Tens of thousands being dropped from US student loan relief program

By J. Cooper
15 November 2017

October marked 10 years since the George W. Bush administration enacted the Public Service Loan Forgiveness (PSLF) program as an incentive to young college graduates to pursue careers as teachers, in government, or at non-profit institutions. The program was advertised as a way for some recent graduates to see an exit sign on their student loan debt.

In 2006, average student loan debt for undergraduates was just under $20,000. For graduate students it was nearly $40,000. For the class of 2016, average undergraduate debt had climbed to $37,172. For graduate students, the average is considerably higher. In that same period, college tuition has increased 63 percent.

Over the past 10 years over half a million graduates have signed up for PSLF. However, according to a recent article in Rolling Stone, more than half of those have been disqualified for myriad bureaucratic reasons. Last month a total of only 137 individuals were deemed eligible to have the balance of their student loans wiped clean. Thousands are just finding out that their years of paying on time won’t count under the federal forgiveness plan because they took out the wrong type of loan, their employer has been disqualified, or their original lender sold the loan to an unqualified institution. President Trump’s budget proposes eliminating the program entirely for borrowers after July 2018.

As many of these borrowers are now discovering, if your employer hasn’t provided the correct proof of employment in a qualifying position, if the loan you are carrying is not through the sole federal direct-loan program, if you have missed even one of the 120 payments required within the 10-year span, or if you paid extra in one payment and skipped the next, you can be disqualified.

New York Times article from October 27 profiles a 46-year-old teacher who enrolled in the PSLF plan the year it was announced, thinking he had done everything according to the rules, only to discover in 2015 that he had been enrolled in a “particular type of ineligible payment plan and would need to start his decade of payments all over again.” One of the online comments from November 5 announces that several class action suits have been launched on behalf of borrowers who were not informed their loans were out of compliance.

Another commenter says: “By the time I’d learned that [one of the loans did not qualify], my loans had ballooned to $90k because I was only paying interest on them with 8.5 percent. … that nonsense impacted my career choices (deciding to stay in nonprofits to secure the forgiveness), my retirement funds, and my sanity. I will end up paying more than $55K in interest on my $60k loan. Truly criminal.”

Among the thousands disqualified or affected are teachers, doctors, lawyers, even police. A lawsuit by the American Bar Association was filed earlier this year after the Department of Education (DoE) announced it had “rescinded without explanation the association’s status as a qualified employer under PSLF and notified ABA employees and others who had previously been approved for participation in the program that they no longer qualified,” according to the DoE website.

Most of those applying for the PSLF program are those with postgraduate degrees. Currently there is no limit on the amount a graduate student can borrow, and it is not uncommon for a graduate student to embark on their first job out of school with $100,000 in debt. To discover, after 10 years working at a public service job, known for low salaries, that you don’t qualify for the program after all, not only impacts the financial wellbeing of the individual, but can have serious psychological effects.

Jason Delisle, a resident fellow at the American Enterprise Institute, a conservative think tank, revealed that when the PSLF program was first created, it was intended to be small and unattractive. “Washington policymakers did not foresee the program growing to its current size. After all, 10 years is a long time to work in a qualifying job, so many experts thought people wouldn’t sign up,” he wrote in Politico in July. “They also thought borrowers were averse to making loan payments linked to their incomes, as hardly anyone enrolled in an earlier version of the government’s income-based repayment plan.”

In fact, Delisle speaks for that section of the ruling elite who are determined that not even a small segment of students in debt will get any relief. Delisle argues that the PSLF program should be eliminated because it encourages graduate students to maximize their debt load, since the larger amount will be forgiven after 10 years. It’s easy for him to ignore the dire consequences for those who get the reality check that they don’t qualify after they have made their regular payments and then face decades of additional payments when they thought they might be able to buy a house or start a family.

As of July this year, the interest rates for Direct Loans increased to 7 percent for graduate students, and 4.45 percent for undergraduates. Trump’s budget proposal includes a provision to eliminate entirely the federal Subsidized Stafford Loan, which has traditionally allowed students to defer payment while enrolled in a college or university, and had a somewhat lower interest rate upon graduation. Another provision proposed in the House version of the next budget would require that all tuition waived, either through a federal program, employer benefit or university tuition waiver, be counted as taxable income.

The overwhelming burden of student debt for borrowers at all levels is becoming worse every year. This past spring, total student loan debt surpassed $1.45 trillion, about $620 billion more than all US credit card debt. Among the 44 million borrowers, the average monthly payment is $351. Trump is proposing to abolish subsidized federal loans and institute a single program for all federal student lending as a single income-based repayment plan at 12.5 percent of adjusted gross income. Today’s recent graduate can look forward to at least half a lifetime of penury as the cost of an undergraduate degree. And for those who can’t afford more than the interest every month, it’s a lifetime.

Currently, 11.2 percent of student loan dollars are in default and another 11 percent are in forbearance (a temporary payment suspension granted at the discretion of the lender while interest continues to accrue). According to the September 28 Washington Post, “millions of people had not made a payment on about $144 billion in federal student loans for at least nine months as of June, a 12 percent increase in defaults from a year earlier.”

Although the default rate has declined slightly from its 14.7 percent peak in fiscal year 2010, it is still well above rates prior to the 2007-2008 mortgage collapse and Wall Street crash—from 8.8 percent in 2009 and 7 percent in 2007. The total number of borrowers in default is at an all-time high, with 1.1 million new borrowers defaulting in 2016.

According to the Department of Education’s latest figures, the third quarter of 2017 saw a major increase in loans going into default for at least a second time. Thirty-thousand borrowers defaulted on $64 million. This was a jump of 7,100 unique loans in just three months. The previous record was set in the first quarter of 2016, with 24,500 borrowers re-defaulting on $57 million.

College graduates face an increasingly bleak future, despite being told that a college education is a necessity to get a “decent” job today. As has been widely reported, Americans between the ages of 18 and 34 are more likely to be living with their parents, rather than a spouse or partner. Employer-paid health care and pension plans are a relic of the past, forcing millions of college graduates to foot the bill for thousands of dollars in expenses in addition to the student loans. The average net worth of the 2016 college graduate is a negative $33,984.

This crushing debt provides fertile hunting grounds for rapacious debt collectors. For the fiscal quarter ending in March 2017, more than $2 billion had been “successfully” recouped for the lenders by 30 national collection agencies. Of this, $182 million was the result of wage garnishment. It should come as no surprise that feelings of despair and suicidal thoughts are so prevalent today.

As the teacher interviewed by Rolling Stone explained, the debt collectors “called day and night.” Calculating his “rehabilitated” debt at over $100,000, he said, “Not one dollar goes toward principal. I will never be able to pay it off. My only hope to escape from this crushing debt is to die.”

Significantly, a recent report by Experian, the consumer credit reporting agency, notes that of the generation of borrowers now making payments, aside from students currently enrolled and thus just beginning to accrue loans, millennials have the highest percentage of past due amounts on loans in repayment (not deferred). Millennials also have the highest number of loans, 4.4 on average. This is also the generation that indicated, by a majority (51 percent) in a recent poll, that they would rather live in a socialist or communist society than under capitalism.

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US brands RT a “foreign agent:” A chilling move against free speech

11 November 2017

On Thursday, RT America, the US-based subsidiary of RT (formerly known as Russia Today), announced that it would, under pressure from the United States government, register as a “foreign agent” under the Foreign Agents Registration Act (FARA).

The Justice Department’s demand that RT register as a “foreign agent” is aimed at delegitimizing RT as a news source, intimidating its journalists and guests, and setting the precedent for taking similar actions against other news outlets.

The US government has given no public justification for its demand, which will require that RT America provide information on its finances and on individuals involved in directing the news outlet. RT clearly reflects the views of the Russian government and avoids criticism of the Putin regime. However, the US has made no similar demand in relation to other outlets that have government financing and backing—the BBC, for example. Moreover, the United States operates a vast network of news agencies that work, officially and unofficially, to promote the interests of the American ruling class all over the world.

The US government’s motivations are entirely political, bound up with the effort to present all opposition within the United States as the product of the actions of Russia. In its reporting, whatever its reasons may be, RT provides a platform for voices critical of the policy of the American government.

The United States outlined the political reasons for moving against the broadcaster in the January 6, 2017 report by the US Director of National Intelligence on “Russian intervention” in the 2016 elections.

The report alleged, “RT broadcast, hosted, and advertised third-party candidate debates and ran reporting supportive of the political agenda of these candidates. The RT hosts asserted that the US two-party system does not represent the views of at least one-third of the population and is a ‘sham.’”

The Director of National Intelligence report further denounced favorable coverage by RT of the Occupy Wall Street movement, declaring, “RT framed the movement as a fight against ‘the ruling class’ and described the current US political system as corrupt and dominated by corporations.”

More recently, US politicians—led by the Democratic Party—have developed a narrative that Russia, through outlets like RT, has worked to “sow divisions” within the United States, as if the American people need RT to know that the political system is corrupt and dominated by corporations.

The campaign has been used to demand a regime of Internet censorship, with technology giants including Google, Facebook and Twitter taking measures to block or demote content from a broad range of websites.

Earlier this month, Google removed RT from its list of “preferred” channels on YouTube, while Twitter blocked all advertising by the channel. In addition to its crackdown on RT, Google has made sweeping changes to its search engine and news service that have dramatically slashed traffic to left-wing, antiwar and progressive web sites, including the World Socialist Web Site, which has had its search traffic from Google fall by 74 percent since April.

Precisely because of its ties to the Russian government, the US State Department has chosen it as its first target in its drive to persecute, criminalize and ultimately outlaw all oppositional journalists.

Will RT’s hosts, including Pulitzer Prize winner Chris Hedges and veteran interviewer Larry King also be forced to register as “foreign agents?” Will all of RT’s guests, which have included prominent left-wing journalists, politicians, academics, and even celebrities, get a knock on their door demanding that they file paperwork with the Justice Department? Will all of these individuals now be opened to questioning about their collaboration with a “hostile foreign power”?

This month, an organization calling itself the European Values Think-Tank, funded by the US embassy and foundations associated with billionaire George Soros, published just such a list, including the names of 2,300 RT guests, grouped into US and UK politicians, journalists, academics, and celebrities. These individuals are, according to the think-tank, “useful idiot[s]” for a “hostile foreign power.”

The list includes journalists Julian Assange, Max Blumenthal, Seymour Hersh, Jeremy Scahill, Ed Schultz, and Matt Taibbi, as well as the academics Noam Chomsky and Stephen Cohen, together with actor Russell Brand and filmmaker Oliver Stone.

Amid soaring social inequality and an ever-escalating military buildup, the US government is moving to silence any alternative to its closely monitored and vetted establishment media outlets, including the major newspapers and broadcast networks.

The fact that RT is being targeted because of its political positions sets an ominous precedent. It means that “foreign propaganda” is being defined by political views, laying the groundwork for a much broader range of news outlets to be labeled as promoting “Russian propaganda,” blacklisted, and ultimately criminalized.

Andre Damon

http://www.wsws.org/en/articles/2017/11/11/pers-n11.html

Democratic Voters Are Done with Party Centrists—and the Progressives Are a Majority

NEWS & POLITICS
On the left, the voters are once again way ahead of the politicians.

Vermont senator Bernie Sanders speaking with supporters at the Phoenix Convention Center.
Photo Credit: Gage Skidmore / Flickr

A new poll shows most Democratic voters want their party to move left, with new people in charge. In other words, they want a political revolution.

They’ve got the right idea.

If the party establishment thinks Robert Mueller’s investigation will save it, it’s probably wrong. After President Richard Nixon and Vice President Spiro Agnew were both removed from office for malfeasance, Jimmy Carter barely eked out a win in 1976. Four years later, Ronald Reagan’s victory ushered in 12 years of Republican leadership in the White House.

That’s a lesson for today’s Democrats. High crimes and misdemeanors don’t automatically translate into enthusiasm for the other party, especially in today’s murky political environment. Corruption is more likely to lead to cynicism than to citizen involvement, unless voters are given something to believe in.

A Left Majority Led By Women and People of Color

Democratic voters apparently know what they believe in. In the latest Harvard-Harris poll, a sample of the party’s base voters was asked: “Do you support or oppose movements within the Democratic Party to take it even further to the left and oppose the current Democratic leaders?”

52 percent of those polled said they support those movements, while 48 percent said they oppose them. That’s a call to political insurrection. These voters want to change the party’s ideology. They “oppose” (that’s a strong word, “oppose”) the people who have been running it for decades.

If the implications for the party’s upcoming races seem clear, the long-term implications are even more stark: 69 percent of voters aged 18 to 34 said they support those insurrectionary movements.

Among other things, the Harvard-Harris poll disproves the “Bernie Bros” canard so beloved by the party’s establishment. Democratic insiders have repeatedly insisted that the party’s left is dominated by white males. The implication is that the left is somehow sexist and/or racist.

But the poll shows that support for the left is greater among female voters (55 percent), Hispanic voters (65 percent), and African-American voters (55 percent) than it is among whites (46 percent) or men (49 percent).

Identity and Economy

It shouldn’t be surprising that Democratic women and people of color are more left-leaning than their white, male counterparts. They’re more likely to suffer the economic consequences of racism and sexism – forms of oppression that are structural as well as social in nature. Some of those signs of structural oppression include:

African Americans are the only racial group in the country who are still worse off economically today than they were in 2000. Black people in this country are more likely to lack health insurance, and the black-white wage gap is worse today than it was in 1979.

Women working full-time in the United States last year earned only about 80 cents for every dollar a man made, according to the latest Census Bureau data. (The marginal decrease in the gender wage gap was due at least in part to falling wages among men.)

Black women working full-time earned only 63 cents for every dollar earned by a white male, Native women earned only 57 cents and Latinas earned only 54 cents. Households led by women were much more likely to be impoverished than male-led households.

While some Democratic leaders, along with their media backers, have tried to argue that the left’s agenda is antithetical to “identity politics,” that dichotomy would have been rejected by pioneers like Dr. Martin Luther King, Jr. and Margaret Sanger, both of whom were leftists.

As for younger voters, they’ve grown up under the most economically unequal conditions in more than one hundred years. Social mobility is down. Millions are burdened with staggering student debt. The entry-level job market has been poor since at least 2008, and their generation has been plagued with under-employment that’s likely to cripple their lifetime earning potential.

Is it any wonder they’re unimpressed with party leaders whose main claims to leadership are their lengthy résumés as members of the ruling elite?

Leftward Movement

Wisely, these voters are looking to “movements,” and not to the party itself, for answers. That’s where change is likely to be born – from the activism of those who understand that economics and identity are inseparable. It’s certainly not going to come from leaders who seem determined to purge the representatives of those movements, while at the same time trying to elevate corporate lobbyists to leadership positions.

Nothing could be more antithetical to the wishes of the party’s base, as expressed in this poll.

There are those who say the party’s base voters are wrong, as a hedge-funder turned Democratic operative did recently. They claim that a “left” agenda will lead the party to defeat. They’re wrong, for at least three reasons.

Working Class

First, many of the left’s ideas appeal to voters across the political spectrum. A number of polls – see herehere, and here, for example – have shown that most voters, including most Republicans, support expanding Social Security.

Donald Trump won the GOP nomination – and ultimately the presidency – in part because he adopted left-seeming positions on trade, job creation, and cracking down on Wall Street. A bitter irony, I know.

Despite improvement in the topline economic numbers, voters remain deeply uncertain about their economic prospects and the nation’s future. 60 percent of respondents to the Harvard-Harris poll said the country is “off on the wrong track.”

Economic uncertainty affects voting across racial and ethnic lines. Regarding Trump voters, pollsters Pete Brodnitz and Jill Normington told House Democrats earlier this year:

“We suffer from the lack of an identifiable positive agenda. Without it, voters will turn to Trump for progress. With it, we can make significant gains.”

That doesn’t mean Democrats should adopt a race-based approach. Turnout was down significantly for black and Hispanic voters last year, which may well have changed the race’s outcome. An “identifiable positive agenda” on the economy is likely to bring out more working-class people of color as well.

Democrats don’t need a “white” strategy. They need a “working class” strategy.

The Vanishing Persuadables

Second, establishment Democrats have spent far too long trying to appeal to that rapidly-vanishing creature known as the “persuadable” voter – perhaps because that approach suited their own ideology (or self-interest) very neatly. Survey datashows that fewer such voters exist with every passing year.

In this environment, turnout is a much more decisive factor than persuasion. Conservatives are more likely to vote than liberals, and early polling indicates that Republicans will outperform Democrats on turnout again in 2018.

To boost turnout, Democrats should look to candidates and policies that mobilize left-leaning voters.

A Movement is More Than a Party

The third point is the simplest one of all. it’s hard to argue that the leftward path leads to defeat when the party’s had so many losses under its current, more right-leaning ideology. Arguments about how to win are most persuasive when they come from people who win on a regular basis. Democrats are out of power in all three branches of the federal government and two-thirds of the states, which means the party’s current leaders don’t have much credibility on the subject.

With any luck, Mueller’s investigation will bring Donald Trump and his team the justice they so richly deserve. But that won’t save the Democrats.

The party’s voters are looking to movements to bring them new leaders and a leftward shift. That’s smart. Movements have energy, independence, and commitment. They can reshape a party’s leadership, infuse it with new ideas, and populate it with activists. That’s because a movement is more than a party. It’s something broader and deeper, something that infuses its members’ lives with purpose and meaning.

Party leaders will fight back, of course. In fact, they already are. But their record of failure shows that the tide of history is against them. On the left, at least, the voters are once again way ahead of the politicians.

 

Richard (RJ) Eskow is a blogger and writer, a former Wall Street executive, a consultant, and a former musician.

https://www.alternet.org/news-amp-politics/dems-want-ditch-leaders-and-move-left?akid=16310.265072.1SHY-3&rd=1&src=newsletter1084703&t=22

Abolish the debt that is drowning Puerto Rico

We need to organize for immediate disaster relief for Puerto Rico–but we can also expose and oppose the debt disaster that came before the hurricanes.

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

Families begin to rebuild after the hurricane in Patillas, Puerto Rico (Andrea Booher | Wikimedia Commons)

SOCIALIST WORKER supports President Trump in his call to cancel Puerto Rico’s punishing debt.

We can pretty much guarantee you’ll never see the first five words of that sentence here ever again–and the supervisors of the “adult day care center” at 1600 Pennsylvania Avenue are obviously trying like hell to make sure we never have reason to.

But it says a lot about the Wall Street-made catastrophe that has plagued Puerto Rico for years before Hurricane Maria that even a reactionary fanatic like Trump didn’t think twice before stating the obvious.

“They owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said in an interview last week with Geraldo Rivera of Fox News. “I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”

“Wall Street promptly freaked out,” Politico reported the next day. That was an understatement. Heavy trading on the normally stable bond market pushed the value of Puerto Rico’s general obligation bonds–already devalued to 56 cents on the dollar after the island effectively declared bankruptcy earlier this year–down to 37 cents on the dollar.

The White House then “move[d] swiftly to clean up Trump’s seemingly offhand remarks,” Politico continued. Again an understatement. Office of Management and Budget Director Mick Mulvaney was rushed in front of a television camera to tell CNN: “I wouldn’t take it word for word with that.”

Just to make sure Wall Street got the message that no one in the Trump administration had any intention of doing what the head of the Trump administration had just said, Mulvaney was more explicit–and more contemptuous of the Puerto Rican people–in a second interview with Bloomberg: “We are not going to bail them out. We are not going to pay off those debts.”

Anyone want to bet that Trump doesn’t talk about “saying goodbye” to Puerto Rico’s debt again?

But the simple fact is that justice demands exactly that: The cancelation of all of Puerto Rico’s debt repayments, by the action of the U.S. government, taking responsibility for the Wall Street loan sharks who inflicted the damage in the first place.

Puerto Rico is caught in the same kind of debt trap that has ensnared poor countries in hock to the International Monetary Fund and World Bank–or more advanced economies like Greece, at the hands of European bankers and bureaucrats. The aim is to force vulnerable societies to knuckle under to the will of the ruling class.

And now, the devastation of neoliberal policies has made Puerto Rico’s crisis following Hurricanes Irma and Maria much, much worse.

People who want to show solidarity with Puerto Rico today will rightly focus on ways to provide immediate relief to communities desperate for food, water and critical supplies. SW hopes its readers will raise what money they can to donate to grassroots efforts–see the What You Can Do box with this article.

But we have another job to do now, while Puerto Rico lingers in the media spotlight: expose the debt trap that made the island more vulnerable when Maria struck and demand that it end.

– – – – – – – – – – – – – – – –

IN MAY of this year, Puerto Rico’s government went to federal court to file for the equivalent of bankruptcy on a debt that includes over $74 billion in repayments on government bonds and $49 billion in pension obligations. But in return for immediate relief, Puerto Rico will have to abide by even harsher austerity dictates.

The debt burden–which is larger than the annual economic output of the island when pension obligations are added in–is one consequence of a recession that has lasted for more than a decade.

The economic slump began when Corporate America–after many years of making super-profits off operations in Puerto Rico, particularly pharmaceutical production–abandoned the island after favorable tax incentives for investment were phased out starting in the early 2000s. Annual corporate investment in Puerto Rico peaked at 20.7 percent of gross domestic product in 1999–it has fallen to under 7.9 percent as of 2016.

Successive governments–whether led by New Progressive Party, which is aligned with the U.S. Republicans, or the Popular Democratic Party, tied to the Democrats–imposed policies that were guaranteed to make the crisis worse: neoliberal austerity.

Social spending was cut drastically–reductions in the island’s education budget led to hundreds of schools being closed, for example. Public-sector workers have been under intense pressure, with tens of thousands of layoffs and attacks on their unions. Regressive taxes have been hiked, making the sales tax of 11.5 percent higher than any U.S. state.

A succession of state assets were privatized on terms guaranteed to benefit the private purchasers: Back in the 1990s, conservative Gov. Pedro Rosselló González sold off hospitals that were part of a public health care system that was once fairly accessible and affordable at around half their market value.

Austerity measures propelled the vicious circle: Continuing economic decline made shortfalls in government revenues worse, leading to more spending cuts and regressive taxes that caused further economic contraction, and on and on.

The consequences even before Hurricane Maria were dire: Official unemployment is 11.7 percent, well over double the rate in the U.S. as a whole. Just under half of people on the island live in poverty, including three in five children.

– – – – – – – – – – – – – – – –

THROUGH IT all, debt was the straitjacket to make sure Puerto Rico didn’t stray from austerity.

Faced with declining revenues as a result of the contracting economy, various branches and agencies of the Puerto Rican government issued bonds to raise money–but these came not only with the usual obligation to repay the cash with interest, but increasing pressure to intensify neoliberal measures.

The vultures of Wall Street were eager to set up the increasingly complex bond issues. They paid better than most municipal issues, and interest on income from Puerto Rico bonds is exempt from city, state and federal taxes.

But the biggest gamblers on Wall Street see more than a tax loophole in the suffering of the people of Puerto Rico. A 2015 report from the Hedgeclippers.org website paints an ugly picture:

Several groups of hedge funds have bought up large chunks of Puerto Rican debt at discounts and have also pushed the island to borrow at extremely favorable terms for creditors. Hedge fund managers are also recommending the implementation of austerity measures.

Known as “vulture funds,” these investors have followed a similar game plan in other debt crises, in countries such as Greece and Argentina. The spoils they ultimately seek are not just bond payments, but structural reforms and privatization schemes that give them extraordinary wealth and power–at the expense of everyone else.

It’s been obvious for several years that Puerto Rico’s debt burden is unpayable, but the hedge-fund vultures are counting on enforcers in the form of the U.S. government.

A law pushed through Congress last year by Barack Obama and the Democrats established a seven-person Fiscal Control Board with broad powers to direct government agencies on the island and dictate laws and policies. It has ordered, for example, exemptions to federal standards on the minimum wage, Medicaid and Temporary Assistance to Needy Families.

To top it off, the seven members of the board include some of the same financiers who imposed neoliberal policies and arranged the deals that caused the debt burden.

Bondholders may still be forced to take a “haircut”–that is, accept less than what they are owed on Puerto Rico’s bonds. But the mission of the Fiscal Control Board is to make sure working people on the island, not investors, pay as much of the price as possible.

– – – – – – – – – – – – – – – –

ALL THIS “reads like the 21st century equivalent of the metropolitan looting of wealth from the colonies,” as Lance Selfa wrote for SocialistWorker.org after Hurricane Maria struck Puerto Rico head on.

And we know who the looters and their accomplices are.

The hedge-fund parasites who are trying to inflict more suffering on Puerto Rico rather than lose a penny from their investment gambles should face pickets outside their offices. Members of Congress–Republican and Democrat alike–should be greeted at public events by solidarity activists demanding that they remove the noose that is strangling the island.

There is much work to be done to organize for immediate relief in Puerto Rico after the hurricane catastrophe. But the left has an opportunity to also expose and oppose the unnatural disaster that came before Irma and Maria.

We may not hear any more about canceling the debt from Donald Trump, but we can raise our own voices to demand that this crushing burden be lifted off the people of Puerto Rico.

https://socialistworker.org/2017/10/11/abolish-the-debt-that-is-drowning-puerto-rico

More than 52 million Americans live in economically distressed communities

By Sandy English
28 September 2017

A new analysis of Census data shows that the so-called economic recovery under the Obama administration was an unmitigated catastrophe for the 20 percent of the American population that live in the poorest areas of the United States and that gains of jobs and income have gone overwhelming to the top 20 percent richest areas.

The 2017 Distressed Communities Report,” published by the Economic Innovation Group (EIG), analyzes the census data for 2011-2015 for people living in each of the nearly 7,500 American zip codes according to several criteria.

The EIG’s Distressed Communities Index (DCI) considers the percentage of the population without a high school diploma, the percentage of housing vacancies, the percentage of adults working, the percentage of the population in poverty, the median income ratio (the percentage of median income that a zip code has for its state), the change in employment from 2011 to 2015, and the change in the number of businesses in the same period.

The report divides the findings for zip codes into five quintiles based on these indicators, rated from worst- to best-performing: distressed, at risk, mid-tier, comfortable, and prosperous.

The results show that distressed communities—52.3 million people or 17 percent of the American population—experienced an average 6 percent drop in the number of adults working and a 6.3 percent average drop in the number of business establishments.

“Far from achieving even anemic growth from 2011 to 2015,” the report notes, “distressed communities instead experienced what amounts to a deep ongoing recession.”

Further, “fully one third of the approximately 44 million Americans receiving SNAP (Supplemental Nutrition Assistance Program or food stamps) and other cash public assistance benefits (such as Temporary Assistance for Needy Families (TANF)) live in distressed communities.” The report notes that most distressed communities have seen zero net job growth since 2000.

Residents in these zip codes are five times more likely to die than those in prosperous zip codes. Deaths from cancer, pregnancy complications, suicide, and violence are even higher. “Mental and substance abuse disorders are 64 percent higher in distressed counties than prosperous ones, with major clusters in Appalachia and Native American communities where rates exceed four or five times the national average,” the report continues.

One other important and alarming fact which the report highlights is that over a third of the distressed zip codes contain so-called “brownfield” sites—areas which are polluted or contaminated in some way. Not only do these have impacts on real estate and business development, they present a whole array of health hazards to the very poorest Americans.

Distressed communities can be found all over the United States but are concentrated in the South: 43 percent of Mississippi’s zip codes are distressed, followed by Alabama, West Virginia, Arkansas and Louisiana. According to the report, [the South] “is home to a staggering 52 percent of all Americans living in distressed zip codes—far above its 37.5 percent share of the country’s total population.”

After this, the Southwest and Great Lakes region have the largest share. In the Northeast, most distressed communities tend to be found in urban areas and in the South, primarily in rural areas.

The biggest cities with the largest numbers of distressed zip codes are Cleveland, Ohio, Newark, New Jersey, Buffalo, New York, Detroit, Michigan and Toledo, Ohio. Mid-sized cities with the highest number of distressed zip codes include Youngstown, Ohio, Trenton, New Jersey, Camden, New Jersey, Gary, Indiana, Hartford, Connecticut and Flint, Michigan.

Urban counties with the highest number of distressed zip codes include Cook County in Illinois, with Chicago at its center, Los Angeles County in California, Harris County in Texas, with Houston at its center, and Wayne County in Michigan, encompassing Detroit. Most of these urban areas were once industrial centers and home to the industrial working class.

Zip codes that have a majority of minorities living in them are more than twice as likely to be distressed as zip codes that are majority white. “In total,” the report notes, “45 percent of the country’s majority-minority zip codes are distressed and only 7 percent of them are prosperous.” At the same time there are numerous distressed communities that are almost completely white. A quarter of the total distressed population is under 18.

The report found that the economic benefits of the recovery after the 2008 recessions have gone to the top quintile of zip codes, where the wealthier layers of the population live, including not only the very rich but also the upper middle class.

These areas, which the DCI terms prosperous, and make up roughly 85 million Americans or 27 percent of the US population, have for the most part the economic wherewithal to finance higher levels of education, have the lowest housing vacancy, highest percentage of working adults, and have had the lion’s share of job and business expansion.

“The job growth rate in the top quintile was 2.6 times higher than nationally from 2011 to 2015, and business establishments proliferated three times faster than they did at the national level,” the report notes. “Prosperous zip codes stand worlds apart from their distressed counterparts, seemingly insulated from many of the challenges with which other communities must grapple. The poverty rate is more than 20 points lower in the average prosperous community than it is in the average distressed one.”

The report makes much less of an analysis of the other three, middle quintiles, the at risk, mid-tier, and comfortable categories, but it does note some factors that address the overall trends nation-wide. “A remarkably small proportion of places fuel national increases in jobs and businesses in today’s economy. High growth in these local economic powerhouses buoys national numbers while obscuring stagnant or declining economic activity in other parts of the country.”

One of the more telling aspects of the report is that extreme poverty in the US is presided over by both capitalist parties: Democratic and Republic politicians have equal numbers of distressed communities in their constituencies. Democrats, in fact, “represent six of the 10 most distressed congressional districts.”

Another observation from the voting data, and one of the few that looks at conditions beyond the bottom and top quintiles, is worth quoting in full:

“President Trump accumulated a 3.5 million vote lead in counties that fell into the bottom three quintiles of well-being (equivalent to 9.4 percent of all votes cast in these counties). A vast array of factors determined voting patterns in the 2016 election, but it stands that the ‘continuity’ candidate performed better in the places benefiting most from the status quo, while the ‘change’ candidate performed better in the places one would expect to find more dissatisfaction.”

Broader figures and the historical view of wealth distribution in the US—that one percent of the population control 40 percent of the wealth or the decades-long decline in the percentage of the national income that goes to the working class—are not brought out in the report but the data add to a complete picture of social conditions across the United States, the character and geographical distribution of social and economic conditions in a country of more than 320 million.

The portrait provided by the EIG report is not simply one of increasing misery and poverty for the bottom 20 percent, and not only one in which only a minority of Americans are achieving anything like “prosperity,” but of growing and explosive dissent among tens of millions.

It exposes as a bare-faced lie the claim that President Obama made at the end of his second term, that “things have never been better” in America.

http://www.wsws.org/en/articles/2017/09/28/pove-s28.html

US Census report shows increasing social inequality

Small median income gain offset by debt and living costs

By Eric London
15 September 2017

US Census data from 2016 released on Tuesday shows increasing social inequality amid a small gain in household income that is offset by a massive growth of personal debt and rising living costs.

The data tracks the ongoing redistribution of wealth from the working class to the wealthy as a result of the pro-Wall Street policies of both the Republican and Democratic parties. It substantiates the oligarchic character of the United States.

Social inequality

The Gini index, used to measure social inequality, with higher figures indicating a wider economic divide, rose slightly from 2015 (.479) to 2016 (.481). The 2016 figure, according to rankings in the CIA World Factbook, makes the US slightly more equal than Madagascar and less equal than Mexico.

In terms of aggregate income share, the shift from 2015 to 2016 is as follows:

Income share from 2015-2016. *Census data reported to one significant figure, meaning percent decline is not reflected in 2015 and 2016 share columns.

The growth in inequality is even starker when traced from 2007, the year before the Wall Street crisis.

The data reflects income and not wealth, thereby providing an incomplete and conservative indication of the scale of inequality. Even within the highest quintile, the income share increased only for the top 10 percent, and, in particular, the top 5 percent.

Income share from 2007-2016

Household income

The corporate media has portrayed the report as a sign of positive income growth, since it shows a slight rise in median income of 3.2 percent from 2015 to 2016.

But according to the Census data, the earnings of “full-time, year-round workers” remained stagnant. For men in this category, a total of 63.9 million people, earnings declined by 0.4 percent, from $51,859 in 2015 to $51,640 in 2016. For women in this category, 47.2 million people, there was a minor increase, 0.7 percent, from $41,257 in 2015 to $41,554 in 2016. In other words, families with 2 adults working full-time saw a paltry $78 increase in their yearly earnings from 2015 to 2016.

Claims of rising incomes mask the growth of inequality. The Census data shows that the household income of the 90th percentile (the 100th being the highest) was 12.53 times higher than the household income of the 10th percentile in 2016, up from 12.23 times higher in 2015 and 11.18 times higher in 2007. The degree to which income is concentrated in the richest 10 percent of the population is exemplified by the fact that the 5th percentile boasted a household income 3.82 times higher than the 50th percentile in 2016, up from 3.79 times in 2015 and 3.52 in 2007.

As Bloomberg News reported Wednesday, “Since 2007, average inflation-adjusted income has climbed more than 10 percent for households in the highest fifth of the earnings distribution, and it’s fallen 3.2 percent for the bottom quintile. Incomes of the top 5 percent jumped 12.8 percent over the period.”

For the working class, any income increase was transferred to the corporate elite in the form of rising debt payments and increasing living expenses, especially for health care.

According to figures from eHealth, a large private health exchange, average deductibles for families rose 5 percent from 2016 to 2017 (a year after the period covered by the Census report) and average individual premiums rose 22 percent over the same period.

The rising cost of student debt alone largely erases income increases seen by some young people. According to the Census, those aged 15 to 24 saw an income increase of 13.9 percent, from $36,564 in 2015 to $41,655 in 2016, while incomes for young people aged 25 to 34 rose 4.9 percent, from $58,091 to $60,932, nearly double the percentage increase for older age groups.

However, in 2016, student debt rose to an average of $30,000 per young person, up 4 percent from 2015, eliminating over 80 percent of the income rise for 25-34 year olds. For 15 to 24 year olds, the $4,000 increase in median income would hardly cover one sixth of the average debt payment, let alone make up for the fact that young people face a future in which they are unlikely to receive a pension, Social Security or Medicare.

Rising debt levels are not a phenomenon limited to young people. A Bloomberg report from August 10 notes that credit card defaults increased from the beginning of 2015—when roughly 2.5 percent of debt holders defaulted—to the end of 2016, when the total hit 3 percent. This figure subsequently climbed in 2017 to reach 3.49 percent.

Bloomberg notes: “After deleveraging in the aftermath of the last US recession, Americans have once again taken on record debt loads that risk holding back the world’s largest economy… Household debt outstanding–everything from mortgages to credit cards to car loans–reached $12.7 trillion in the first quarter [2017], surpassing the previous peak in 2008 before the effect of the housing market collapse took its toll, Federal Reserve Bank of New York data show.”

“For most Americans,” the report continues, “whose median household income, adjusted for inflation, is lower than it was at its peak in 1999, borrowing has been the answer to maintaining their standard of living. The increase in debt helps explain why the economy’s main source of fuel is providing less of a boost than in the past. Personal spending growth has averaged 2.4 percent since the recession ended in 2009, less than the 3 percent of the previous expansion and 4.3 percent from 1982-90.”

The Bloomberg report explains that income from wages minus household debt trended downward in 2015, meaning that debt is rising faster than wages, causing a loss of roughly $500 billion across the US economy in the space of just one year.

Poverty rate

Though the Census report shows that the poverty rate declined from 13.5 percent of households in 2015 to 12.7 percent in 2016, this figure is substantially higher than the 11.3 percent level that prevailed in 2000. In reality, individuals and families must make 2.5 to 3 times the official poverty rate of $12,000 for an individual, $15,500 for a married couple and $25,000 for a family of four just to make ends meet.

What the data really shows is that the poorest half of the country–over 150 million people–is in a desperate financial position, with the next poorest 40 percent facing constant financial strain and a declining share of the national income. In regard to poverty, the Census Bureau maintains figures that go up only to 200 percent of the official poverty level. The latest report shows that 95 million people—29.8 percent of the population—fall into this category. The share of those under the age of 18 in this category is much higher–39.1 percent.

This is the context for the drive by the Trump administration and both big business parties to slash corporate taxes, impose a health care “reform” that will increase costs for millions of people, and accelerate the transfer of wealth from the working class to the financial aristocracy.

WSWS

 

 

 

New York Times surveys the results of 35 years of affirmative action

By Fred Mazelis
13 September 2017

In a front-page lead article over a two-column headline a few weeks ago, the New York Times informed its readers that its own detailed analysis had shown that “Black and Hispanic students are more underrepresented at the national’s top colleges and universities than they were 35 years ago, despite decades of affirmative action efforts.”

What the Times presents as the somewhat unexpected result of longstanding social policy was illustrated by an unusually detailed full-page series of graphs for 100 institutions of higher education, broken down into five categories: The Ivy League, Flagship Public Universities, Other Top Universities, Top Liberal Arts Colleges, and the massive University of California system.

The graphs use percentages of white, Asian, Hispanic and black students at each of these schools, compared to their numbers in the college-age population, to depict the degree of “overrepresentation” or “underrepresentation” for each group.

Overall, the survey shows that white and Asian students are more “overrepresented” than ever, and blacks and Hispanics more “underrepresented” today than in 1980. Hispanic students made up 13 percent of the freshman class among these 100 schools, for instance, compared to 22 percent of the population. In 1980, with a far smaller Hispanic population, the “gap” was only 3 points.

Black freshmen were 5 percent of the enrollment in 1980 and 12 percent of the population. Thirty-five years later, the gap has grown to nearly 10 points: the percentage of African-Americans is 15 percent, but the college freshman enrollment is only 6 percent.

The rationale for affirmative action, which has its origins in policies initiated by the Nixon administration more than 45 years ago, was that it would level the playing field and enable broad layers of black and Hispanic youth to obtain enter colleges and universities for the first time.

The failure of affirmative action to meet these promises is not accidental, nor was it unforeseen—certainly not by socialists, who understood the real purpose of this program.

It is obvious that without providing tens of millions of good-paying jobs, without vastly improved educational opportunities for all youth from pre-kindergarten through high school, and without the provision of free universal health care and child care, there can be no serious expectation that the latest generation of black and Hispanic working class youth will fare any better than its predecessors in obtaining and in making use of a quality higher education.

The decades of affirmative action have coincided with the decades of social counterrevolution, of the shredding of the social safety net that increased under the presidency of Ronald Reagan and that has continued since then, under Democrats and Republicans. The political and corporate establishment demagogically used the suffering of minority workers and youth to promulgate programs that were never designed to help them in the first place.

This does not mean that some aims of affirmative action have not been achieved. They have—but they are for the most part unstated ones.

A small slice of the African-American population, largely from the middle class, has been selected and integrated into the ruling elite, including the corporate and political establishment. These are the men and women who have been elected to high office, who occupy a few more of the top rungs of the corporate ladder, and who are helping to set the agenda in higher education and other spheres of social life. They in turn are presented as role models and representatives for a small but significant upper middle class constituency, in that way serving as a new base of support for the capitalist system.

The image of “progressivism” and diversity is also used to burnish the image of American capitalism as it competes against its rivals internationally. The small layer that has benefited from affirmative action is utilized to showcase the supposed virtues of the market and the endless possibilities for success under the profit system.

At the same time, however, a political division of labor involved in affirmative action has also become ever clearer with the passing years. The program was first backed by Nixon, who saw no contradiction between affirmative action and his own racist views. For about a decade the programs were largely bipartisan policy, accepted by both major capitalist parties. This began to change, especially in the 1980s. While the Democrats became the program’s biggest boosters, the Republicans discovered that Nixon’s “Southern strategy” could be expanded throughout the country by utilizing resentment caused by racial preferences.

The two big business parties developed a reactionary and cynical means of magnifying and promoting racial division. Affirmative action was attacked from the right, and challenged up to the US Supreme Court. It continues today, as college administrators are for the most part allowed to take race into account in admissions policies, as long as they do not employ quotas.

Affirmative action was never the demand of the working class. It was the brainchild of the political establishment, of a faction of the ruling class, with the approval of sections of the middle class civil rights leadership. And it has been used for decades to encourage resentment among white workers and youth, among students passed over for college admission, all the while ignoring the conditions and needs of the vast majority of the youth—black, Hispanic and white.

The challenges that black and Hispanic youth face are essentially no different than those facing millions of white working class families. The purpose of the Times study, even as it acknowledges part of the truth about affirmative action, is to cover this up so as to continue the effort to divide the working class on racial grounds.

The New York Times put its reporters and researchers to work for many hours, if not weeks, to document the racial breakdown of the student body all over the country. No one appears to have been assigned to analyze the class reality underlying the percentages, however. No one looked at the plight for the vast numbers of white working class youth for whom college has become increasingly unaffordable, and who are likewise “underrepresented” as compared to the upper middle class families, of all races. The category of “whiteness,” by combining the poor, the unemployed, the underemployed and the victims of deindustrialization and wage-cutting, together with the wealthy, is being used to obscure the reality of class relations.

Sixteen years ago, the World Socialist Web Site, in a statement on “Affirmative action and the right to education: a socialist response,” contrasted the demands of the civil rights movement of the 1960s, for greater social equality, with affirmative action, part of “the politics produced by [the capitalist] system, which is based on splitting working people along racial, ethnic religious and other lines to cover up the fundamental class divisions of society.”

For as long as it has been used, the WSWS explained, “affirmative action measures have benefited primarily a small section of middle and upper class minorities. … Affirmative action not only fails to overcome the problem of racism, its discriminatory character inevitably exacerbates racial divisions and pits white and minority workers and youth against each other in the struggle for a completely inadequate number of jobs and educational opportunities.”

In 2001, the average tuition at a public university was $3,500. Today it is $9,650 for state residents, and more than $24,000 for those out of state. For private schools, average tuition in 2001 was more than $15,000. The latest figure is $33,480, not including $10,000-$15,000 in room and board and other expenses. More than ever before, affirmative action has become a means of integrating a very small section of the upper middle class and grooming it for future roles presiding over increasing inequality and repression.

Growing sections of the working class, including African-American and Hispanic families, are coming to recognize that affirmative action is worth no more than any other promise made by any capitalist politician. This recognition must be translated into a complete break with the Democratic Party.

In opposition to the promise of a step up for a select few by trampling on the hopes and futures of the vast majority, the working class must fight for a socialist program of free quality higher education for all. This is part of the struggle to defend and extend the basic rights of the working class and eliminate the social inequality that is the product of the profit system. This fight is taken up only by the Socialist Equality Party.

WSWS