My last post on income inequality was so much fun, I thought I’d do another. It’s not the same old drill about how we have the greatest level of income inequality in the western world. It’s not even about how the gap between the highest and lowest earners has widened. No, today I’d like to point out that middle class earners spent much less money last year. “Households in the middle fifth of the population sliced their average annual spending” in 2009, a decline of “3.1% from 2007 and 3.5% from 2008, the steepest one-year drop since records began in 1984.” The wealthy, the top fifth of consumers, also tightened their belts, as the pols like to say, to tune of a 2.6% decline since 2007. Don’t worry, there were some spenders out there.

Meanwhile, the poorest Americans spent more as prices for necessities like food and rental housing climbed. Spending rose 5.6% from 2007 to 2009 for the poorest fifth of consumers, the most of any other income group, despite a 5.5% drop in after-tax income to an average $9,956 a household. In some cases, elderly people and others with low incomes dipped into savings or relied on credit to get by.

‘What you’re looking at here is people at the bottom trying to hang on,’ said Timothy Smeeding, public affairs professor and director of the Institute for Research on Poverty at the University of Wisconsin in Madison. ‘You can’t go below a certain level.’ …

The lowest earners spent 15.4% more on food last year than in 2007, shelling out more for cereals, meat and processed vegetables. Since many in the lowest income group may already rely on discount shops and make few discretionary purchases, it can be difficult for them to scrimp.

Among the poor, rent expenditures increased 5.3%. Those who managed to stay in homes they owned saw their mortgage payments rise 27.8%, suggesting that policy makers’ efforts to reduce mortgage-debt burdens aren’t reaching the most needy. Across all income groups, mortgage payments were down 7.6%.”

Before anyone goes ballistic because I pointed out that it’s not good for us to have high poverty levels as the wealth of this country gets more and more concentrated, let’s consider the source of the above information. Though they take the trouble to note that it’s difficult for the lowest earners to feed and house themselves, and even mention a needed government program, this didn’t come from the Daily Worker. It’s straight outta the Wall St. Journal, people. But we all know how socialistical they are over there.


I know I’ve been an inconstant blogger, but I feel I must share this news today. We all know it, but we should look at these numbers every chance we get.

The top-earning 20 percent of Americans – those making more than $100,000 each year – received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.”

Don’t worry, if income inequality doesn’t bother you, other bad news.

The poverty gap between young and old has doubled since 2000, due partly to the strength of Social Security in helping buoy Americans 65 and over. Child poverty is now 21 percent compared with 9 percent for older Americans. In 2000, when child poverty was at 16 percent, elderly poverty stood at 10 percent.

Obviously it’s good that a smaller percentage of older Americans is poor now, but with the first baby boomers turning 65 next year, how long will that trend last? Also, more than 1 in 5 children are impoverished? Not good. Ye olde land of milk and honey is not so much, is it? I sure hope the Republicans manage to save tax cuts for the wealthiest Americans, they’re obviously really suffering.


Maureen DowdI’m sorry this is, as usual, late. It took me awhile to find my eyeballs after they rolled out of my head. That was Sunday afternoon (OK, it was Monday) when I was reading the Sunday Times Week-in-Review section, wherein one Maureen Dowd actually chastised First Lady Michelle Obama for being away on her husband’s birthday. Seriously. I’m a great admirer of Dowd’s accomplishments, though not so much of her columns. Frequently clever and usually wickedly funny, they’re not especially sharp or insightful. For me, anyway. This one, however, was deranged.

How much has Michelle Obama sacrificed for her husband’s career? How much did she give up to get him where he wanted to go? From where I stand – or kneel on all fours, desperately raking the rug for my ocular orbs – it looks like the woman has done more than her fair share for her man. No one knows what goes on in anyone’s marriage, including her own sometimes, so we certainly don’t need to be reminding a professional woman, a wife and mother, what she owes her husband on his birthday. What, was he turning 10? Did he get his first pair of big boy pants? No, the man is 49, and I’m willing to bet he’s missed more than a few family birthdays over the course of his marriage. “[A]t moments when you think Michelle might make her husband toast, or better yet a martini, she’s often off on a girls’ trip.” Note the use of the word girls’ here, that’s code. You’re supposed to picture Michelle drinking overly sweet cocktails with some flighty gal pals as they laugh overly loudly about cute boys. In reality, she was showing her daughter the world while acting as an excellent ambassador for our nation. Oh, Maureen, this is beneath you. It’s insulting, it’s chauvinistic, and it’s silly.


Blue Cross Blue Shield of North Carolina gets plenty of attention around here. From lobbying tactics to executive pay, from sponsorship of lavish events to outsourcing IT, we’re all over Blue. So it’s nice to see someone else get in on the action. Consumers Union, publisher of the OCD-beloved Consumer Reports, has a great new study on how so many nonprofit BCBS’s have ended up with so much “surplus” – which in any other context would be known as profit. Seems BCBSNC is not alone in holding on to more than state law requires even as it jacks up premiums annually. “In our sampling of ten diverse nonprofit BCBS plans, we found that 7 out of 10 of the plans held more than three times the amount of surplus that regulators consider to be the minimum amount needed for solvency protection.”

To be fair, our Blue isn’t the worst Blue there is: “For example, as of the end of 2009, BCBS of Arizona has surplus more than seven times the regulatory minimum. Health Care Service Corporation, a mutual insurer doing business as BCBS of Texas, Illinois, New Mexico and Oklahoma, has five times the regulatory minimum. Meanwhile, over the past three years both insurers continued to raise their rates.” Wow. Still:

Blue Cross Blue Shield of North Carolina raised rates on some individuals and families 18.44% in 2008, 8.5% in 2009, and 12.24% in 2010, while growing surplus to $1.4 billion in 2009, about 4.5 times the regulatory minimum.”

How is that helpful? To the insured, I mean. I know they need some surplus, but how does it help me for BCBSNC to hike my rates during the biggest recession in years when it’s already sitting on 4.5 times the cash its required to have on hand? How are their rate increases approved when we all know they’re sitting on a big ole surplus? “[M]ost states do not put limits on how much surplus insurers can accumulate and most do not have an explicit mandate to consider whether surplus levels are sufficient or too high when deciding to approve or disapprove a requested rate increase.” Hmmmm.

Of course it’s important for BCBSNC to have some surplus, I’m not denying that. But do they need so much? Couldn’t they use some to offset rates increases? Or, at the very least, couldn’t they stop directing a set portion of the increases to surplus, particularly since they’re operating in a stable environment?

Four of the ten plans studied experienced no periods of underwriting loss during the nine-year period (Arizona, North Carolina, Tennessee, and Wyoming). Annual gains among those plans varied, on average, from 2.9% (North Carolina) to 7.7% (Arizona). … That shows that … the underwriting cycle was far tamer than that on which … insurers and regulators may still rely today to develop target surplus ranges.”

There’s a whole lot more in the reports, including lots of sexy math and some actuarial action, but the upshot is clear.

To realize the promise of health reform, our collective challenge is to ensure that health insurance coverage is affordable. Some nonprofit health insurance companies continue to stockpile large amounts of surplus, funded by premium dollars. Health advocates, local grassroots organizations, concerned consumers, and some policymakers need to tackle the issue of potentially excessive surplus funds.”

Grassroots organizations and concerned consumers, that sounds like us, doesn’t it? Wouldn’t it be great if we a had big, cool buddy to help us? The summary of the report concludes:

Based on its findings, Consumers Union is recommending state insurance commissioners examine these surpluses, develop appropriate ranges for minimum and maximum surplus, and disapprove or reduce rate increases, particularly on individual market plans, when the company has more surplus than is necessary for solvency protection.

Whatcha say, Wayne?