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Trading  | June 27, 2018

A new report by the U.N. Special Rapporteur on extreme poverty and human rights in the United States finds about 40 million live in poverty, 18.5 million in extreme poverty, and 5.3 million live in Third World conditions.

The 20-page report by Philip Alston, U.N. Special Rapporteur on extreme poverty, warned the U.S. has one of the highest rates of income inequality among Western nations.

He criticized the Trump administration for the $1.5 trillion in debt-fueled tax cuts in December 2017 overwhelmingly benefited the wealthy and worsened inequality among the middle class and poor.

Alston could be right because companies are expected to spend $2.5 trillion this year for financialization purposes, including stock buybacks, dividends, and M&A deals, according to UBS, which does not entirely benefit the real economy.

Alston called the U.S. the most unequal society in the developed world. He said U.S. policies had benefited the rich by hollowing out the middle class.

The Stanford Center on Inequality and Poverty ranks the U.S. 18th out of 21 wealthy countries regarding labor markets, poverty rates, safety nets, wealth inequality and economic mobility.

For more than four-decades, economic policies in the U.S. have  neglected the middle class. However, the report said policies enacted during the Trump administration seem “deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship.”

According to the report, the visit of the Special Rapporteur coincided with the dramatic shift of the nation’s policies under the current adminstration. Some of the important shifts include:

  • Provide unprecedentedly high tax breaks and financial windfalls to the very wealthy and the largest corporations;

  • Pay for these partly by reducing welfare benefits for the poor;

  • Undertake a radical programme of financial, environmental, health and safety deregulation that eliminates protections mainly benefiting the middle classes and the poor;

  • Seek to add over 20 million poor and middle-class persons to the ranks of those without health insurance;

  • Restrict eligibility for many welfare benefits while increasing the obstacles required to be overcome by those eligible;

  • Dramatically increase spending on defence, while rejecting requested improvements in key veterans’ benefits;

  • Do not provide adequate additional funding to address an opioid crisis that is decimating parts of the country; and

  • Make no effort to tackle the structural racism that keeps a large percentage of non-Whites in poverty and near poverty.

Alston further referenced the International Monetary Fund’s (IMF) 2017 report emphasizing the economy “is delivering better living standards for only the few”, and that “household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy.”

As shown below, the wealth of the top .01 percent of the population has exploded since 1980, thanks to the financialization of corporate America. Meanwhile, the bottom 90 percent or the middle class and the poor, have been systematically hollowed out.

Alston said debt-fueled tax reform “will worsen this situation and ensure that the United States remains the most unequal society in the developed world.”

This situation does not look good for the bottom 90 percent of Americans, but for society as a whole, with high poverty levels “creating disparities in the education system, hampering human capital formation and eating into future productivity,” said Alston.

There are also global consequences. The debt-fueled tax cuts will reduce the revenues needed by Governments to ensure basic social protection and meet their human rights obligations.

The U.S. withdrew last week from the U.N. Human Rights Council, describing it as a “cesspool of political bias.” It marked the first time that any country has exited the council since its inception in 2006.

U.S. Ambassador to the U.N. Nikki Haley called the council a “hypocritical and self-serving” group. She also criticized the U.N. report and said the council should focus on impoverished countries like Burundi and the Congo Republic.

Bernie Sanders, I-Vt. called upon the Trump administration to provide Congress with a plan to tackle the wealth inequality crisis stated in the U.N. report.

“It is patently ridiculous for the United Nations to examine poverty in America,” Haley said in a letter to Sanders last Thursday.

However, Haley in her response to Sanders slammed the report as “misleading and politically motivated.”

“The report categorically misstated the progress the United States has made in addressing poverty and purposely used misleading facts and figures in its biased reporting,” Haley wrote.

“There is no question that poverty in America remains a serious concern, but it does no one any good to inaccurately describe its prevalence or its causes.”

Sanders responded to Haley, saying he believes “it is totally appropriate” for the U.N. to publish a report on poverty in America.

“I hope you will agree that in a nation in which the top three people own more wealth than the bottom half, we can and must do much better than that,” Sanders wrote in his reply.

At the same time, the U.S. economic expansion has become the nation’s second-longest on record, as the Central Bank-fueled bubble enters the late stage of the credit cycle. While equity markets have faded from all-time highs, President Trump is peddling propaganda on Twitter calling “this is the great economy in the history of America and the best time ever to look for a job”!

When you start hearing government advertising that sunny days are here, well, you should run.

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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