Working poor suffer under Bush tax cuts
Cash crunch: loss of services outweighs tax gains for millions
DETROIT — The Bush administration and Congress have scaled back programs that aid the poor to help pay for $600 billion in tax breaks that went primarily to those who earn more than $288,800 a year.
To offset the loss of the tax revenue, the administration has amassed record federal deficits and trimmed social spending.
The affected programs — job training, housing, higher education and an array of social services — provide safety nets for the poor. Many programs are critical elements in welfare-to-work initiatives and were already badly underfunded.
A six-month Detroit News investigation showed that as a result of the withering government assistance, working poor and destitute Americans are increasingly likely to be placed on waiting lists for help, receive reduced services, or be denied service entirely.
The News, after interviewing scores of people across the United States and examining thousands of pages of federal and state financial records, determined the loss of services cost many poor Americans more money than they saved from the tax cuts.
In many cases, the poorest lost services and got no tax cut at all.
The analysis of the three Bush tax cuts is based in part on estimates by the Center on Budget and Policy Priorities, using data from the nonpartisan Congressional Budget Office.
The poorest 20 percent of workers, who earn on average $16,600 annually, will get a tax break of $250 this year, which is less than 2 percent of their income. That amounts to about 68 cents a day.
By comparison, the richest 1 percent, with average incomes topping $1.1 million, will receive $78,460 in tax cuts this year. That is nearly 7 percent of their income.
For the poor, inequities of the Bush tax cuts are further exacerbated by the long-standing disparities in the Social Security tax, which has increased nine times since 1977.
Earnings are taxed for Social Security at a rate of 6.2 percent on income up to $87,900. But there is no Social Security tax on income above that amount. For America’s poorest workers — those who struggle to make ends meet — every dollar is subject to the Social Security tax.
The richest 10 percent, who make on average $288,800, will pay less than 2 percent of their income for Social Security.
In fact, while most workers pay into Social Security all year, millionaires — who pay less than half a percent — would be finished paying it by the first four weeks of the year.
For taxpayers who earn more than $87,900, it amounts to an estimated $85 billion break.
Meanwhile, the Bush tax breaks for the richest 10 percent this year alone will total $148 billion.
That is twice as much as the government will spend on job training, $6.2 billion; college Pell grants, $12 billion; public housing, $6.3 billion; low-income rental subsidies, $19 billion; child care, $4.8 billion; insurance for low-income children, $5.2 billion; low-income energy assistance, $1.8 billion; meals for shut-ins, $180 million; and welfare, $16.9 billion.
The reduction in government assistance that accompanied the tax cuts couldn’t come at a worse time.
The number of Americans living in poverty has risen 10 percent since 2000, after falling in the late 1990s. Nearly 36 million Americans — one in eight — now live in poverty and tens of millions more are considered working poor.
The economy has lost nearly a million jobs — 241,000 in Michigan alone — since it slid into recession in March 2001.
That has increased the demand for government programs from millions of Americans who are now more likely to know hunger, homelessness and chronic need.
America’s working poor — its secretaries, cooks, laborers, clerks and others — are finding it difficult to meet even basic needs.
For the poor, child care and housing can consume more than 80 percent of their income. And 45 million Americans, most of them low-income, have no health insurance.
Housing in many cities is so unaffordable that although 39 percent of the homeless work, they can’t pay for even a substandard apartment, according to a 2003 survey by the country’s mayors.
Compounding the problem, massive budget shortfalls have forced states to pare back their contributions to federal programs. At the same time, charitable contributions declined.
Those mired in poverty, hoping to wean themselves from public assistance, have received little help from Congress in their struggle to earn a living wage. Government is now offering job training to fewer people than in years past.
Nearly 6 percent of all U.S. workers earn minimum wage, $5.15 an hour.
Based on a 40-hour workweek, the annual minimum wage of $10,700 places a single parent of two well below the poverty level. Minimum wage earners got very little under the Bush tax cuts. Key social program cuts have left them with fewer places to turn for help.
