Lost among
never-ending talk in the mainstream media about the ‘modest
recovery’ being experienced in America have been some rather poignant
headlines that are telling a completely different story. I’ve used up
many weeks to outline the flaws regarding how our economic growth is measured
and suggest more responsible alternatives. I don’t expect Washington to
change, however. Those suggestions are for ‘We the People’ as we
navigate our own individual situations and seek to do the things necessary in
order that we are better prepared to deal with the undeniable consequences of
gross mismanagement by our government.
However,
at the same time I have noticed that many people who are still on the fence
in terms of understanding where we’re really at present a unique
problem. Most people will believe anything they hear on television or read in
a newspaper and accept it at face value. It becomes fact and, in many cases,
they will parrot what they’ve heard or read as their own opinion. To
the contrary if one endeavors to challenge the mainstream, we must be armed
with facts and arguments that are concise, salient, and provable beyond any
reasonable doubt. The good news is we have common sense and facts on our
side. The bad news is that common sense is in short supply these days as is a
willingness to face reality.
This
article is for all you folks who are still on the fence, not quite sure of
where we are and where we’re headed. In it I will offer two rather
important facts about our society that will hopefully help you recognize that
we are not better off than we were a few years ago. Things are in fact
getting worse – from many different points of view, and this has been
going on for much longer than most would even realize.
Food Stamp Use Up 70% Since 2007
There
were many of us outside the mainstream who called the recession in mid to
late 2007. My alternative measurement of economic output (based on the
Cobb-Douglas output model) puts the beginning in mid to late 2006. At the
time, the government was running what were already considered to be
unsustainable budget deficits and those deficits were nothing compared to
what we’re seeing now. The point is that government borrowing and
spending was able to postpone the recession from hitting Main Street for
about a year. Don’t forget also that the housing market was in the
process of putting in a huge top. People were still using their homes as
their own personal ATM machines and running up their credit cards.
However,
by 2007, we witnessed a monumental shift of our society. People, now running
out of their own ammo, started turning to the government. In the case of food
stamps, also known as SNAP, they began to rely on the government for their
daily bread in larger and larger numbers. That trend is still intact today.
Food stamp use has increased every month for at least the last three years if
not even longer. The Congressional Budget Office (CBO) recently released its
data through 2011 on food stamp use. 45 million people received food stamp
assistance in 2011, a 70% increase over the number receiving assistance in
2007. 45 million doesn’t really sound like a huge amount, especially
considering that our population is over 300 million. This constitutes about
one in 7 people. If you’re at work and reading this, pay attention to
the next 7 people who walk by your desk. Statistically, one of them is on food
stamps.
It
still might not seem like a big deal, but when you figure that the number has
almost doubled in 5 years and is expected to continue to grow until at least
2014 (by the CBO), it suddenly becomes a bigger deal. When you figure that
the government borrows almost 50 cents out of every dollar it spends, it
makes the reality even more grim. Statistically at least, the government
is borrowing money from banks and foreigners to help feed about 20 million
people in this country. Still sound like no big deal?
The
CBO went on to say that about 2/3 of the increase in total spending on the
food stamp program was due to an increase in participants in the program.
Another 20% was due to temporarily increased benefit amounts as a result of
the 2009 stimulus bill passed by Congress. Many of us told you the stimulus
was a joke. It was supposed to stimulate the economy, but buried in there was
an increase in food stamp benefits. How is that supposed to stimulate the
economy? My personal guess is that the increase was to cover inflation
created by the fed to cover all the bailouts and promises made to the banksters. If that is indeed the case, you can forget
about the Bureau of Labor Statistics and the fed and their ridiculous
assertion that inflation runs at about 2-2.5% per annum in perpetuity.
Anecdotally,
the CBO said use of food stamp benefits would decrease after 2014 because the
economy would be improving, but it also warned that usage would remain high
by historical standards. 2014 huh? What about the ongoing ‘modest
recovery’ we hear about constantly? If nothing else, you’ll
hopefully be able to see that the left ear has no idea what the right mouth
is saying and vice versa. Maybe the CBO and the Commerce Dept. should have a
meeting and get their propaganda straight.
Social Security Disability Applications Skyrocket
Social
Security Disability or SSDI is a program that pays benefits to workers who
have earned ‘credits’ by paying into the Social Security Ponzi
scheme. In many cases, even workers who have not earned credits are eligible
for benefits as are their dependents under certain circumstances. People who
open a claim for SSDI are also eligible for Medicaid benefits. There have
been many documented cases of abuse of all of these support systems, but
there has also been a dramatic increase in legitimate claims as well.
Since
the beginning of 2009 more than 5.4 million workers have signed up for
disability benefits. According to government data, since the recession
officially ‘ended’ (sic) in 2009, the number of applicants for
SSDI has been nearly twice the number of jobs created. And remember they are
using BLS numbers when they talk about the number of jobs created. Many
others, myself included, have repeatedly
demonstrated the outright misrepresentation and fraud in the BLS’
reporting methodologies. To put it in a nutshell, the odds are overwhelming
that there are several SSDI applicants per job ‘created’ rather
than just two. Again, per government data, these are discouraged workers who
are dropping off the unemployment rolls and out of the work force and, as they
give up looking for work, are turning to the government for assistance.
Here’s
a synopsis from a quote in Investor’s Business Daily:
“As a result, by April there were 10.8 million people on
disability, according to Social Security Administration data released this
week. Even after accounting for all those who've left the program —
mainly because they hit retirement age or died — that's up 53% from a decade
ago.”
The
proportion of those on disability compared to the overall workforce has been
steadily increasing since the early 1990s as well (see above graphic).
Ironically, if you take a look at when consumer debt burdens really started
to accelerate, we’re in the same time window. Coincidence? You decide.
There
has been no cross-referencing to date that I’m aware of regarding how
many SNAP participants are also on SSDI, but the chances are pretty good
there is some overlap. It has become a widely accepted fact in economic
circles that the number of households completely dependent on government
programs is on the rise. Remember, we’re only dealing with two programs
here. Don’t forget there are still Medicare, Medicaid, Medigap, LI-HEAP to be considered and the list goes on
and on. This article is only scratching the surface of the increasing
dependence on government.
I
think that after seeing this information one would be able to construct a
rather sound argument that the government is borrowing a good deal of money
in order to support an increasingly dependent society, and concurrently, is
doing an awful lot of opinion shaping to keep this fact under the radar. Does
this sound like a healthy economic environment to you? Reliance on the state
might be the ‘in’ thing right now, but we’ve already seen
the tragic failure of such thinking and policy in Europe. Those who believe
we’re immune just because we live in America are in for a rude
awakening.
Until Next Time,
Andrew W. Sutton, MBA
Chief Market Strategist
Sutton &
Associates, LLC
Interested in what is going on in the markets and
the economy? Read Andy Sutton's weekly market and economic commentary 'My Two
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