Sunday, November 29, 2009

NYT: 1 in 4 Children, and 1 in 8 Americans Now on Food Stamps

The topic of what is happening with hunger is nothing new to regular readers of FMMF; we've been harping on it for over 2 years as mirage like stories of the "strength" of the US economy, based on government reports (2007, early 2008) and measures such as GDP dominate our ideas of how to measure prosperity.   But judging from the "comments" section in the web version of this weekend's story in the New York Times, a lot of Americans are getting their first education on what is truly happening under the surface.  I assume many foreign readers must also be shocked as they read about the dirty underbelly of the world's "richest"* country.

*excluding debt.

When I began the blog in summer 2007, 1 in 11 Americans were on food stamps.  In just a few years that had jumped to 1 in 9.  [Jun 8, 2009: 1 in 9 Americans on Food Stamps]  Now, the New York Times report says the figure has unfortunately hit new thresholds....increasing to 1 in 8 Americans, including 1 in 4 children.  Let us be clear, there is certainly fraud in the system, and people taking advantage of the largesse of the government - that cannot be disputed and if there is one place to increase government spending, it is auditing of these type of programs..  But there is no way that rate of increase happens due to just fraud... it's an indictment of the hollowing out of our economy and the increasing bifurcation of the economic fortunes in the country.   Not everyone can be a business owner or investment banker - jobs that used to fulfill the needs of the "middle" of America are disappearing and no one asks the questions of why.  Meanwhile, the cost of living remains high, in fact our central bank is trying to increase it by the minute rather than letting the market decrease them (AS IS NEEDED), while wage have been pressured for over a decade.  The house ATM filled the gap for many in the middle part of the decade but people are now out of options... 

We've warned / predicted in 2007 this was going to be a long term trend, but frankly even I am shocked at how quickly this is happening.  [Dec 8, 2007: Do the Bottom 80% of Americans Stand a Chance?]  I believe the woman highlighted in this short video below is more "typical" of the new face of food stamps rather than "everyone is just looking for a handout from government" or whatever explanation helps people rationalize things .

Obviously readers of this type of blog are generally not going to be affected by such a situation but I want to continue to highlight this, not only for informational purposes but to show the costs of the massive transfer of wealth from the many to the few; I've labeled it "Reverse Robin Hood" many times in 2008 and 2007.  I won't get into the morality of it, or why it is happening - we've discussed our ideas countless times.  The bottom line, regardless of where you fall on "reasons" is there is simply no denying it *is* happening.  One can worship at the alter of stock market prices or government reports as indicators of economic health all day, but I believe these measures increasingly reflect a smaller and smaller portion of the US society.  Once you leave the vacuum of Washington D.C., Manhattan, or similar enclaves it is not quite such a happy go lucky time. 

I also cannot reinforce enough how damaging inflationary policies enacted by our central bank are on the lower tranches of society... inflation is the most regressive tax there is, and one of the reasons so many are in so much trouble.  [Aug 18, 2009: Bloomberg Opinion - Deflation Theory is Lemon We've Been Sold]   This is why I get quite angry when I see the hand clapping across "The Street" as they cheer what Bernanke is doing, because it helps inflate their assets and create (nominal) "wealth" - who cares that it is concurrently helping to destroy fellow country(wo)men, right?   Or to feel better about it, we can just claim all these new Americans are "lazy" and "just want the government to hand them money"... please notice the lazy fellow shoppers at Costco for example. [Oct 30, 2009: Costco to Roll Out Food Stamps Nationwide]

So as we celebrate the "economic recovery" let me reassure you that if not for the food stamp program (to the "lazy") the soup lines of the 1930s would be back out in force, and I would expect the potential for social disorder would be extreme.  Those smirking at this type of program should most likely be thankful they exist, as hungry people are desperate people and are prone to do not whatever is necessary to feed their family.  Let us not forget, the path from hedge fund manager to pizza delivery man is not too far is it?  [Mar 24, 2009:  20/20 - From Hedge Funds to Pizza Delivery]  More than a safety net, I would call this specific program a social order net...

The New York Times piece is very long so I encourage the full read; I will just grab some snippets below:
  • With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.
  • It has grown so rapidly in places so diverse that it is becoming nearly as ordinary as the groceries it buys. More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.
  • They include single mothers and married couples, the newly jobless and the chronically poor, longtime recipients of welfare checks and workers whose reduced hours or slender wages leave pantries bare.
  • .... the program is now expanding at a pace of about 20,000 people a day.
  • There are 239 counties in the United States where at least a quarter of the population receives food stamps, according to an analysis of local data collected by The New York Times.  The counties are as big as the Bronx and Philadelphia and as small as Owsley County in Kentucky, a patch of Appalachian distress where half of the 4,600 residents receive food stamps.
  • In more than 800 counties, it helps feed one in three children.   In the Mississippi River cities of St. Louis, Memphis and New Orleans, half of the children or more receive food stamps. Even in Peoria, Ill. — Everytown, U.S.A. — nearly 40 percent of children receive aid.
  • While use is greatest where poverty runs deep, the growth has been especially swift in once-prosperous places hit by the housing bust. There are about 50 small counties and a dozen sizable ones where the rolls have doubled in the last two years. In another 205 counties, they have risen by at least two-thirds. These places with soaring rolls include populous Riverside County, Calif., most of greater Phoenix and Las Vegas, a ring of affluent Atlanta suburbs, and a 150-mile stretch of southwest Florida from Bradenton to the Everglades.
  • The richest counties are often where aid is growing fastest, although from a small base. In 2007, Forsyth County, outside Atlanta, had the highest household income in the South. (One author dubbed it “Whitopia.”) Food stamp use there has more than doubled.
  • Unemployment insurance, despite rapid growth, reaches about only half the jobless (and replaces about half their income), making food stamps the only aid many people can get — the safety net’s safety netBenefits average about $130 a month for each person in the household, but vary with shelter and child care costs.
  • While the numbers have soared during the recession, the path was cleared in better times when the Bush administration led a campaign to erase the program’s stigma, calling food stamps “nutritional aid” instead of welfare, and made it easier to apply. That bipartisan effort capped an extraordinary reversal from the 1990s, when some conservatives tried to abolish the program, Congress enacted large cuts and bureaucratic hurdles chased many needy people away.
  • The program’s growing reach can be seen in a corner of southwestern Ohio where red state politics reign and blue-collar workers have often called food stamps a sign of laziness. But unemployment has soared, and food stamp use in a six-county area outside Cincinnati has risen more than 50 percent.  (dogma has a funny way of disappearing when economic duress hits)
  • “It’s embarrassing,” said Mr. Dawson, 29, a taciturn man with a wispy goatee who is so uneasy about the monthly benefit of $300 that he has not told his parents. “I always thought it was people trying to milk the system. But we just felt like we really needed the help right now.”
  • While Mr. Dawson, the electrician, has kept his job, the drive to distant work sites has doubled his gas bill, food prices rose sharply last year and his health insurance premiums have soared. (but government reports almost no inflation - officially anyhow!)  His monthly expenses have risen by about $400, and the elimination of overtime has cost him $200 a month. Food stamps help fill the gap.
  • The program has filled the Dawsons’ home with fresh fruit, vegetables, bread and meat, and something they had not fully expected — an enormous sense of relief. “I know if I run out of milk, I could run down to the gas station,” said Mr. Dawson’s wife, Sheila.
  • Across the small towns and rolling farmland outside Cincinnati, old disdain for the program has collided with new needs. Warren County, the second-richest in Ohio, is so averse to government aid that it turned down a federal stimulus grant. But the market for its high-end suburban homes has sagged, people who build them are idle and food stamp use has doubled.
  • Sarah and Tyrone Mangold started the year on track to make $70,000 — she was selling health insurance, and he was working on a heating and air conditioning crew. She got laid off in the spring, and he a few months later.
  • “We were being really snippy, having anxiety attacks,” Ms. Mangold said. “People get irritable when they’re hungry.”  Food stamps now fortify the family income by $623 a month, and Mr. Mangold, who is still patching together odd jobs, no longer objects.
  • I always thought people on public assistance were lazy,” he said, “but it helps me know I can feed my kids.

Last interesting anecdote:
  • At the same time, the recession left Sandi Bernstein more sympathetic to the needy. After years of success in the insurance business, Ms. Bernstein, 66, had just settled into what she had expected to be a comfortable retirement when the financial crisis last year sent her brokerage accounts plummeting. Feeling newly vulnerable herself, she volunteered with an outreach program run by AARP and the Ohio Association of Second Harvest Food Banks.
  • Having assumed that poor people clamored for aid, she was surprised to find that some needed convincing to apply.“I come here and I see people who are knowledgeable, normal, well-spoken, well-dressed,” she said. “These are people I could be having lunch with.”

[Nov 10, 2009: Walmart Executive - "There are Families Not Eating at the End of the Month"]
[Jan 18, 2008: One Lonely Voice Agrees with Me on Food Inflation - Food Bank Needs Surging]
[Nov 14, 2008: Wall Street Journal - A Run on (Food) Banks]
[Feb 20, 2009: NYT - Newly Poor Swell Lines at Food Banks Nationwide]

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