The American economy

So I was reading this yesterday in the Taipei Times yesterday:
and it has some (for me, anyway) amazing statistics:

[quote]According to the US census bureau, poverty has been on the rise for the past four years, despite a robust economy. The number of people living in poverty increased last year to 12.7 percent of the population, some 37 million people, the highest percentage in the developed world. Since Bush took office an additional 5.4 million have slipped below the poverty line. In 1970, the rate was 11.1 percent. Almost 8 percent of white people are classified as below the poverty line and almost 25 percent of African Americans.


The article originally comes from The Guardian. So are the stats wrong? If not, why are so many people in America doing badly?

PS. Sorry I couldn’t get URL button to work.

This is obviously leftwing propoganda. Why do you hate freedom?

A fair chunk of the downside of US economic performance since 2001 can be explained in terms of the tax cuts. Instead of putting money in the hands of those who actually spend it (i.e. lower and middle income earners), the Bush cuts simply gave more money to those who already had a fair pile of filthy lucre to begin with.

In the face of a downturn in demand (i.e. what we’ve had everywhere since the burst of the tech bubble in 2001), these people don’t spend their extra cash, they save it. This reduces consumption (both one for one and compared to what could have been the case if tax cuts had been given to lower income earners), which reduces investment (firms don’t want to expand plant and equipment if noone is buying their products), and ultimately reduces aggregate demand. A reduction in aggregate demand encourages those with cash to hang onto it… And a vicious circle of underperformance is the result.

The bitter irony of Bush’s tax cuts is they have been extraordinarily expensive. We’re up to 4 trillion dollars in accumulated Federal debt now I think - that’s the entire GDP of Japan last year. For this kind of money (given in the form of tax cuts for lower income earners) we should have seen a rapid increase in consumer spending, solid jobs growth, and some decent GDP figures. What we’ve had over the last 4 years is continuing uncertainty in all indicators. And one day soon, the US govt is going to have to either jack-up taxes again to pay for the current spend-up, or reduce expenditure - both of which will have a dampening effect on demand.

A sizeable component of what we are witnessing in the US is policy-driven and tied to the tax regime. It didn’t have to be this way.