Lost in the 21st Century

How do you feel about cat food in your golden years?

No, not for the cat…

America’s retirement crisis has reached epic proportions, according to a recent study by Boston College’s Center for Retirement Research. The study estimates that the current retirement income deficit, or the gap between the retirement savings of U.S. households and what they need to have in order to maintain their living standards past retirement, is a whopping $6.6 trillion — five times the projected federal deficit for 2010.

“The key sources of income retirees are relying on are either under attack, in the case of Social Security, or disappearing, in the case of traditional pensions,” said Ross Eisenbrey, vice president of the Economic Policy Institute, at a press conference on Wednesday. “The early Boomers are better off than the late Boomers, and God help the poor Gen Xers. Seventy percent of them are on a track that leads to a fallen standard of living in retirement.”

According to the latest retirement income data, half of 65-and-older households have an annual income of less than $29,744 — about half the median income of younger households. Traditional pensions are disappearing in favor of 401(k) plans, which allow employers to shift much of the cost and all of the risk to their employees, and on top of this, Congress is considering cutting Social Security to balance the federal budget.

Maria Freese, director of government relations for the National Committee to Preserve Social Security and Medicare, said that the $6.6 trillion estimated retirement deficit is a “conservative number” and that the crisis could become far worse if Social Security is compromised.

via U.S. Retirement Deficit Reaches $6.6 Trillion: ‘God Help the Poor Gen Xers’.

Now, if only they would listen….

A small army of economists warned Congress on Thursday not to focus on deficit reduction instead of job creation or else risk a 1937-style double-dip recession.

“History suggests that a tenuous recovery is no time to practice austerity,” says a statement signed by more than 300 economists and policy experts. “In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring.”

Democrats in Congress have had 1937 in mind since March 2009. “We’re not going to let it happen again,” vowed House Speaker Nancy Pelosi (D-Calif.) at the time.

Nevertheless, deficit hawks dominated the debate in Congress this summer as Democratic leaders struggled to reauthorize a series of programs created by the 2009 stimulus bill. Pelosi and her counterparts in the Senate have had seemingly little choice other than to sacrifice things like COBRA health insurance subsidies and enhanced unemployment benefits to win the support of deficit-hawkish Democrats and moderate Republicans.

“This is about a high road to recovery versus a low road to fiscal balance,” said Bob Kuttner of the American Prospect and co-author of the statement, along with the Center for Economic and Policy Research’s Dean Baker and the Robert Borosage and Roger Hickey from the Institute for America’s Future. “The proper sequencing is: You get the recovery first, that requires increased public investment. And then the road to fiscal balance is much less arduous because people are working, businesses are investing, and tax revenues go up because you’re back in recovery.

“There is also a low road to fiscal balance, where you have austerity and you get the budget balanced at the cost of whacking the real economy.”

via 300 Economists Warn Congress: Don’t Kill Growth And Jobs In The Name Of Deficit Reduction.

Sorry, but I find this completely unacceptable in a country as rich as the US.  How can 43.6 million people be in poverty and more than 50 million not have health insurance and people not think the government needs to do something about it?

And how can they think there is not something fundamentally wrong with public policy that drives this?

The poverty rate surged to 14.3 percent last year, the highest since 1994, as the recession took its toll on incomes, the Census Bureau said Thursday.

The ranks of the working-age poor climbed to the highest level since the 1960s as the recession threw millions of people out of work last year, leaving one in seven Americans in poverty.

About 43.6 million people were in poverty last year, the Census Bureau said Thursday in its annual report on the economic well-being of U.S. households. The report covers 2009, President Barack Obama’s first year in office.

The poverty rate climbed from 13.2 percent, or 39.8 million people, in 2008.

The share of Americans without health coverage rose from 15.4 percent to 16.7 percent — or 50.7 million people — mostly because of the loss of employer-provided health insurance during the recession. Congress passed a health overhaul this year to address rising numbers of the uninsured, but the main provisions will not take effect until 2014.

via U.S. Poverty Rate Highest Since 1994 : NPR.