U.S. Economic/Financial News
Wealth Increasingly Concentrated at the Top
Dec. 12 (EIRNS)The Congressional Budget Office (CBO) report, "Historical Effective Federal Tax Rates: 1979 to 2005," released this month, confirms the trend noted in previous years: The richest Americans are sitting on the major portion of total U.S. income, and their pile just gets larger relative to the rest of the country.
The CBO used a broader definition of income for their new reportcomprehensive incomewhich takes into account untaxed income such as welfare, food stamps, and Social Security benefits, as well as the usual taxable income, according to the Dec. 15 New York Times. The intent was to give a more accurate picture of income in the lowest economic stratum.
The results are shocking:
* The upper 1% of households made $1.8 trillion gross in 2005and kept an average of $1.072 million per household after taxeswhile the lowest 20% made only $15,300 per household after taxes, with gross income of $369 billion for the quintile. In other words, the lowest 20% of households altogether made just 20% of the income of the highest 1% of households in aggregate.
* The highest 20% of households by income made 51.6% of the income after taxes, leaving the other 80% to divide the remaining 48.4%. The lowest quintile only received 4.8% of the total income, while the upper 1% garnered 15.6%.
Since 1979, the percentage of income concentrated in the upper 1% of households has doubled, while that concentrated in the lowest 20% households has dropped by 30%.
* The income for the lowest 20% of households has increased by $200 since 2003, while that for the top 1% has increased by $465,700. And the increase in income for that upper 1% in aggregate was greater by 37% than the total income for the lowest 20% in 2005.
Florida Sucker-Funds Hemorrhaging, Speculative Losses Soar
Dec. 12 (EIRNS)The municipalities which entrusted their monies to Florida's state-run Local Government Investment Fund (LGIF) may not have thought of themselves as suckers, but thanks to the Fund's "investments" in the toxic financial waste dumps known as SIVs, some 14-16% of their money has already been lost, provoking a political firestorm in the state. Since the problems came to light in mid-November, some $13 billion was pulled out of the fund before it froze withdrawals on Nov. 29, and another $2 billion has been withdrawn since it reopened Dec. 6, despite some restrictions. Making matters worse, the remaining funds have been split into a "Fund A," from which withdrawals can still be made, and a "Fund B," from which withdrawals have been suspended. Municipalities can withdraw all of their funds from Fund A if they wish, but must pay a 2% penalty above a $2 million or 15% limit (whichever is greater), and they will likely lose the 14% of their funds in Fund B, which consists of the toxic SIV investments. The LGIF has also suspended interest payments to the municipalities, instead using the funds to cover the losses in Fund B.
Will Bush Cause a Freezing Winter?
Dec. 13 (EIRNS)The Department of Energy's Energy Information Agency said yesterday that the heating cost for the average U.S. household will be $986 this Winter, which is an increase of 10.9% from 2006-07. USA Today notes that more low-income and elderly people are applying for Low Income Home Energy Assistance Program (LIHEAP) help this year. However, President Bush has just vetoed the second LIHEAP bill, passed by a bipartisan vote in both houses of Congress, as he also vetoed the first version.
Melody Rodriguez of the Central Missouri Community Action told USA Today, that, so far this year, 569 people have applied for assistance, as compared to 159 last year; while others are purchasing more wood for their wood stoves.