Hard times at the bottom of the Bush economy
Image by Renegade98
From a tent city in Reno to a drug dealer’s block in Detroit, I saw how Republican rule has hit those living on the American fringe.
By Dan Hoyle
Oct. 13, 2008 |
The Flying J Truck Stop outside of Jerome, Idaho, has some of the cheapest gas in the area, so on a Tuesday afternoon in late September, vehicles were lined up at its 16 pumps. For Rickie S., this would normally mean brisk business — he’s been an itinerant polisher of semitrailer wheels and hubcaps for the past 26 years. He doesn’t have a résumé or calling card but insists his work is world-class. “Get on a CB and ask about Rickie — I’m known coast to coast,” he says. But lately the truckers, who have been crunched by high gas prices for months, have been reluctant to hire Rickie even for a few bucks to buff and shine their rigs.
Business has gotten so bad that Rickie, who is 50 years old, has decided to abandon his trade.
“I’m done. I just threw away my rags, all my polish. You can’t make any money doing that anymore,” he says, taking a seat on his Army duffel bag and pushing back his Conway trucker’s mesh cap. He glances at the dirt caking the rims of my van, accumulated over 11,000 miles of traversing the country since June, and shares his story of economic blues. “I’ve got three blankets, two dollars, one beer and a 50 percent chance of survival,” he says. “This economy is bad, man! And guess what? The buck stops here.”
With the American financial system in crisis, politicians in both parties have taken every opportunity to denounce the corporate pirates of Wall Street and sound off on behalf of the anxious working majority. But far off embattled Main Street is another troubling picture of the nation’s economic swoon, where the working poor and lifelong scrappers struggle to keep from sliding onto Skid Row. For those on the bottom rung of the economic ladder, the current crisis is in a sense a mere aggravation of years of hard times. But for some it has turned particularly harsh.
According to the U.S. Census Bureau and the Bureau of Labor statistics, the national poverty rate increased from a record low of 11.3 percent in 2000 to 12.5 percent in 2007 — an increase of approximately 5.8 million Americans living below the poverty line. “In George W. Bush’s presidency, there’s been an almost total absence of benefits of growth trickling down to the middle class, much less to those at the bottom,” says Jared Bernstein, an economist with the left-leaning Economic Policy Institute, whose extensive writing on the working poor includes the book "The State of Working America." The nation’s unemployment rate has risen from 4 percent in 2000 to 6.1 percent at present. Bush’s economic policy has been marked by tax cuts largely beneficial to the wealthy, while federal funding for many programs helping low-income people has not kept pace with inflation.
Traveling around the country for three months this summer and fall, I found abundant evidence of an economy under strain. At the truck stop in Idaho, amid overgrown lots in run-down Detroit, at idle slot machines and in a dusty tent city in Nevada, I met people struggling to survive on the fringes of the faltering economy. Many were suspicious of a journalist’s inquiries and wary of divulging personal information (including their last names). But they were outspoken about the way economic hardship has hit home in recent months.
In Jackpot, Nev., a casino town of 1,416 people, Olivia A., 38, waits tables at Barton’s Club 93 Casino. She is a lot less busy these days, even with the prime rib special dinner on a recent Monday going for the tantalizing price of .98. The casino is not empty — there are still a few older women pulling on long, thin cigarettes and feeding slots with names such as Winning Times and Stinkin’ Rich — but Olivia says business is way down. As a result, her hours have been cut. A mother of three, she never expected to be struggling so hard to pay the bills when she left her job as an accountant in Mexico more than a decade ago to come to the U.S. with her husband. Leaving a middle-class job in Mexico was difficult, yet worth a better life for her children, she had thought.
But lately, every day seems less of an improvement over her previous life in Mexico. “Sometimes, I think about going back,” she says. “the only reason I’m here is for my kids. Back home I was a professional. I had a completely different life.”
The severity of the downturn can also be seen beyond the legal edges of the economy. On a recent Sunday afternoon on Jefferson Avenue, in Detroit’s notorious East Jefferson neighborhood, Joe, 37, is dressed in street-business casual: a white Adidas T-shirt, gray stonewashed jeans, white Adidas sneakers and a black do-rag. But the tattered state of his attire is a telltale sign that sales are down at his corner drug business, where he waits anxiously for today’s payday to come from across Alter Road. Three blocks to the north, the boarded-up storefronts and treeless sidewalks here give way to a leafy, boutique-strewn lane of Jefferson Avenue in Grosse Pointe, the wealthy suburb that is home to many of the top engineers and executives of the American auto industry. They have been some of Joe’s most profitable customers over the years. “When a white person come across Alter Road, they might spend 0 at a time,” explains Joe, “whereas round here, people only looking for dimes and nicks [ and bags].”
Over the past year, Joe’s big buyers from the suburbs have been cutting back. Like everyone else in the Motor City, Joe has felt the impact of losses at Ford, General Motors and Chrysler. “As goes the Big Three, so go Detroit, and I mean everybody,” says Joe. He grew up on welfare, and admits to being “knee deep in the drug game” since he was 15 years old, but he complains that he is even less shielded from the economic crisis as a part of the illegal and informal economy. He says he has been struggling to make child support payments for two kids. “At least the autoworkers get memberships to Sam’s Club and Costco. We have to buy our Pampers at the corner store for !”
Detroit has the highest poverty rate of any American city at 33.8 percent, with many blocks boasting only a lone house surrounded by fields of overgrown weeds. Watching the cars pass by, Joe eyes a yellow BMW. “Right there! That dude spent about 0 last week right here on this corner,” he declares. “But he didn’t come round last weekend like he normally do. You know he’s thinking, ‘I can’t be blowing money now. I might lose my job.’”
Economists across the board agree that this decade has been nothing like the 1990s, which saw sustained, healthy economic growth at most levels. Still, Rea S. Hederman Jr., an economist at the conservative Heritage Foundation, seeks to paint a less bleak picture when it comes to the plight of the working class. He notes that consumption inequality has increased far more slowly than income inequality, as more and more people at the bottom of the economic ladder own cellphones, dishwashers and microwaves. Hederman, preferring the term “pro-growth” to “trickle down” economics, also points to a long streak of positive job growth numbers from August 2003 to January 2008.
But with regard to those numbers, Bernstein, of the Economic Policy Institute, says that the period from March 2001 to December 2007 was “the worst business cycle on record for job growth, and you won’t find an economist to disagree with that," with jobs growing at just 0.7 percent annually, well below the 2 percent annual average. Put another way, in the 1990s, 21 million jobs were created, according to the Bureau of Labor Statistics, while in this decade only between 5 and 7 million jobs have been created, according to various estimates. (The decade isn’t over yet, but few economists are likely to be predicting a bonanza of job creation in the two years remaining.)
A stark picture of what it means to be down and out these days has cropped up just four blocks from the towering casino hotels of downtown Reno. After a local homeless shelter reached overflow capacity this spring, people began pitching tents in the dirt of an open lot; a tent city of more than 50 structures has since sprung up. On a warm late September afternoon, I weaved my way around people’s makeshift homes, some adorned with T-shirts featuring arty designs, others guarded by plastic animal lawn ornaments. People’s stories were a potent mixture of misfortune, bad decisions and dwindling opportunities.
In recent times, Bill Rosenbaum, 48, was installing carpet for new subdivision homes in Southern California and Arizona, traveling so much that he found it easier to stay in hotels. Then his van blew out and the home foreclosure crisis crippled the market for new carpet installation — and he was homeless for the first time in his life. He recently found a day job picking up pine cones for a rancher outside town. He hopes to save enough money to buy a new van and start his business back up.
Tammy Tyra, 47, of Seymour, Texas, was a trucker for the Landstar Carrier Group until last November, when she started having seizures. Diagnosed with epilepsy, she was forced to quit. Unable to find a new job, she eventually found her way to the tent city in Reno. She put her goal in simple terms: “I want to get me a freakin’ job!”
Alden Collins, 56, lost his job when he refused to take a pay cut from to an hour at a restaurant in Lake Tahoe. As he told his story, it quickly devolved into a song. (His friends nearby noted that he had been off his medication recently.) Nashing his teeth between notes, and banging his foot in the dirt to keep time, he sang, “Trying to go to work/ yeah yeah yeah/ but workin’ in the dirt just don’t work for me.”
Many of the people at the tent city suffered from mental health issues, and as social programs have been cut, they have less access to services. Those at the bottom have suffered in multiple ways, Bernstein says. “They’ve been hit on two sides. The markets are letting them down, and our government is letting them down.”
Debbie Weinstein, executive director of the Coalition on Human Needs, a Washington-based advocacy group for low-income people, says that “there’s been a great deal of shrinkage of a bunch of different kinds of services.” The organization has tracked 97 federally funded programs during Bush’s second term in office; according to data from Weinstein, federal funding for all but 13 of the 97 programs failed to keep up with inflation. Funding for major initiatives such as the Center for Mental Health, Adult job Training and Homeless Assistance Grants (which have budgets in the hundreds of millions of dollars), was down between 8 and 17 percent in inflation-adjusted dollars from 2004 to 2008.
According to both Bernstein and Hederman, those at the bottom usually receive less attention in times of economic crisis. They are a politically insignificant group compared to the broad American middle class, and expressing support in policy terms for the poor, who are often seen as lazy recipients of the un-American handout, can be risky for a politician in a close election. “The poor have been pretty invisible on the political stage,” Bernstein says. “It’s usually only in boom times that we look at those issues closely, and people debate if there are policy failures or they are just lazy bums.”
“I’d like to think people are more sympathetic in terms of volunteerism and charitable contributions," Hederman says. But a bad economy can get in the way, he says. "People are also looking to save in case things get worse.”
Setting aside any moral imperatives to aid the working class and poor, it’s evident that the relative health of this population tells us something about the state of the country.
At the truck stop outside Jerome, Idaho, Rickie speaks of two decades as a troubled but hard-working independent contractor to truckers across the country. On a good day he said he could make 0 to 0 polishing rigs; lately, he was lucky to make to . He expresses sharp frustration with the truckers, many of whom were loyal customers for years. “I feel like getting on that CB radio and saying, ‘Y’all are the sorriest motherfuckers I know, driving around the country with dirty wheels and dirty trucks. You gotta have some pride in your ride!’”
He cocks his head and watches a 18-wheeler with dirty rims easing out into traffic. “But people just don’t have any money for that anymore," he adds. "I know.”
— By Dan Hoyle
Our country is facing a number of problems right now. Unemployment has continued to be high. We have huge deficits for as far as the eye can see. Our nation debt is around $ 14 trillion and growing. Our politicians in Washington have been more focused on the expansion of government services, and regulating businesses, than understanding what it takes to stimulate our economy. Some seem to believe that any dollar spent is stimulative by nature. But not every dollar is spent equally. Dollars spent by the government is only reshuffling the deck. Dollars spent by consumers help businesses to grow. And dollars spent by businesses is what creates jobs and wealth in our country. And what is the best way to grow our economy? By creating a positive business atmosphere where businesses look for opportunities to create jobs and create wealth.
The business community has been sitting on the sidelines, and it’s contributing to a sluggish economy. The economy and the markets do not like uncertainty, and they have been faced with nothing BUT uncertainty lately. The good news is that several things have happened recently that should help give the US economy a kick start.
1 – Tax Rates
Business like certainty, and predictability. Businesses have been faced with potential raising tax rates. If Congress had allowed tax rates on the “rich” to expire, then half of all profits from small businesses would have been effected by the higher tax rates. Critics like to explain that the higher tax rates will only effect a small number of small businesses. But this is incredibly misleading. Most small businesses are VERY small, and do not provide employment opportunities, or make enough money to be effected by the higher tax rates. Think of piano teachers, independent carpenters, Mary Kay consultants, local musicians, or the attorney down the street working out of her house. These are the people who make up the majority of small businesses. And while they’re very important to our communities, they’re not the job creators. It’s the “bigger” small businesses that create the jobs, and make enough money to be effected by the higher tax rates.
Do you want these small businesses to create jobs, or do you want them to be strangled with regulations and economic fear? Is it more important for these businesses to create jobs so that people can get off unemployment, or to pay more taxes so that we can keep more people on unemployment? Despite what some critics would like you to believe, keeping these tax rates consistent will be good for the economy, and good for job creation.
2 – The Omnibus Spending Bill
One of my biggest disappointments with the current Congress is that they haven’t even attempted to pass a budget for 2011 until now. We are already a couple months into the 2011 fiscal year, and all they’ve done is passed continuing resolutions to keep the government funded. This last week in the Senate, Harry Reid introduced a spending bill to fund the government for 2011 loaded with billions in earmarks from both political parties. The document was nearly 2,000 pages, and Reid was pushing for a quick decision from the Senate to pass the bill. It’s a good sign that the bill has been pulled. Maybe politicians are finally understanding that we can’t keep spending money we don’t have. And that the American people are fed up with business as usual in Washington.
Investor’s Business Daily explained it this way: “The lump of coal in our Christmas stocking that was the omnibus spending bill is dead. The Congress the people elected, not the one they repudiated, can now guard the public purse, not pick our pockets. The failure to pass a budget or any of 12 appropriations bills despite full control of both houses of Congress led to this paroxysm of spending, a $ 1.27 trillion bill full of earmarks that represented the antithesis to the type of government voters on Nov. 2 said they wanted. Those voices evidently were still being heard, particularly by the 23 Democratic and independent senators up for re-election in 2012.”
Families have to be fiscally responsible. Business have to be fiscally responsible. If the federal government doesn’t get its fiscal house in order, fear and uncertainty will continue to dominate the business mindset. The fact that this bill was pulled will be seen as a positive by the business world.
3 – Business Friendly Environment
For the last two years, rightly or wrongly, the business community has viewed the White House and Congress as anti-business. From new health care legislation that imposes new costs and responsibilities on businesses, to new financial regulations that impose new burdens on the financial community, Congress and the White House have pushed for priorities that are not viewed as pro-business, or pro-economy. The business community wants to be optimistic about the future. Seeing the first signs from the White House that they’re willing to consider a more pro-business approach will be seen very positively by the business community at large.
If Congress can continue to focus on tackling out of control spending, deficits, and the national debt, we should see some resurgence in our struggling economy. If President Obama and the White House continues to move to the center and work with business leaders, confidence should return. And hopefully we’ll put our small businesses in a position to grow, create wealth, and create jobs.