to dislike in this agreement. It makes permanent most of the Bush era tax cuts, ensuring that income from dividends and capital gains will be taxed at a lower rate than income from work. It makes permanent the estate tax but locks in a tax rate that creates a huge windfall for the top 0.3% of households. Sequestration cuts – the automatic spending cuts that members of both parties hated and the President said would not occur – have been postponed for two months, with three-quarters of FFY 2013 cuts ($85.6 billion) and $109 billion in annual cuts after that still in law through 2022. The President’s line in the sand on raising tax rates for the top 2% of earners got pushed way back, with top rates kicking in at $400,000 for an individual and $450,000 for a couple. A low-wage earner might need 20 years to make that much.

The agreement is at the same time extraordinary. Eighty-five Republican members of Congress voted with their Democratic counterparts to raise taxes on wealthy Americans – no small feat in a Congress defined (some might say dominated) by its Tea Party members, Grover Norquist, and fealty to the no-tax pledge. Even toward the end, the House of Representatives stood firm in its defense of tax cuts, failing to muster enough votes for Speaker John Boehner’s “Plan B,” which included significant spending cuts and limited tax hikes to millionaires and billionaires.

On the plus side, the agreement abandoned the plan for “chained CPI,” a new measure of inflation that would have reduced future cost-of-living increases for Social Security, veterans’ benefits and other critical benefits. There were no additional spending cuts. The family tax credit programs – including the Earned Income Tax Credit and Child Tax Credit – were protected, and improvements made to those credits were extended for five years. Emergency unemployment insurance benefits were extended for laid-off workers who would have faced a significant immediate threat if we went over the cliff.

So what happened? The framework for the debate has always been the same: a grand bargain that would achieve a deficit reduction target of $4 trillion through a combination of cuts and new revenue. 

The President took what could be considered a realistic path – pressing for tax cuts for the middle class and tax hikes for the top 2% who could most afford it (and have done the best over the past decade). He largely succeeded, and while that is a significant victory, it does not raise enough revenue to stabilize the nation’s debt. This will end up putting significant pressure on the spending side of the ledger.

Already much of the press on the agreement is calling for significant new cuts, without acknowledging the $1 trillion in cuts already agreed to in the Budget Control Act of 2011. Plus, the President has lost the leverage of the Fiscal Cliff deadline.

The next fight will take place over the next two months when Congress will have to act to raise the debt ceiling, probably in February. Sequestration cuts will be announced on March 1 and scheduled to begin on March 27, the date that the continuing resolution governing current year spending expires. 

The President acknowledged that the debate is not over in his January 2 press conference and made two strong statements; that the vote on the debt ceiling should not be tangled up in the larger deficit reduction plan, and that new spending cuts have to be matched one for one with new revenue. Still, few are optimistic that Congress will take a reasoned, balanced approach to resolve the remaining issues, as The New York Times notes:

In the weeks to come, Republicans will use not just the debt-ceiling threat, but also the $100 billion across-the-board cuts known as the sequester, delayed for two months in this week’s deal, and the potential shutdown of the government when the current spending resolution expires in March. Standing up to brinkmanship will require a level of resolve that the president has yet to fully demonstrate.

It is also unclear where new revenue will come from given the long-term agreement on the Bush tax cuts and the fact that the President has taken corporate tax reform off the table, arguing that loophole closures should be dedicated to corporate tax reduction. The easiest and most politically popular option, higher marginal tax rates on wealthy individuals, is done. The other options (capping the value of tax deductions for home sales or charitable contributions) will be harder to accomplish.  

So what’s at stake moving forward?

Sequestration cuts. The current plan locks in three-fourths of the cuts ($85.4 billion) plus another $4 billion in discretionary cuts in the current year (FFY2013). While there is some hope current year cuts will be reduced, it is more likely that the debate will center on knocking back the devastating sequestration cuts for 2014 and beyond.

Working family tax credits. One of the surprises of the debate was the targeting of the Child Tax Credit and Earned Income Tax Credit programs, which are refundable for very low-income working families. While the fiscal cliff agreement continues those programs for five years, including the improvements that specifically benefit low-income families, there is grave concern that their refundability may be in jeopardy.

Medicaid. The health care program was excluded from sequestration, but cuts are likely to be on the table. Since states jointly fund this program, reduced federal participation will just shift costs to states. On the plus side, Medicaid is key to the promise of coverage under the Affordable Care Act, so protecting Medicaid is likely to be a high priority for the administration.

Entitlements. Chained CPI might return, as well as cuts to Medicare and Social Security. 

Pressing for additional revenue will continue to be the key to avoiding new deep cuts to health care, education and other critical services. While the Fiscal Cliff no longer looms, the Debt Ceiling Cliff is just over the horizon.

Few in PA Would Be Affected by Ending High-income Tax Cuts

By Sharon Ward, Third and State

The Pennsylvania Budget and Policy Center is out today with a new analysis finding that President Obama’s plan to end federal tax cuts for high-income earners would have very little impact on taxpayers in most Pennsylvania counties.

In over half of the state’s 67 counties, fewer than 1 in 100 residents (that’s 1%) would pay the higher marginal tax rate on income above $200,000 for individuals and $250,000 for married couples.

In most counties, only a small number of individuals are affected. In 24 counties, fewer than 200 high-income earners would pay the higher rate. Almost two-thirds of the top earners who would be impacted reside in just six Pennsylvania counties.

Map 1. Percentage of Taxpayers in Each PA County with Incomes Over $250,000

Map 2. Number of Taxpayers in Each PA County with Incomes Over $250,000

Under President Obama’s plan, families earning over $250,000 would keep other tax breaks on the first $250,000 of income, including a lower bottom tax rate and preferential tax rates on capital gains and dividends – a savings of $12,112 per taxpayer. The top tax rates would be restored to those in effect in the 1990s when the nation added 23 million jobs.

The PBPC county estimates are based on 2010 taxable income data published by the Pennsylvania Department of Revenue. You can read more about the estimates and analysis here.

White House Budget Call

White House spokesman Jay Carney opened a media conference call on the President’s proposed budget then Heather Higginbottom, Deputy Director of the Office of Management and Budget (OMB) took over then answered questions.

Obama’s budget proposal would reduce the deficit to $901 billion.  He inherited a $1.3 trillion deficit from George W. Bush.  Republican Presidents have been responsible for 82% of our national deficit.  The White House, in this call, called on Congress to address the looming budget deficit act currently looming as the result of inaction last fall.  The agreement to which Obama caved last summer in a desperate deal to save the country from defaulting on its obligations would have devastating effects.

The President wants to invest #376 billion in short term spending to expand the economy.  This includes extending the payroll tax cut, build infrastructure including broadband, give businesses investment tax credits for capital projects and other measures.  I hate th epayroll tax cut.  For the first time in history it means part of Social Security is being funded by general tax revenues thus, for the first time, meaning the social safety net is contributing to the deficit.  This is only because the amount workers and employers are paying into the system is being cut to stimulate economic growth.  There are other, better ways to do this without providing Social Security’s opponents ammunition for eliminating it.

He also wants to eliminate the Bush/Obama tax cuts for the rich and redirect defense spending from the wars into infrastructure investment.  Republicans have spent billions of tax dollars building infrastructure in Iraq and Afghanistan while refusing to do so stateside.  With crumbling roads, bridges, an ancient electrical grid, desperate needs for water and sewage systems and airport expansion along with the need for high speed rail it is time for conservatives to invest in America for once.  This would also create good, well paying middle class jobs for those desperate for employment.

The cut of $476 billion over ten years for the Pentagon is really only a drop in the bucket.  The DOD budget grew from about $350 billion twelve years ago to upward of $800 billion because of Bush’s wars of choice and waste.  There is no rational need for such lavish spending in a time of austerity and few real strategic threats.  There is no longer a strategic mission in Afghanistan for instance.  Bin Laden is dead.

We must rethink this mentality that cutting spending will expand the economy.  It has the exact opposite effect.  Americans are desperate for jobs and are sick and tired of losing their homes, seeing criminal bankers go free and of not having health care.  The country faces major challenges and it is up to good government to assist everyone not only the rich and powerful.

One Year and Still Going Strong

Third and State celebrated its one-year anniversary this week. We launched on February 1, 2011, and 350 posts later we’re still going strong.

We couldn’t do it without our readers, so we thought it would be fun to take a look back at what posts you liked the most. And so we bring you a countdown of the top 10 most viewed blog posts at Third and State.

10. Governor Corbett Unveils 2011-12 Budget Proposal, March 9, 2011:

By taking direct aim at schools and higher education, the Governor’s plan disregards a fundamental principle of economic growth – businesses locate and expand in states with an educated workforce and academic centers of innovation.

There is a better choice. Lawmakers can choose to take a more balanced approach that makes targeted cuts, improves accountability and raises revenue.

9. 2011-12 State Budget Highlights, June 28, 2011:

State legislative leaders and Governor Tom Corbett agreed on a 2011-12 state budget deal this week, and on Tuesday, the state Senate approved it on a 30-20 party-line vote. The bill heads to the House of Representatives next. …

The biggest cuts, in both dollars and percentages, are in education programs, including PreK-12 and higher education.

8. Marcellus Shale, Unemployment and Industrial Diversity, August 3, 2011:

There is always a danger that Marcellus Shale extraction may crowd out rather than seed new industries. Policymakers in Harrisburg and elected officials in these regions should make efforts to ensure that some of the good economic fortune represented by Marcellus Shale gas is reinvested in the seed corn necessary to increase the economic diversity of these communities. A drilling tax is the most sensible way to generate the funds needed to pay for these investments.

7. What is Pat Toomey Doing? Inequality and America’s Future, November 16, 2011:

On a day when a national newspaper is using Philadelphia to illustrate the erosion of the middle class, why is Senator Toomey championing ideas that threaten the most cherished American values (opportunity, democracy) and the country’s future living standards? You’d have to ask him.

6. CEO Pay Soars While Workers’ Pay Stalls, April 6, 2011:

Since there’s been a lot of discussion about public-sector pay recently, it’s interesting to compare these CEO salaries with that of the top-earning public workers in Pennsylvania. According to a Pittsburgh Post-Gazette story in 2009, the top 100 highest-paid state employees in Pennsylvania earned $19.4 million as a group. In other words, the two highest-paid CEOs in Pennsylvania earn a lot more than the top 100 public-sector workers.

5. Fruit Salad, Anyone?, March 14, 2011:

The Governor’s speechwriter appears to love apples to pears comparisons, or maybe bananas to oranges. But nothing so plain as apples to apples. …

In sum, when you do apples-to-apples comparisons, public-sector workers do not earn more than comparable private-sector ones. In addition, Pennsylvania public-sector wages have not risen faster than in the private sector over the last half decade.

4. A $56 million ‘Oops’: PA Revenue Department Updates Marcellus Shale Tax Estimates, November 23, 2011:

Back in May, the Department estimated that taxable Marcellus Shale royalties generated $102.7 million in PIT collections in 2010. Now the Department says that figure is a tad lower – $46.2 million, a decrease of $56.5 million or over 55% from what was reported six months ago. To quote Britney Spears, “Oops!” …

The gas industry has been very effective in arguing that it is contributing a “game-changing” number of new jobs and tax revenue, and uses these claims to beat back efforts to enact a meaningful drilling tax. We have made the case for some time that these claims are well overstated. The Department of Revenue data, particularly the paltry PIT numbers for 2010, seem to back up our case.

3. Déjà vu All Over Again: Mid-year Cuts and a Budget Shortfall on Tap for 2012, December 20, 2011:

Secretary Zogby rightly identified areas of built-in growth that will contribute to a structural budget deficit moving forward.

His analysis failed to mention how much tax cuts, both enacted and planned, will contribute to the short- and long-term problem. For example, the administration has likely under-estimated the cost of the 100% bonus depreciation policy enacted in January, contributing to the lower-than-expected corporate tax collections. (This policy allowed corporate taxpayers in 2011 to deduct 100% of a capital expense up front, instead of stretching it out over a period of years.)

The Governor’s budget guidance issued earlier this year called for $400 million more in tax cuts, which could contribute to more than half of the expected gap for 2012-13.

2. What’s Good for the U.S. Chamber of Commerce Isn’t So Good For You, March 3, 2011:

All else equal, the Chamber seems to prefer that any given level of job growth go along with lower wages and less human development. This leads you to conclude that the Chamber values lower wages and less human development as simply good things in and of themselves. Kind of like apple pie. Go figure.

And the number 1 top viewed blog post of the year:

Teacher Salaries and the Medieval Bloodletting of the Public Schools, May 23, 2011:

The Teacher Salary Project seeks to educate Americans that this country has relatively low teacher pay compared to the most successful educational systems in the world. That’s one reason it’s difficult for American schools to retain their most talented teachers, especially in distressed communities. …

Yet policymakers in Pennsylvania are running hard in the opposite direction. Cuts in public school funding will mean stagnant or lower pay, especially in our poorest districts. More education delivered in charter schools and private schools will mean greater inequality in pay in two senses: a bigger gap, on average, between the charter and private schools serving affluent students and those serving lower-income children; and a bigger gap, again on average, between the pay of school CEOs and principals and the pay of front-line teachers.

When public school performance predictably suffers, any chance this will be used to push privatization of education further? Heh, when the first round of medieval bloodletting doesn’t work, let’s bleed the patient a bit more.

SOTU 2012: Community Colleges, Workforce Development, Taxes & Infrastructure

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette has a pretty good summary of the State of the Union.

Here is the full text of the President’s speech, and Wonkblog has a version of the speech with only what they define as specific policy proposals.

What follows are our favorites from the speech.

Community colleges and workforce development:

Join me in a national commitment to train two million Americans with skills that will lead directly to a job. My Administration has already lined up more companies that want to help. Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running. Now you need to give more community colleges the resources they need to become community career centers – places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing.

I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need. It’s time to turn our unemployment system into a reemployment system that puts people to work.

Taxes:

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes.

Infrastructure:

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

Must Reads: State of The Union, Stimulus and Austerity Economics PA Style

A blog post by Mark Price, originally published at Third and State.

Tonight President Obama will deliver his State of the Union Address to Congress. We are expecting the President to recommend an extension through the end of 2012 of extended unemployment insurance benefits and the payroll tax credit. It looks as though a major theme in the address – besides the catch phrase “built to last” – will be conventional policies aimed at reducing inequality, such as increased spending/tax credits for education and training.

Education and training are important and fruitful means of reducing inequality, but they fall well short of what’s needed to reduce the degree of inequality we now face.  A more forceful step in the direction of reducing inequality would include raising the minimum wage and making it easier for workers to form and join unions. We don’t expect to hear the President call for either of those changes.

The President will propose paying for his new initiatives with higher taxes on wealthy households. As with education and training, restoring some sense of fairness to the tax code is a laudable goal but longer-lasting reductions in inequality will only come from policies that allow the pre-tax wages of more Americans to rise as the size and wealth of our economy grows.

Manufacturing, energy, job training and middle-class growth will be the cornerstones of President Barack Obama’s speech tonight as he takes to the nation’s grandest political stage for the annual address on the state of the union, according to senior advisers.

We are slowly getting details of a settlement of allegations of fraud by banks during the housing bubble. Dean Baker notes this morning that the deal is said to include immunity from prosecution for banking executives in exchange for mortgage relief paid for by investors (not the banks). It’s good to be a banker.

The Philadelphia Inquirer reports this morning that the association that represents construction contractors who mainly compete for work in the non-residential construction sector is expecting essentially no change in the number of workers they will employ in 2012. Non-residential construction makes up roughly two-thirds of all construction employment in Pennsylvania. Also of note in the article: 62% of Pennsylvania contractors surveyed reported relying on some stimulus-related work. Remember that factoid next time you hear someone claim stimulus spending had no effect on the economy.

Construction employment will go up – very slightly – in 2012, contractors predicted in a survey released Monday by the Associated General Contractors of America…

The survey notes that many contractors relied on stimulus-funding projects over the past years, but few expect to perform much stimulus-funded work in 2012.

In Pennsylvania, for example, 62 percent of those surveyed had stimulus work, with most of them assigning the majority of their workers to those projects. But in 2012, only one in five expects stimulus work.

More news of property tax hikes, teacher layoffs and larger class sizes – this time out of Dauphin County.

The Central Dauphin School Board Monday night approved a $155.4 million preliminary budget for 2012-13 that could mean higher taxes, larger class sizes or furloughs of as many as 50 district employees.

The Patriot-News Editorial Board notes that the asset tests for food stamps proposed by the Corbett administration are unwise and likely to punish many rural families.

Creating an asset test for food stamps in Pennsylvania is the wrong approach…

Given the economic woes many families are facing with at least one parent – sometimes both – out of a job, the car rule hardly makes sense. This is especially true in rural parts of the state. Reliable transportation is critical to achieving financial independence, and in many families that means parents having two decent cars to drive.

The other issue is the $2,000 limit in savings. Families struggling to get out of poverty are likely to be trying to save money, build up funds to help them pay off bills, make a security deposit on an apartment or catch up on mortgage payments. It makes no sense to compel people to potentially liquidate funds to be able to put food on the table.

Hunger is a problem in our state, and many people rely on food stamps to solve it.

What is Pat Toomey Doing? Inequality and America’s Future

A blog post by Stephen Herzenberg, originally published at Third and State.

Let me connect three dots for you. Draw your own conclusions about the impact of Pennsylvania Senator Pat Toomey’s proposal in the super committee to reduce the federal deficit.

Dot Number 1 – The American middle class is shrinking: The New York Times reports this morning that the middle class is shrinking in America – based on where people live.  In 2007, the latest year studied, 44% of families lived in middle-income neighborhoods, down from 65 percent of families in 1970. A third of families lived in very high-income or poor neighborhoods now, up from just 15 percent of families in 1970. The case example used to illustrate this national trend – the Philadelphia metropolitan area.

Dot Number 2Toomey proposes to increase after-tax inequality further: In the super committee, Congressional Republicans, led by Senator Pat Toomey, have advanced a plan that they say would raise revenues by closing tax loopholes and eliminating tax breaks while cutting spending by $1.2 trillion. But a closer look shows that, of $3.5 trillion raised by the elimination of loopholes and tax breaks, $3.2 trillion would lower tax rates for the wealthiest. The plan would lower taxes at the top a lot more than simple extension of the Bush tax cuts for the very rich. So the impact of Senator Toomey’s proposal would be to increase economic inequality after taxes: affluent families would pay less in taxes and the middle class and the poor would face cuts in Social Security, Medicare, and other social programs.

Dot Number 3High inequality undercuts core American values (opportunity, democracy) and weakens our economy: High levels of economic inequality – such as now exist in the United States – undermine intergenerational mobility (also known as “the American Dream”). (For evidence, see the links in this earlier blog post on inequality or this one or see this online video by Richard Wilkinson.) Such inequality also contributes to the erosion of political democracy – shifting the country further from one person, one vote towards one dollar, one vote. And, third, high levels of inequality undermine economic and productivity growth. Let’s process that again: the end of the American Dream; the erosion of democracy (wasn’t America – and Pennsylvania – the birthplace of democracy?); and a weaker economy. Three strikes and you’re out.

Question Number 1Why? On a day when a national newspaper is using Philadelphia to illustrate the erosion of the middle class, why is Senator Toomey championing ideas that threaten the most cherished American values (opportunity, democracy) and the country’s future living standards? You’d have to ask him.