We hit on this topic recently, but it begs revisiting (again and again) as the sheer growth in the number of Americans on food stamps continues to shock and awe.
USDA recently released December numbers for its so-called Supplemental Nutrition Assistance Program (SNAP) which show 486,503 persons added to the food-stamp rolls in December, bringing the total receiving help to more than 44 million. That’s up almost 7% just since June, and 13% compared to a year earlier. Households receiving food stamps swelled to 20.67 million, an increase of more than 263,000 in one month, and a nearly 16% increase in a year.
Compare back to a couple years ago and today’s rates of increase become even more astonishing. In 2007, average monthly participation was 26.31 million persons, so the December total represents a nearly 68% increase over the ’07 average. During the same period, the number of households receiving assistance soared 75%. That’s a startling increase, any way you look at it. Continue reading…
My tab for riding NJ Transit went up 25% per month in May. If that seems like a big jump, it is. But I’m lucky. In addition to jacking up fees, NJ Transit cut routes, so some commuters (but not me) are losing their trains and getting squeezed into other, now more crowded lines.
In New Jersey, we’re already getting hit with forced austerity. So are residents in California, New York, and several other states. The tab for the multi-decade debt binge is coming due. The problem is, too many people are still pretending it isn’t sitting there on the table.
But it is. You’d best wrap your mind around higher taxes, fewer services, and “austerity” being forced upon the U.S. citizenry with the same absolutism with which it’s being forced on the Greeks and Spanish. Because U.S. debt is near a tipping point beyond which we will not be able to just “grow” our way out of it anymore, and that means more drastic measures will need to be employed. All that austerity stuff you keep hearing about.
And “austerity,” in case the Greeks riots haven’t hammered the point home, in this case is a euphemism for “pain.”
Reader J.C., after I wrote in Tuesday’s closer about the deficit levels, passed along a recent research report from Citi’s Willem Buiter, who goes into a very detailed look at national finances (it’s not pretty, we’ll get to it.) “It’s not so much the deficit as the debt,” J.C. wrote, and added that interest rates play a big part too. But the bottom line is, once we pass 90% of debt to GDP, we won’t be able to earn our way out of the debt hole.
“The arithmetic of public debt dynamics is simple but inexorable,” Buiter wrote.
I should’ve posted this last night, but still, there’s some good stuff in here, especially the segment with Jerry Seib, where he’s talking about governments at the local, state and even federal level being forced to cut services. You are going to hear more and more about this as time goes on, unless of course the Obama administration comes up with a full-employment plan that blows out the government coffers.
And, personally, that Tiger Woods/Nike ad put it over the top for me: I’m done with Tiger Woods forever.
I haven’t posted much the past two days because I was working on an “Ahead of the Tape” column for the paper, which came out today, “U.S. Borrowing Costs Stay Stable. For Now.” Here’s a taste:
The budget report isn’t a market mover, one reason it gets released during market hours. In the short run, investors are more or less “comfortable” with large deficits, says Dan Greenhaus, Miller Tabak’s chief economic strategist.
Long term, though, is different. “The lack of a credible plan to reduce the deficit as a percentage of GDP will eventually weigh on investors’ minds, which could have implications for currency and debt markets,” Mr. Greenhaus says.
Erasing the deficit seems intractable, because much of it—like health care and Social Security—is mandated. Military spending isn’t, but isn’t likely to come down amid two wars. The next-biggest government outlay is interest on the debt. And that’s where the debt markets get, well, interested.
Low interest rates don’t just help the housing market. The government’s managed to actually pay out less in interest while the total amount of debt has risen with all these historically low rates. The real fear, of course, is that the bond vigilantes will start making the government pay up for its largesse.
Our colleague Deborah Blumberg touched on this in a story in Monday’s Journal. There’s an auction of 10-year bonds today at 1 p.m. ET, and keep an eye on how that one plays out. If you start seeing yields on auctioned debt higher than the debt trading in the secondary market, it will raise some eyebrows.
Posted by Paul Vignaon June 26, 2009 Economy, Washington /
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Okay, we're gonna need about 10,000 more of these.
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