It's Demand (or lack thereof) Stupid!

According to recent census figures one in two people are poor or low income. At a time when the middle class is shrinking, when unemployment remains high, after years of stagnating wages for those who haven’t lost their jobs, many government programs are being reduced or eliminated. State governments, unlike the federal government, cannot fund safety-net programs that exceed budgets. In fact, state and local governments that have been hard hit by the loss of tax revenue caused by high unemployment and stagnant middle class income have not only been unable to keep up with the need for safety net programs but also have been part of the unemployment problem having to reduce state and local government payrolls. Almost 100 million Americans fall into a low income category. That is 100 million lost customers for many products and services. 100 million potential customers that cannot afford to consume anything other than housing and basic services. It is this staggering loss of potential as well as actual customers that is responsible, in part, for the high unemployment and the failure of companies to hire more workers. The need for more workers only exists when there is a greater demand for products and services. In Tennessee, 169,000 households need assistance with energy bills. In addition to that astronomical number, there are another 4000 households on a waiting list hoping that more funds will become available. The resulting lack of demand due primarily to extraordinary income disparity between executive compensation and compensation for the rest of salaried workers is the number one cause of continued unemployment. Until such time as this changes, the future for middle class working families will remain bleak. Finally, as long as the top 2% of income earners continue to receive preferential tax treatments a balanced budget is not possible. Excluding trillions of income from income tax obligation or being categorized as a “special” form of income deserving special (read lower) tax treatment will continue to add to the deficit and further compound the problem of high unemployment. While promised and hoped for, trickle down was a failure for everyone except the top 2%. Income has not only failed to trickle down, income neither oozed or seeped down but remained at the top where little in the way of demand resulted. After ten years it should be obvious that poor people will not benefit economically when the rich fare better. However, it should also be obvious that rich people will do better when poor people get poorer.