5 More Ways Most Americans Are Screwed in This Economy
While economists insist the worst of the economic crisis us behind us (unless you’re in Greece) and the administration celebrated the success of the year-old stimulus package yesterday, many Americans aren’t reaping the benefits of the recovery they keep hearing has arrived. Today’s news shows that — yet again — for the average American, the picture isn’t getting any rosier.
1. More people than expected lost their jobs last week
New Labor Department statistics show that an additional 31,000 people signed up for unemployment benefits last week. That means that in the last four weeks, nearly half a million more Americans joined their 8.4 million fellow citizens as victims of the recession that’s supposedly over. And those numbers don’t even reflect the 100,000 jobs economists think the massive snowstorms may have cost the economy in February.
2. Even though the economy sucks and interest rates are low, inflation is creeping up
Although the Fed has been keeping interest rates low and, what with massive unemployment, no one can afford to buy that much anyway, the inflation and wholesale rates went up twice as much as economists expected. So, not that Americans have money to spend — which is the only reason that inflation isn’t even higher — but companies are already chomping at the bit to raise their prices and improve their profit margins. For those Americans whose budgets are already stretched to the breaking point, inflation just means the necessities that they are buying may soon cost noticeably more.
3. Rich people paid way less in taxes than you last year
Just in time for tax season comes the news that even as many Americans struggled to keep their jobs and many struggled to pay their tax obligations once they lost their jobs, the rich got to keep more of their not-so-hard-earned money than anyone. The 400 households with the most income in 2007 paid an effective tax rate of 20 percent, due to Bush’s tax cut on capital gains (the profit earned from buying something that you later sell for more money). That effective rate is less than the regular tax rate paid by someone making $34,000 a year in 2009. Naturally, the capital gains tax cut remained in effect in 2009 and, with the wealthy barely facing any unemployment and continuing to earn money hand over fist, their tax bills aren’t likely to be any higher come April 15. Meanwhile, the Republicans who cut the taxes that allowed the super-wealthy to pay an effective tax rate of 20 percent are complaining about the deficit created by Obama’s 2010 budget and stimulus programs designed to improve the economy and get people back to work.
4. Your health insurance premiums are going up — way up
A new report issued by the Department of Health and Human Services notes that insurance companies are raising premiums for 2010 at rates of up to 56 percent in some places. While Congress was considering health care reform last year that would have regulated the industry more stringently, rate increases remained low for what appears now to have been public relations reasons. But now that any comprehensive reforms are off the table and what’s left seems increasing unlikely to pass regardless, insurance companies plan to make up for their mediocre profit increases last year with a gangbuster year in 2010. In the meantime, the 10 percent of Americans who are unemployed (and many more who are underemployed) seem likely to add to the ranks of the country’s 47 million uninsured — unless health care does pass, in which case they’ll be required to buy the increasingly unaffordable health insurance pedaled by this nation’s bloodsucking insurance companies.
5. The foreclosure crisis isn’t over, and the mortgage modification isn’t really working
The mortgage crisis that spurred so many foreclosures might be over, but the foreclosure crisis is not. Economists expect a surge in foreclosures and short sales this year, and the government’s supposed hedge against such eventualities — its $75 billion mortgage modification program — isn’t helping except “at the margins.” Almost 300,000 more homeowners became eligible for permanent mortgage modifications in December and January, but only about half of those homeowners were offered them — and 500,000 are about to be bounced because of supposed paperwork problems, which is the major reason banks have found to exclude homeowners from participating since the program’s inception. In fact, the newest figures show that only about 20 percent of the 4 million eligible homeowners have gotten permanent modifications to date. But that warning may come too late for many homeowners: The deadline for fixing the paperwork they might not have even known was considered incomplete was January 31.