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That’s the premise behind an article on CBS news by Aimee Picchi which is based on a book co-written by Sociologist Professor Kathryn Edin of Johns Hopkins University. A sample:

“By one dismal measure, America is joining the likes of Third World countries.

The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That’s according to “$2.00 a Day: Living on Almost Nothing in America,” a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.

The measure of poverty isn’t arbitrary — it’s the threshold the World Bank uses to measure global poverty in the developed world. While it may be the norm to see families in developing countries such as Bangladesh and Ethiopia struggle to survive on such meager income, the growing ranks of America’s ultrapoor may be shocking, given that the U.S. is considered one of the most developed capitalist countries in the world.

“Most of us would say we would have trouble understanding how families in the county as rich as ours could live on so little,” said author Kathryn Edin, who spoke on a conference call to discuss the book, which she wrote with Luke Shaefer. Edin is the Bloomberg Distinguished Professor of Sociology at Johns Hopkins University. “These families, contrary to what many would expect, are workers, and their slide into poverty is a failure of the labor market and our safety net, as well as their own personal circumstances.”

Despite questionable statistics from the U.S. Department of Labor, most Americans do not believe the recovering economy has really boosted their well-being. True, there are more jobs now than in 2009 at the bottom of the recession. However, many of these jobs, as CRI has said here and here and, oh what the heck, just read here, are not the kinds of blue-collar jobs which were lost during the Great Recession. By this we mean jobs which paid at the absolute minimum, $35,000 and helped families earn at least a basic standard of living, even on just one income. The jobs we are seeing growth in are jobs in sectors like retail, restaurant, and tourism, which are generally minimum wage jobs.

The exact numbers receive EBT benefits (also known as ‘food stamps’), TANF (Temporary Assistance for Needy Families), Affordable Housing, student loans, etc., varies from month to month. But one thing that has absolutely happened is, more and more Americans are becoming poor, increasing numbers of working and middle class Americans are finding themselves sliding downward and not up, and the future looks bleak, because our deficit is so large there is no real way to ever pay most of it off. That’s why in poll after poll, the majority of Americans believe the so-called “Millennial Generation” will be the first generation to be worse off than their parents.

It should surprise no one that presidential candidates like Donald Trump and Bernie Sanders are stealing the show. The rhetoric each espouses, while different in ideology, basically says the same thing: the ruling class (Berni’s ‘billionaire class’ and Donald’s ‘political class’) has changed America from a free-market oriented society to one that is a combination of socialism and crony capitalism, the exact same system countries such as Canada, Sweden, Germany, France, the UK, Belgium, the Netherlands, Italy, Spain, and Portugal have. The days when a person could confidently and reasonably believe s/he could work hard, save money, invest wisely, and earn a higher standard of living are fading. Yes, there are indeed people who do overcome the odds and become millionaires or billionaires, even from humble beginnings. But for those who lack some superstar athletic, musical, or coding talent, those opportunities seem more and more distant as the majority of Americans work harder and harder for less value per hour.

The question of who to blame for this economic malaise floats around. People who identify as conservatives or libertarians generally put the blame on the government, believing government policies aimed at keeping people dependent on government, discouraging work opportunities for the poor (this post from ZeroHedge explains it, and mind their language), and federal reserve dollars being pumped into the system causing inflation are the main source. Throw in Statist politicians from both parties taxing and spending and pushing a tax code which actually harms people trying to acquire wealth through work rather than the already-rich and people whose income comes from the stock market, and there’s your answer.

People who identify as liberal or socialist will put the blame on Big Business. According to the Brookings Institute, the average age of a business in America is sixteen years- the highest it’s ever been. Despite claims of “new entrepreneurial activity” by our elected officials, fewer people are attempting startups. The biggest reason, besides bureaucratic red tape and high taxes? Business cronyism, where large firms use the government to rig policies in their favor and against their competitors, especially small competitors. As access to capital for small business owners, especially young people and people of color, declines, you will see fewer people taking risks to create jobs. That leaves us more dependent on corporatism for our daily bread.

In our view, both the left and the right make fair points, which then brings us to the next step: the solution. In our view, only a truly fair marketplace, where a person reasonably believes he or she can compete either for a job or in business, will help people climb the economic ladder. The reason Trump and Sanders are hitting cords with a segment of the population is because (and the political pundits miss this, for the most part) the majority of Americans, whose household income is less than $55,000 a year, are becoming frustrated and resentful that opportunities are being taken away and incomes are declining due to government policies which discourage work and entrepreneurship, and corporate entities who raid the treasury for their own gain, depriving would-be entrepreneurs and workers of the funds they need to either start a business, take care of their families, or save for retirement. The economic mobility ladder is slowly but surely being lifted up by those who already “made it” and are using the government to keep everyone else away, or dependent on the government administrators for their basic needs.

We hope the public at large begins putting the pieces together and starts to vote for candidates who will oppose the so-called Ruling Class and their wealthy financiers, and instead turns to candidates with quality solutions that will give people opportunity and real hope. That is change we could believe in.

CRI will continue to conduct research on policies which we believe best help all Delawareans achieve what they can and believe they can move up the economic mobility ladder. If you agree that Delaware needs a real change in how our government does business, then visit caesarrodney.org and learn about what you can do today to help.

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Every year, the General Assembly finds a way to balance the budget, as they are required to do by our state constitution, or at least use accounting gimmicks to move spending around so future liabilities aren’t held against the current FY budget.

This year, the state’s “in a pickle”, so to speak, or maybe something to do with scrapple would fit better. There is a budget deficit in the neighborhood of $70 million, which increased after legislators caved to state employee demands not to pay additional expenses for their healthcare policies due to a wage freeze for most state employees, a freeze which has lasted for years. Not only did they not make this move at the request of Governor Markell, but they added $21 million to the deficit with money we don’t have to keep their constituents happy.

Meanwhile, the state wants money to pay for infrastructure spending, cleaning up the waterways, investing in startups/businesses to grow the economy, paying for increased Medicaid and public education expenses, services for the increasing number of senior citizens retiring into Delaware, and so on. As spending goes up, the state is collecting less from casino revenue and  personal and corporate income taxes than in previous years. You can see where we’re going to run into problems, and we’ve predicted for some time that the next governor of Delaware is going to have a serious fiscal mess to fix.

So what do our elected officials have in mind to balance the budget? Some new ideas include: raising state income taxes on top earners from 6.7% to 7.6%, increase Delaware’s per-gallon gas tax, motor vehicle fees, and taxes levied on wholesale fuel deliveries to fund new road and bridge improvements, increasing the gross receipts tax, reduce corporate income taxes, eliminating the estate tax, and actually cutting personal income taxes across the board.

“There’s not going to be a split of these issues that will give us the transportation money and we’ll figure this out later,” Lavelle told the News Journal. “I didn’t fall off the banana truck yesterday. I’ve been fooled more than once down there and it ain’t going to happen again.”

Did you see what was missing among these ideas? Ways to cut state spending. This is how our state does “the water dance,” similar to how many indigenous tribes around the world pray for rain; they do a symbolic dance and hope the sky will open up and rain will just fall and provide much-needed water to grass and crops so they will grow and life can continue. Replace the actual dancing with accounting “dancing” (tricks), and the rainfall with moneyfall, and otherwise the concept is the same.

Now some of this has already been done; we know the state Department of Education is about to take a big hit, as Legislators have become increasingly opposed to the Governor’s education plan, which includes Secretary Murphy. Race To The Top funds are phasing out and school district referendums continue to alternate between passing and failing, which means some districts have found themselves cutting back on spending and hiring while freezing wages for some district employees.

Yet when we see the final budget, which must be passed by June 30, where else will the state consider making cuts? Senator Lavelle went on record suggesting that tax increase were off the table unless the prevailing wage law is reformed or repealed. Will Delaware Democrats be willing to stand up to their union supporters and change the prevailing wage law?

Another way the state could make cuts is to get us out of RGGI, which is a regional cap and trade scheme. RGGI does not do anything for the environment, but it does increase our electric bills by an average of $50/year per household, and thousands more per year for most industrial businesses, who have most of the remaining few manufacturing jobs Delaware still has. Will the GA make an effort to pull us out of RGGI?

Delaware has plenty of room where cuts could be made, the only determination will be whether they make them or not. In the meantime, please visit caesarrodney.org

for the latest news and information you can use to learn about our state’s fiscal situation and click on the “Impact Delaware” link to learn more about how you can make a positive impact on Delaware.

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Legislative Hall in Dover, Delaware

This article originally appeared at the Watchdog.org website on January 20, 2015. Read the original at http://watchdog.org/193657/legislative-priorities-2015-delaware-way/

Last week was the first week the state Legislature was in session, but they will soon adjourn for budget and finance hearings before getting back to lawmaking in mid-March. Five new representatives and one new senator took their oaths of office for the first time, but this Legislature looks almost identical to the last one: the Democrats control the governor’s mansion, the House of Representatives 25-16, down from 27-14 last year, and the Senate 12-9, down from 13-8.

Notably absent from the last General Assembly were bills to make Delaware’s economy more free as the state—well-known as the “Switzerland of America” for its easy incorporation process and fair Court of Chancery—faces competition from Nevada and North Dakota for corporate business and from the Sun Belt for jobs. This year the Caesar Rodney Institute hopes to see legislation to address the following issues:

1. Education Savings Accounts: Delaware has “school choice”-IF your idea of school choice is to allow a child to transfer from one public school district to another (provided that district has room).While that’s better than nothing, that’s not really school choice.

CRI supported a bill last year called the “Parent Empowerment Education Savings Account Act” (PEESAA) which would have introduced Education Savings Accounts as an option for low-income and special-needs students who are the most likely to need additional services not being offered by the traditional public schools. This bill was tabled in the House Education Committee but we hope ESA’s and other bills encouraging school choice are brought up this year.

2. Prevailing Wage (PW): Delaware has an insanely wide range of wages a that business who wants a public construction contract has to pay its employees to get the contract.

Every January the state Department of Labor mails out its PW survey to union-friendly contractors and conveniently “forgets” to remind non-union-friendly construction companies to ask for, and return, the survey. This results in wage variance like $14.51 per hour for a bricklayer in Sussex County, but $48.08 per hour for the same job in Kent and New Castle Counties. Not to be outdone, boilermakers get $71.87 an hour in New Castle County, but “only” $30.73 in Kent County.

These high rates prevent many construction projects from being started and make those which are done more expensive for taxpayers. If the PW won’t be eliminated, we hope the state will instead use the U.S. Occupational Employment Statistics survey. This would reduce rates by almost 40 percent on average and free up nearly $63 million of spending from the State’s FY15 capital budget, including almost $18 million for more school capital improvements.

3. Make Delaware the next right-to-work state: Delaware is not a right-to-work (RTW) state and, between that and our inconsistent-as-applied PW law, many businesses outside the state choose not to move here. Incorporating and buying office space in Wilmington for some high-paying executive jobs is one thing. But Moody’s Analytics in late 2013 said Delaware was the only state at immediate risk of falling back into a recession and a lot of this is due to more businesses closing than opening in Delaware. Pass legislation to end forced unionization and support pro-job growth policies instead.

4. Tax and regulatory reform: Only five states have a Gross Receipts Tax, which is a tax on revenue generated before profit and loss is factored in. Three of those states have no further taxes on corporate earnings and the only other state (Virginia) that does has lower tax rates. Between this tax, high personal and corporate income taxes, franchise taxes, and overall over-regulation by state agencies, Delaware is increasingly threatening its “Incorporation Golden Goose” as Nevada and North Dakota work to take business from the state. This needs to be addressed.

5. Work to lower energy prices: Delaware has electric rates 25 percent higher than the states we compete with for jobs like nearby Virginia. We import close to one-third of our electricity from out of state, the highest rate in the nation. Some of this is due to our geography, but a lot of it is due to the state’s failure to build a network of natural gas pipelines from the Marcellus Shale to Delaware.

Coupled with the state’s participation in the Regional Greenhouse Gas Initiative (RGGI) carbon tax scheme and taxpayer subsidizing of “green” companies like Bluewater Wind (gone), Fisker Automotive (didn’t build cars in Delaware), and Bloom Energy (still has not brought the promised 900 high-paying full-time jobs), Delaware cannot grow its economy if energy prices are high. We want the Legislature to pass natural gas pipeline extension and end participation in RGGI and subsidies for “green” companies.

What issues do you think the state Legislature should focus on this year?

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Since 2008 America has seen a greater number of businesses close than open. According to Gallup, roughly 6 million businesses out of 26 legally recognized actually function; the rest are inactive or exist only on paper. Of these 6 million “real” businesses, 3.8 million employ 1-4 employees. Only about 108,000 businesses in America (2% of “real businesses”) employ 100+ people. If we continue to kill off small business with over-regulation and over-taxation, how will the government be able to pay its bills, short of more printing, borrowing, and cancelling debts?

From Gallup: (article truncated for space)

“The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.

We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.

The U.S. Census Bureau reports that the total number of new business startups and business closures per year — the birth and death rates of American companies — have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.

You may not have seen this graph before.

Until 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number suddenly turned upside down. There has been an underground earthquake. As you read this, we are at minus 70,000 in terms of business survival. The data are very slow coming out of the U.S. Department of Census, via the Small Business Administration, so it lags real time by two years.

Here’s why: Entrepreneurship is not systematically built into our culture the way innovation or intellectual development is. You might say, “Well, I see a lot of entrepreneurial activity in the country.” Yes, that’s true, but entrepreneurship is now in decline for the first time since the U.S. government started measuring it.

Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation. To get back on track, we need to quit pinning everything on innovation, and we need to start focusing on the almighty entrepreneurs and business builders. And that means we have to find them.”

No matter how much some people will try to convince you the Roaring Twenties are back, the reality is that we have far too many businesses closing and not enough replacing them.Businesses do open and close all the time, but a lot of business closings are small businesses getting shut down because of government policy via regulation and taxation. A lot of these policies are Cronyist policies pushed by big business to weaken their competition, which is smaller stores. Thus for example, a big chain like Costco can safely come out in favor of the minimum wage increase knowing it will end up hurting the roughly 80 percent of businesses which employ nine or fewer people, while at the same time reaping the benefits of “caring” for their employees (note: we don’t object to Costco paying its employees well; we applaud it. But just because Costco might be able to afford a wage increase doesn’t mean every business can).

Crony business policies, government bureaucrats who make new regulations to justify their jobs, politicians who want to “do something” to get votes, and a well-intentioned but misinformed public which votes for things like minimum wage hikes  all result in a decline in new business startups and jobs lost and never created in the first place. We at CRI support economic policies which make it easier for people to start businesses and create new (hopefully well-paying) job opportunities without sacrificing necessary regulations and basic standards of decency. But unless we fundamentally change the way our country is operating, that 70,000 per year decrease in total businesses operating in America will increase in number.

Help support CRI! Your support allows us to research and provide analysis to the public on policies which will best grow the economy and create jobs. An end to the prevailing wage, Right to Work legislation, an end to Delaware’s gross receipts tax and lower corporate income taxes and personal income taxes, health care reform which encourages innovation from the private sector, and energy policies which would give people more choices would go a long way to helping Delaware, and America, make a sound economic recovery for all. Please consider making a contribution today.

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At the Hispanic CREO (Council for Reform and Education Options- CREO is Spanish for ‘I believe’) conference December 11-12 the topic of how to approach the issue of school choice was discussed. Here are our top three takeaways and fantastic photos of Miami:

  • First session had speakers representing four different Hispanic Chambers of Commerce: South Florida, Albuquerque, Illinois, and California. The big takeaway is that Hispanics have got to stop the in-fighting and work together to solve problems. This lesson applies to all groups though Hispanics were the #1 focus of the conference (see the name).
  • Myles Mendoza is the Executive Director of Ed Choice Illinois, and a member of the Democrat Party. He discussed the challenges Democrats who support school choice have since the issue has become so highly (and unfortunately) politicized. One method he had: focus on the “low-hanging” fruit. Find people of all backgrounds who are willing to accept the truth about Delaware’s public education system and explain to them the merits of supporting school choice. Police officers might find it easier to support it if they realized just how much better schools would improve the local community, like Wilmington or Dover. Then find others who see the benefits of better schools and who realize this isn’t a partisan issue.
  • The business community MUST become more involved. Too many business owner’s don’t see the benefits of how better schools benefit them because they have never been approached on this issue, or have been approached from a partisan point of view. SUPPORTING QUALITY EDUCATION ALL CHILDREN IS NOT PARTISAN! One way is to ask local businesses to invest in their community’s education. They can either a) get apprentices/interns out of high school to work for them or b) they will benefit when educated people turn into consumers with money to spend at those businesses.

If you have other ideas, please share!

Now, the photos:

Biscayne Bay, from the Marriott where the conference was.

Downtown Miami

The post-dinner dessert.

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