The Poverty Trap

If I may beg your indulgence as the holiday looms… I decided to re-post (with audio this time), a popular piece from October of this year focusing on the Catch-22 of credit scores and the outsized role these made-up numbers have on our lives.

I’ll bet many of you are finishing your holiday shopping with a whirlwind of credit card purchases. If you are one of the small percentage of people world-wide who have enough cash on hand to pay your bill in full at the end of each billing cycle, then kudos to you! The rest of us will have to pay our credit cards’ near-usury interest rates for many month or even years to come. And as I explain below, the interest rate you pay is based on your credit-worthiness, which is typically determined by a three digit score assigned to you by credit reporting agencies like TransUnion, Equifax and Experian. Basically, if you have a high credit score number, you will pay a lower interest rate, a lower number, a higher rate. But here’s the catch: only those who don’t really need the whopping amount of credit extended to them at low interest rates, get those low interest rates and access to money…and only because they already have money.

I also want to take this time to thank you for reading and listening to my posts, and to wish all a fun, safe holiday for those of you who celebrate, and a great New Year! My planned schedule is to post a shortened Sunday Evening Reads this coming Sunday as usual, and then do an end of the year wrap-up next Thursday, right before we burst into 2022.

Oh, if you want to use that credit card one last time and still are in need of a gift, why not give a subscription to Crime and Punishment? The credit card companies will thank you and so will I!

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber

“There was only one catch and that was Catch-22, …”

Joseph Heller, “Catch-22”

Heller’s insightful protagonist, Captain Yossarian, was right—there was only one, tragic “catch” to the bombadiers’ predicament in the novel Catch-22. But the “Catch-22” millions of people are caught in today, by the credit score industry’s circular logic, runs a close second.

Others have written about the “Catch-22” of credit scores, but they point out a different “catch” than I do. For example, young borrowers have not been able to build up a positive credit history, because, well, they’re too young to have paid consistently on car loans and mortgage loans or held a job for a number of years, all of which are usually needed to get a good credit score and therefore decent credit deals, meaning moderate to low interest rates. Additionally, years of on-time rent and utility payments do not show up on a traditional credit report, which is translated into a credit score, which in turn, is used by lenders to make credit viability decisions. As this article from The Guardian points out, an unfortunate number of millennials are turning to payday loans to borrow money, which actually hurt a credit score in both the short and long run, in addition to the usury interest rates that are a given with such loans.

I was heartened to read that President Biden is considering harnessing the power of the Consumer Financial Protection Bureau to make the credit score model more fair by including those same variables, rent and utility payments, to allow lower income folks to establish good credit. The President is also considering establishing a public entity, within the CFPB, to create and manage this updated scoring model: “Almost half of consumers in low-income neighborhoods do not qualify for traditional loans under current methods, according to CFPB research. A public entity utilizing nontraditional data could change that, experts say.”

But my “catch” involves the entire credit score system.

History

First, let’s take a fun look at the history of the credit score. Did you realize that there are real peoples’ names behind those acronyms? Credit scores were first created in the 1950’s by Bill Fair and Earl Issac, statisticians who made what turned out to be fairly accurate predictions of a person’s credit-worthiness. Their company, Fair, Issac and Company eventually morphed into FICO, today’s behemoth that generates our FICO Scores from credit reports maintained by the three major credit reporting agencies: TransUnion, Equifax and Experian. Credit scores didn’t vault into regular use until the 1970’s, and the “modern iteration of the FICO score…was not introduced until 1989.”

Note the difference between a credit report, which is a compilation of financial information collected on a particular person (that’s all of us), and credit scores, which are the three-digit numbers that are generated through an algorithmic calculation of the information contained in those credit reports. The three credit bureaus are private businesses and consider the algorithms that generate our individual scores as proprietary, so there isn’t full transparency about how those numbers are generated.

Why the change from a personal and subjective lending experience to an impersonal and more objective one? There are some pretty good reasons. When use of credit cards started to take off in the early 1970’s, lenders couldn’t keep up with the demands of individually determining the credit worthiness of so many. But it was also a question of fairness: the use of credit scores removed the subjective nature of lending — what did the typically white male in the bank think of the way you dressed, did he stereotype your credit worthiness or lack thereof based on your race, did you have a less than stellar reputation in the community that he could use to deny you a credit card or a mortgage? The credit score supposedly removed those subjective reasons, but added other criteria to create a circular logic that those without money cannot escape.

The Cruel Irony

If credit scores, which have grown to monster-sized proportions in determining a person’s choices in life, like the ability to get credit, including a mortgage, credit score checks to get a job or rent an apartment, didn’t present such a cruel scenario for the average American, it would be funny.

Check out these “tips” to improve your credit score that appear at the end of my credit score monitoring page, and probably yours, too. I’ve shortened the list to just the essentials:

Quick tips to get your credit in tip-top shape:

* Keep credit card balances low: Try not to max out your credit cards. Better yet, pay the balance in full each month if you can.

* Pay down debt: Create a plan to completely pay off an account.

* Pay off past due accounts: Contact your creditors to make arrangements to pay off any debts that have gone to collections.

* Make extra payments: Consider making extra payments on your credit card accounts or loans each month, as long as there are no penalties for doing so.

Do you see that each of these “tips” requires a person to have that elusive substance that those in poverty, the middle class, and even those with more substantial incomes simply don’t have? It’s called cash.

If 40% of Americans don’t have enough cash on hand to cover a $400 emergency expense, how are they capable of following this advice? They aren’t. That’s why at least 108 million consumers in the U.S. have no credit score or a low credit score—that’s close to a third of our country’s population. I’ve often wondered, given the statistics I just quoted, whether those who wrote these “tips” for paying down debt and increasing a credit score are embarrassed. Imagine someone who has a serious illness and had to charge their medical debt on credit cards, or someone who got fired or laid off from their job and can barely make the minimum payments on their credit cards, let alone pay extra, as their debt rises daily? It’s the “doing of an impossible thing” that the law abhors, and akin to “pulling y…

“Usury is the act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate permitted by law. Usury first became common in England under King Henry VIII and originally pertained to charging any amount of interest on loaned funds. Over time it evolved to mean charging excess interest, but in some religions and parts of the world charging any interest is considered illegal.”

Investopedia

I don’t think that banks or other lending institutions should be banned from charging some interest on loans, rather it is a matter of how much interest is enough for the lender, and how much is too much for the borrower. Lenders want to make the highest profit possible, so the sky’s the limit on interest rates from their perspective. Unfortunately, the borrower has no control over interest rates…unless millions rise up and demand a federal cap on lender rates, for example, and elected officials listen and respond with legislation. I don’t know if millions of low-wage or average-salaried worker have rallied for a cap, but there is currently a Senate Bill sponsored by the Chairman of the Senate Banking Committee, Ohio’s own Senator Sherrod Brown, and Senator Jack Reed, a Democrat from Rhode Island, to reintroduce the “Veterans and Consumers Fair Credit Act, legislation to extend the Military Lending Act’s 36% interest rate cap to cover veterans and all Americans.” I think this is a good idea and a good start.

As of July of this year, 18 states and DC have enacted rate caps that supposedly prevent at least the exorbitant rates of payday loans, but a federal law is needed to not only provide consistency, but to close the shocking loopholes in state laws. Although California is one of the states that has capped lender interest rates, this article from the LA Times explains the need for federal legislation by highlighting the major loopholes in its own state law: according to the state’s own attorney general, all of California’s banks, savings and loan, credit unions, finance corporations or even a pawnbroker are exempt from the usury law. It makes you wonder who exactly is covered? Your Aunt Mable?

When I began to get behind on my mortgage and my credit score plummeted as a result, I started to notice lots of personal loan and credit card offers arriving in the mail. I had no idea why lenders were urging me to take on more debt, when I couldn’t pay the debt I already had.

This is why.

I showed you this photo in a previous post discussing the bankruptcy conundrum, and it works just as well here to illustrate what I consider to be a usury interest rate plus fees. The reason I believe 36% to be a usury rate and those on the Senate banking committee don’t, could be because of the cruel irony of our system: those who are already comfortable don’t need to borrow at all, let alone at this rate. If you have enough money to at least pay all of your bills, then you likely have a higher credit score which, in turn, earns you a much lower interest rate if you borrow at all.

The banks target individuals in financial trouble because they know who are desperate for cash or credit. That’s why it’s called “predatory lending”. And by comparison to a “Pay Day” loan which can reach 300% interest or higher, this credit card offer of 36% interest plus annual fees is a bargain.

In addition to credit card offers, I continue to receive offers for personal loans, but this one has a twist: it’s a real check. I also mentioned this scheme in a previous post, because I actually cashed the one I received a few years ago and paid the horrendous interest rate plus fees for well over a year before I was able to pay it off. Fortunately, I’m not desperate for cash at the moment and was able to save this recent offer just to show you a close-up of the interest rates and fees.

If you read the fine print, and you should, you'll see you will owe $95/month for 41 months— that’s three years and five months you will pay just about $100 every month for $2,500 cash now, and you will pay nearly one half of the loan amount in interest and fees.

And although there is no penalty for an early payoff of the loan, the fine print states that if you pay off the loan early, “you may be entitled to a refund of part of the finance charge.” (emphasis added). I guarantee that if you asked the lender what it meant by this statement, you would hear crickets. And because it uses the word “may” and has no additional explanation, it is most likely legally meaningless. In other words, don’t expect a refund. The bank makes sure it gets it’s full finance charge amount, regardless of when you pay off the loan.

In fact, it really doesn’t matter to the lender if you default.

According the the National Consumer Law Center,

“As long as the borrower pays long enough before defaulting, a high-rate installment loan will be profitable. If the borrower makes even half the payments on a longer term high-rate installment loan, the lender may receive sufficient cash flow to recover the amount loaned and another 50% or more, likely more than enough to turn a profit. While the lender may have a successful experience, default causes a cascade of devastating consequences that are likely to plague the consumer for a lifetime.”

Do you think we need a federal usury law that caps lender rates? Should this cap be 36% as proposed in the current Senate bill or even lower? Please share your thoughts in the comment section below.

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This is the trailer for the PBS film that explores the concept of Corporate Welfare and how it helps corporations to thrive, and allows average working taxpayers to suffer.

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber

I first heard the words “corporate welfare” when Senator Bernie Sanders was running his first campaign for President in 2015. I had closely followed politics for decades and even worked on a few campaigns, but I never heard this concept mentioned, let alone explained and made an integral part of a presidential campaign. Senator Sanders described how workers for Walmart, as an example, made so little in wages as full time employees, that they still qualified for food stamps and other forms of government aid for the poor. In other words, the taxpayers were subsidizing Walmart’s low wages via government programs. Wow. How did I not know this?

Perhaps it’s because I was watching and reading what now is dubbed “mainstream media”, which not only didn’t cover this issue, but repeatedly branded Senator Sanders as a socialist “kook” for daring to call attention to our government’s hypocritical entanglement in this scheme.

What I did know is that our government’s social safety net was too lean, and the constant complaining, mostly from the right, that cuts had to be made to these “handout” programs, and the talk of “welfare queens” were thinly-veiled, racist code. But this disingenuous scapegoating of the poor continues today with Senator Joe Manchin (D-WV) and others. “I don’t believe that we should turn our society into an entitlement society,” Manchin said, as he was whittling down the “Build Back Better” bill of his own party’s President.

And then I learned of the grotesque amount of money in the form of tax abatements, incentives and bailouts that federal, state and local governments provide large companies for the pleasure of gracing their communities with factories, warehouses and mega stores. This 2020 article from Business Insider cites a Princeton study that “finds that most states and local governments offer $30 billion a year in welfare — as a ‘low-end estimate’ — to corporations, and in some states the outgoing incentives exceed corporate tax revenues.” So our government is loosing money, your money, on these “incentives” to draw businesses to local communities.

But wait, there’s more. This 2014 article from Forbes, probably one of the antecedents to this year’s PBS film “Corporate Welfare: Where’s the Outrage?”, gives a few frightening examples of government subsidies to corporations. Here’s just one: “The 965 companies in the [ Good Jobs First Report prepared in 2014] received over $110 billion of public money. Berkshire Hathaway, a company with $485 billion in assets and $20 billion in profits, received over $1 billion of that money. Its chair, Warren Buffett, is worth about $58 billion.”

It’s true that at least some of these companies never provide the jobs and tax base they promise in exchange for the subsidies they receive. In 2019, for example, General Motors decided to close its auto making plant in Lordstown, Ohio, allegedly because of the decline in demand for the small cars it was making there. But the state had signed several economic development agreements with GM which specified that the Lordstown plant would remain open until 2027 in exchange for tens of millions in tax breaks. As early as 2017, however, GM started cutting jobs and shifts at this plant and “announced it would build its new Chevrolet Blazer in Mexico.”

The partial good news from this scenario is that Ohio’s Tax Credit Authority demanded its $60 million back, and in September 2020, GM agreed to repay $28 million and contribute $12 million in community support where the plant was located, presumably leaving the state about $20 million in the hole from it’s broken economic development agreements.

Now that’s an entitlement society, Senator Manchin.

“I do care a great deal about the environment but my real work and my greatest challenge is trying to overcome deceits that end up jeopardizing public health and safety.”

Erin Brockovich

Yes, I admire the “real” Erin Brockovich because she’s clearly a fighter, and often put the common good over her own needs. And I love Erin Brockovich the movie because it told the truth. The film and the true story it was based on beautifully captured the deceit that large, powerful companies engage in as a matter of course. And it clearly captured their arrogance. Think about it: if an individual or even an entire company or organization is deceitful, they have to be quite arrogant to engage in that behavior to begin with—why else would you think you could get away with lies and cover-ups of crimes? And where there is power, when a company is so intertwined with jobs and money for a community, for example, that they are “too big to be punished” in a way that hurts them, there is massive arrogance.

There’s a scene in the film, right after the Masry law firm files its initial complaint against the California utility company, PG&E, where the company sends it youngest, greenest attorney to try to quickly sweep away these allegations, like its swept away everything else that got in its way, and it doesn’t work.

As I mentioned before, I practiced environmental law for nearly 15 years, and time and again, that is exactly what happened. The regulated community didn’t always take a state agency seriously (even though we existed only to enforce environmental laws) and usually sent in their first level attorneys at the beginning of an enforcement action—and even they could be arrogant. Many times, though, we often saw a major escalation in the experience of the company attorneys and a less condescending tone, but only after they realized we were ready and able to prosecute.

Ms. Brockovich still works today to prevent water pollution and hold those who pollute accountable. Her famous case against PG&E, and the subject of the film, ultimately awarded 600 or so residents of Hinkley, California, over $333 million in 1996, “the largest settlement ever paid in a direct-action lawsuit in United States history to that date”. But do you think that stopped them? Read all about what PG&E has been up to in the intervening years and be prepared to be shocked. They emerged from bankruptcy just last year and pledged yet again to be good corporate citizens.

But in this post, I’d like to focus on another type of environmental degradation: air pollution, which admittedly is more difficult to trace, and pinpoint its origions and eventual pathways into neighborhoods.

Factories and other companies which make products also make some form of pollution, that is discharged at some point in the manufacturing process to the water, air or land. And this pollution is typically in the form of chemical waste, poisonous to humans, other animals, plants and every living thing it touches.

This is where deceit comes in. These facilities know that they have discharged toxic material, either in a spill, or by purposeful dumping, or by exceeding their permitted discharge limits. If the spill or other type of discharge is large and obvious, the company has no choice but to take the initiative and report it. But a company often knows about the pollution it has caused and simply covers it up, including destroying evidence. In the PG&E case for example, the company suddenly started providing residents with bottled water and offering to pay their considerable medical bills after complaints about sickness swept through the town, but with no explanation, and without telling the residents to stop drinking their well water.

This investigative piece by Pro Public shows that even when state regulators know there is pollution and the residents are complaining of constant sickness clearly associated with that pollution (in this case discharges to the air), they either won’t take action or claim they cannot. In this Mississippi case, local residents kept years of written logs documenting their symptoms and forced the state environmental quality administrators to at least set up air monitoring devices in their area. According to one women: “ ‘I knew there was something wrong,’ ” she said, citing how several of her neighbors had died of cancer in recent years. ‘ “When we saw [the monitoring results], we were like, ‘Oh my God, you mean to tell me these people were allowed to use this stuff, knowing it causes cancer?’ And they seemed to think it was OK. No, it’s not OK. People are dying, you idiots.”

This piece also states that, “The EPA and state agencies could install air monitors in communities to gauge how much toxic pollution reaches neighborhoods. But there’s no federal requirement to do that.” What the authors don’t add is that even if there is no federal specific air monitoring requirement of this type, any state can impose their own regulation allowing them to do so, because state environmental regulations can be more strict than any federal regulation imposed nationwide. The question then becomes: why don’t states impose stricter environmental regulations to protect the health and ultimately the lives of its citizens?

This might come down to where industry is concentrated in the United States. Pro Publica recently put together a map highlighting the 1000 “hotspots” in the country associated with the highest cancer risk from toxic air pollutants. This information was assembled from monitoring reports submitted to the U.S. EPA between 2014-2018.

Texas, Louisiana and West Virginia are three states with significant cancer-causing hot spots, according to this data. So why don’t at least these three states pass more strict standards for release of toxins into the air from industry? This is just an educated guess, but industry tends to pick up and leave a state if the environmental regulations become too strict, because stricter regulations cost more money and cut into company profits. And states don’t want to loose industry that provides tax dollars for their coffers and jobs for their citizens.

Interestingly, in response to Pro Publica’s initial investigative piece and “hotspot” map, the current administrator of the U. S. EPA, Michael S. Regan, recently toured industry towns in Louisiana, Texas and “Cancer Alley”, a stretch of land with chemical plants running along the Mississippi River between Baton Rouge and New Orleans, Louisiana. He talked with townspeople along the way and promised action, including re-evaluating existing air pollution laws, increasing monitoring, inspections and enforcement, and directing federal funds via the proposed Build Back Better Act, to aid their communities. This visit was dubbed “The Journey to Justice” tour, likely because President Biden pledged environmental and racial justice as one of the cornerstones of his new administration.

The Pro Publica analysis of reported EPA data showed “on average, census tracts where the majority of residents are Black experience more than double the level of cancer risk from toxic air pollution as majority-white tracts.” There is no doubt that the poor and minorities suffer the brunt of environmental pollution, likely because wealthier communities, which tend to be majority white, have more money to influence community officials and hire lawyers to prevent industry from settling in their communities. No one wants a chemical plant in their backyard, but some people have more choices than others.

Do you think that the Biden Administration and its EPA Administrator will make good on their promises to these communities? I’d love to hear your thoughts in the comment section below!

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And as always, take a second and subscribe to this newsletter—free and paid su…

I hope all of you who celebrated Thanksgiving or Indigenous Peoples’ Day… or nothing at all, are happy and content right now. I wanted to take a short break this week, so I thought I would re-share my first post for Crime amd Punishment: Why the Poor Stay Poor in America. This piece is important to me because it lays the groundwork for everything else I’ve written about: a robust support system allows a community, whether it’s in the natural world or a country like ours to do more than exist. It allows each member of that community to thrive.

I have a lot more subscribers now then I did on September 15th, when I started this newsletter 10 short weeks ago, and I am truly grateful for your support.

I’d also like to ask you what you’d like to read here, what topics about poverty, racial and environmental inequality would you like me to cover? I have lots of ideas for upcoming posts, but I’d love to know what issues are most important to you. Please let me know in the comment section below.

And as we enter the season of gift-giving, let me suggest that you purchase gift subscriptions to those newletters on Substack you particularly like, for your friends and family of all ages. It’s a gift that keeps on giving all year—and what better present than to encourage those you know and love to learn, and give them the tools right in their inbox to do just that!

Again, thanks for reading and commenting, and for your financial support—it allows me to keep going and to expand what I offer you. I have a number of posts planned that involve deeper dives into topics that I know are important to cover, but are rarely discussed in traditional, ad-driven media. Additionally, I have several interviews, Q & A posts and a more formal podcast planned that I hope to offer you in the coming weeks and months, so thanks in advance for your financial support.

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Seeing the Forest and The Trees: If Collaboration and Mutual Support Work In a Forest, Can It Also Work To Temper Inequality?

Trees communicate. And in an old-growth forest, their communication extends to helping other trees and plants thrive through the connection of the trees’ underground root system to a broad and deep web of fungi. Dr. Suzanne Simard, forest ecologist, author of Finding the Mother Tree: Discovering the Wisdom of the Forest, and decades of forest research explains that  “…trees are ‘social creatures’ that communicate with each other in remarkable ways — including warning each other of danger and sharing nutrients at critical times.”  This is exactly why the abysmal logging practice of  “clearcutting” and replanting neat little rows of one kind of tree simply does not work. The trees may exist for awhile (at least until they’re harvested, I suppose), but they certainly don’t thrive without their underground communication system. The logging industry, and the fossil fuel industry too, are all about short-term and even more short-sighted economic gain, so the industries’ profits are what matter, not ensuring a harmonious interaction and interdependence among species.

…forests, in fact, behave contrary to Darwin’s theory by thriving with collaboration and cooperation and through helping their weakest members, not purging them.

Fortunately, human life on our planet has never been about just existence, but rather, how together we can thrive. And we have a lot to learn from how trees interact in a forest. When I first read Peter Wohlleben’s book, The Hidden Life of Trees: What They Feel, How They Communicate, I was struck by the extent to which trees help fellow trees and how interdependent they are. Wohlleben believes that “When trees grow together, nutrients and water can be optimally divided among them all so that each tree can grow into the best tree it can be.”  Both Wohlleben’s and Simard’s research provide the basis and confirmation of this sharing philosophy of the forest, and at the same time, it also upends the idea of  “survival of the fittest”. And Simard and Wohlleben directly make note that forests, in fact, behave contrary to Darwin’s theory by thriving with collaboration and cooperation and through helping their weakest members, not purging them. “… a tree can be only as strong as the forest that surrounds it”, maintains Wohlleben.

I also was struck by the comparison of forest collaboration to what our country’s economic system could be, rather than the caricature it has become.

Take these appalling statistics, for example.  According to Senate Budget Committee Chairman Bernie Sanders’ opening statement at a Senate hearing in March 2021:

__   the richest 50 Americans now own more wealth than the bottom half of our society — over 165 million people;

__ the top one-tenth of 1 percent now owns more wealth than the bottom 90 percent, and two individuals own more wealth than the bottom 40 percent;

__ In 1965, CEOs of large corporations made just 20 times as much as their average workers. Today, CEOs now make over 300 times and, in some cases, over 1000 times more than their average workers.

To add a broader perspective to our country’s current wealth inequality, a 2017 report by The Institute for Policy Studies states that roughly a fifth of Americans “have zero or negative net worth”. As of the 2020 Census, there are 332,278,200 people in the United States, so if that percentage generally has held for the last three to four years, that’s over sixty-six million Americans who probably have nowhere to go economically but down.

I’m not the only one who believes these statistics portray a grotesque distortion of capitalism. In fact, those who advocate for a minimum guaranteed income, like the authors of a proposal for the New School’s Institute on Race and Political Economy, titled “A Guaranteed Income for the 21st Century,” recommend a $12,500 annual income for every adult and a $4,500 allowance for every child, to be eventually phased out at higher income levels. In Ezra Klein’s recent opinion piece for The New York Times, one of the authors of this proposal, Darrick Hamilton, argues that a guaranteed basic income is a “truer form of capitalism” because “People can’t reap the returns of their effort without some baseline level of resources.” 

Poverty in America is a Catch-22 of gigantic proportion.

In other words, the poor can’t feel strong, confident and ready to grab for their  dreams when they expend all their energy trying to maintain a roof over their heads and food on the table.  Being poor is physically and emotionally draining, and I understand this from first-hand experience: I understand the gnawing fear and insecurity that is a direct result of having no money, the frustration of applying for government aid that takes months to come, if at all, and not being able to purchase the necessities that make life , not easier, but just normal. This combination hardly allows someone to be their most productive, bright-eyed and optimistic, the qualities one might need for, say, a job interview or to attend classes.

Poverty in America is a Catch-22 of gigantic proportion. Those who think a person can just “pull themselves up by their bootstraps” don’t understand the  nearly unbreakable cycle of scarcity and is suffering under one of the great American myths. Even the origin of this phrase tells you that it is an attempt to do an impossible task. To use that proverbial “bootstrap” to better yourself without help takes a lot of energy — energy that most in poverty simply lack.

After all, keeping a certain percentage of our people down, is, and probably always has been, a policy choice by our elected officials. But it doesn’t have to be that way. Can you imagine the robustness of the American people and strength of our economy if we nurtured our weakest and helped them to thrive, to help eac…

From the 1972 movie, “The Candidate”

Some stories are timeless and resonate hundreds of years later. But why? Is it because the “human condition” doesn’t change, or humans are incapable of real change, or people are just too lazy to break from their patterns, no matter how destructive? For a more optimistic perspective, perhaps these stories tap into universal emotions like love, greed, hate, compassion, and that’s why they resonate through generations. Or maybe it’s both.

If you listen to the words in the fictitious candidate’s speech above (Robert Redford as Bill McKay, in one of the great political movie satires, “The Candidate”), you’ll notice that we’re talking about and fighting about these exact issues today: race, poverty, health care, affordable housing, and environmental issues.

It’s not that our government, prodded by activists, hasn’t tried to solve these persistent problems and it’s not because they haven’t tried hard enough, but it may be because what amounts to equality issues, have never been a priority for our country. Plus, our elected officials have nearly always used these issues to divide us, distract us, and play us off against one another, so these problems, which should no longer exist in a modern, supposedly sophisticated society, continue to plague our country and relegate millions of our citizens to a bare existence.

Here’s an example from just a few days ago that sheds light on our country’s priorities:

Senator Bernie Sanders has vowed not to vote in favor of the $778 billion defense spending bill currently before the Senate because he believes “we need to get our priorities right.”

"The Senate has spent month after month discussing the Build Back Better Act and whether we can afford to protect the children, the elderly, the sick, the poor and the future of our planet. As a nation, we need to get our priorities right. I will vote ‘NO’ on the National Defense Authorization Act," Sanders said in a statement.

The problem is that this defense spending bill will pass quickly with bi-partisan support and without the need for Senator Sander’s vote. Sanders correctly points out that even though we are no longer at war, the annual defense budget has increased by $37 billion since former President Trump’s 2020 defense budget and is $25 billion more than President Biden even proposed for this coming year.

It is ironic that none of the Republicans or Democrats grousing about the increasing debt and national deficit, that may or may not result from passage of the paired down “Reconciliation Bill”, and particularly Senators Joe Manchin and Kyrsten Sinema, the Democrats holding up this bill until they receive a more detailed cost analysis, are worried about what the defense spending bill will cost or what it might add to our nation’s debt.

But maybe they should: according to an article in TruthOut, “The likely passage of the bill comes at a time when Congress is negotiating a social spending bill that would cost $1.75 trillion over ten years — or about a fifth of the amount in spending over one year that the current defense bill proposes.”

Just to make sure we all understand, the proposed $1.7 trillion social spending bill is the total cost spread out over ten years— it’s not an annual spending bill like the Defense Budget.

This is a timely and classic example of our country’s out-of-whack priorities. Our elected officials sing the praises of negotiation, but what about directly negotiating our country’s priorities? I’m no pacifist, and of course, agree that we need a defense budget, but don’t we need to finally prioritize government spending to temper inequality, help heal the racial divide, put a decent roof over our poorest citizens’ heads, many of whom are veterans, and turn around the climate crisis?

Another flashback to a Republican president and 5 Star General, who seemed to believe we needed to rearrange our nation’s priorities:

“Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.”

Dwight D. Eisenhower

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“The best journalists and writers do not simply relay information, their value is in discovering what really matters to people.”

Nora Ephron

I always keep this advice from the late author, Nora Ephron, in mind as I write posts for this newsletter. Although the issues I write about are important to me, it doesn’t mean that I can make it clear why these issues should be important to you and your families. For example, if you are not part of the millionaire and billionaire class, like the vast majority of Americans, why would raising their taxes matter to you?

That’s what I’m trying to do here: write about issues that should matter to most of us if we had the time to think about them, to read about them, and then to take the extra step and figure out the impact of these specific issues to our lives and to the lives of our fellow citizens. One of the great things about this platform—Substack— is that basically the material is curated for you, so if you are interested in, say, the intersection of economic, racial and environmental inequality, and are ticked off at the growing wealth gap, you would subscribe to this newsletter. You might notice that many Substack writers take curating a step further and offer even more specific writings on a particular issue that might illuminate your path to its understanding. My Sunday Evening Reads attempt to do just that with recommended readings on a very specific issue. But I try to explain why each of these readings shed light on the topic and might help you figure out the impact of the issue on your life and the “life” of our country.

Emily Litella always got it right even when she got it wrong.

So…what is all this fuss I keep hearing about a “wealth tax”? It’s important to know, first off, that I’m far from an expert in any kind of tax and was thrilled when I barely passed the “Federal Personal Income Tax” class required in law school. But there are basic facts about federal taxes that we should all know: the first federal income tax was created in response to the civil war (our government needing revenue and fighting wars seemed to coincide through the centuries), and the precursor to the IRS was started then, too, called the Office of the Commissioner of Internal Revenue.

The federal income tax as we know it today, was enacted in 1913, and was always a “progressive tax”, meaning the more you earned in income, the more you paid in taxes, up to a top limit, which has varied by double digits over the years.

But a “wealth tax” is something different: it is a tax on a person’s overall net wealth, their total assets minus their total debt for the year, not just their income. Although it may initially present some problems, primarily in accurately assessing a person’s overall wealth, I think there is way too much fuss being made about this tax—let’s choose a minimum amount of wealth it will apply to and a maximum percentage taxed and collect that revenue.

Let’s look at a few essential readings on the wealth tax proposed in recent years:

— This “Explainer” article from the Associated Press discusses the basics of the wealth tax being proposed today by progressive democrats as both a way to make our economic system more fair and to help pay for President Biden’s proposed “Build Back Better Plan”. Interestingly, talk of a wealth tax heated up during the pandemic, which netted billionaires, like Elon Musk and Jeff Bezos much greater profits than usual.

“This new tax would apply solely to people with at least $1 billion in assets or $100 million in income for three straight years. These standards mean that just 700 taxpayers would face the additional tax on increases to their wealth, according to a description obtained by The Associated Press of the proposal of by the chairman of the Senate Finance Committee, Sen. Ron Wyden, D-Ore.”

https://apnews.com/article/coronavirus-pandemic-joe-biden-business-health-personal-taxes-bb51ab8b987c32e00c743a05d428079c

— This pre-pandemic political piece from NPR News explains both Senator Warren’s and Senator Sanders’ quite different wealth tax proposals as put forward during their respective presidential campaigns. But both of these tax proposals would reach a much larger number of wealthy individuals than the billionaire’s tax now being proposed.

“A wealth tax polls very well — including among Republicans. In July [2019], a poll from the New York Times and Survey Monkey found that two-thirds of all Americans, including 55% of Republicans, approved of a 2% wealth tax on all people with wealth over $50 million.”

https://www.npr.org/2019/12/05/782135614/how-would-a-wealth-tax-work

— This recent article from Forbes explains the pros and cons of a wealth tax in substantial detail.

“A wealth tax seems fairer to some. A billionaire entrepreneur who owns their own company, like Bezos or Zuckerberg, is currently able to delay taxes on their business wealth. “If you never sell the stock, you will remit no capital gains taxes. If you pay no dividends, you will remit no individual income taxes at all as a result of owning that stock. To some, there is something unsettling about people who have tens of billions of dollars of wealth who pay little in taxes,” said [Jeff] Hoopes [associate professor at the University of North Carolina and the research director of the UNC Tax Center.] They would not have the same ability to avoid a wealth tax.”

https://www.forbes.com/advisor/investing/what-is-a-wealth-tax/

— Oh that silly Elon Musk…Is he going to sell more of his Tesla stock so he’ll actually have “income” and have to pay the reduced capital gains tax? Here’s an NPR piece from just yesterday that helpfully explains why a wealth tax would be more likely to snare the ultra-wealthy into paying a greater share of taxes.

“Rather than sell their shares, the super rich can borrow against their holdings. In effect, they use them as collateral for loans. ‘They have so much stuff that they can convince a bank to lend them money for their cashflow needs," [Scott]Dyreng [a professor of accounting at Duke University] says. "So, they don't need to have income. They just have assets that back loans.’”

And finally for this evening, a hilarous essay written by Nora Ephron on the possibility of wealth.

https://www.newyorker.com/magazine/2010/10/11/my-life-as-an-heiress?mbid=nl_Daily%20122617%20Subs&CNDID=7968747&spMailingID=12635062&spUserID=MTMzMTg1NTY2OTE0S0&spJobID=1302319260&spReportId=MTMwMjMxOTI2MAS2

Why is the implementation of some form of wealth tax important for most Americans? Not necessarily to narrow the wealth gap between the very richest and everyone else, although it will do that to a small extent, but to ensure that billionaires pay a larger share of taxes (wealth, as we have learned) is a lot more difficult to hide than income. And this revenue can pay for things that working class Americans desparately need, like child care tax credits, paid family leave, expanded health insurance coverage, repaired roads and bridges, efficient public transportation, and more. And this in turn, should help many more Americans thrive rather than just exist day-to day.

Please share your thoughts! Do you think a wealth tax will benefit our country? Why or why not?

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Housing for All

“In the richest country in the history of the world, every American must have a safe, decent, accessible, and affordable home as a fundamental right.”

Senator Bernie Sanders

Read about the Yellow Springs, Ohio Community Land Trust model here.

One of the reasons I started this newsletter is to share with as many people as possible, what I have learned and continue to learn as an “income and wealth-challenged” person. I often say to my friends (or dog or cat, whoever might be available to listen), “Who knows that “this” is going on in our country?” “How could the average person have the time or the inclination to find out about “this”?” “Why isn’t “this” ever discussed on the national news?”

I’ve already written about several of these issues here, like the cruel Catch-22 of credit scores, the value to our country of a Universal Basic Income, the shocking reality of Pay Day Loans, the conundrum of our personal bankruptcy laws, and our country’s growing income and wealth inequality.

But what I have been focused on most recently, as have a few elected officials, authors and journalists, is the growing gap between the very rich and everyone else, and along with this, the erosion of the middle class. Last week, I happened to stumble upon a Tweet from the Sanders Institute, where it touted Senator Sanders’ creation of a Community Land Trust when he was Mayor of Burlington, Vermont. According to the Institute’s article, “The Burlington Community Land Trust, today named the Champlain Housing Trust (CHT), was started in 1984 with a substantial grant and technical assistance from the City of Burlington. It was the first CLT in the United States to be initiated by a municipality.”

I also read a 2016 article from Slate Magazine titled How Bernie Sanders Made Burlington Affordable, written when the good senator was running for President the first time and shaking up our country with his “radical” ideas…designed to help average working people.

A community land trust happens to be one major tool to close that wealth gap. How? It turns out that the “American Dream” of home ownership is in fact, one of the best way to build wealth. But many of our country’s low income residents can’t afford the downpayment, the property taxes on both the land and the structure, or the inevitable repairs, which shuts them out from increasing their overall wealth. The alternative to building wealth for individuals is investing in the stock market, which most lower income people simply don’t have the extra money to do.

A community supported land trust owns the property and builds or refurbishes the homes, then sells them at below market prices to residents who meet a certain income threshold and can still afford the lowered payments—the buyer owns the home and the trust retains ownership of the land. This separation of land and structure ownership allows the owner to only pays taxes on the structure, purchase the home at a reduced price, pass the home to their heirs and earn a shared equity on the sale of the home. (The equity realized on a sale typically is shared between the homeowner and the land trust to allow the trust to re-sell the home to another low income resident at a reduced price.). The trust also usually assists with repairs on the structure, which allows the owner to focus on making the mortgage payments and building equity.

lt also keeps the affordability of the community trust housing permanent— the other types of government subsidized housing can fluctuate because most are dependent on annual subsidies and are unable to keep pace with the increased demand for affordable housing.

“…CLTs are a valuable tool in closing the wealth and equity gap in cities with significant racial disparities.”

And it seems that the community land trust model is slowly catching on. The City of Baltimore, for example, announced this past September that it was allocating $4 million available for funding the City’s land trusts. According to Baltimore’s mayor, Brandon Scott, "The Community Land Trusts movement represents both a tangible and scalable strategy to help us build community power." There are approximately 277 land trusts operating in the United States today.

What do you think of the Community Land Trust model to help low income members of a community build wealth through home ownership, and so “build community power”?

I’d love to hear your thoughts.

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As always, thanks for reading and commenting!

“I am glad to approve this legislation which is to be known as the Clean Air Act. It will make possible a national effort to control air pollution, a serious and growing threat to both our health and our safety. Ninety percent of the population of our cities, over 100 million people, already suffer from a degree of air pollution that demands immediate action.”

President Lyndon Johnson, speaking after he signed the nations’s first Clean Air Act, December 17,1963. Read the full text of his remarks here.

I grew up in Steubenville, Ohio, a small town on the Ohio River directly across from “Wild, Wonderful West Virginia”, as our neighboring state was known in those days. Our town was powered by steel mills on either side of the river, which in it’s heyday, provided the areas’ residents a solid, middle-class living. But those same mills that at one point made almost a third of the nation’s steel, also helped Steubenville rate as the most polluted town in the country in the mid-seventies. In fact, Steubenville was one of six urban areas studied for decades and through several generations to determine the link between air pollution and increased mortality. And the results of these studies, that demonstrated a correlation between air pollution and increased mortality from a variety of causes, formed the basis for Environmental Protection Agency rules curtailing mercury, soot emissions and other air quality regulations.

“Steubenville is a perfect environmental laboratory,” said James Slater, a chemistry professor at Franciscan University of Steubenville. Two large steel mills and two plants that turned coal into furnace-ready coke for those plants operated nearby, he said, and the Ohio River Valley is prone to temperature inversions that trap polluted air. “We have it all,”

I fondly remember driving with my friends on the treacherous West Virginia roads in the early morning hours of our weekend escapades. At about 1:30 or so, we would hear the sirens go off from the mills, alerting us to their massive, nighttime dump of pollutants into the skies—fiery orange smoke would belch from the stacks and a horrendous smell of burnt sulfur and metal would fill the air, as we hurriedly rolled up the car windows. I can only liken this warning to the screeching of my cat, right before she vomits and shoots a hairball across the room. There is no escaping either discharge.

Whether you hail from a polluted industrial town or a near-pristine mountain top village, most of us understand by now the direct link between air pollution resulting from the burning of fossil fuels, whether from cars, power plants or factories, and our ongoing climate crisis. And unfortunately, it works in both directions: air pollution has caused climate change by warming the air and water, and conversely, climate change has worsened air pollution by trapping more pollutants in the warming air.

The following detailed explanations from the U.S. Environmental Protection Agency, The Environmental Defense Fund, and The Institute for Advanced Sustainability Studies in Potsdam, Germany, will help you understand the connection:

— Basics on the connection between air pollution and climate change from the U.S. EPA.

“Emissions of pollutants into the air can result in changes to the climate. Ozone in the atmosphere warms the climate, while different components of particulate matter (PM) can have either warming or cooling effects on the climate. For example, black carbon, a particulate pollutant from combustion, contributes to the warming of the Earth, while particulate sulfates cool the earth's atmosphere.”

https://www.epa.gov/air-research/air-quality-and-climate-change-research

— This explanation from the Environmental Defense Fund details exactly how climate change is worsening air pollution, and solutions we can take right now to mitigate this problem.

“Air pollution kills 5 million people around the world every year, as it raises the risk of heart attack, stroke, diabetes and respiratory disease.”

https://www.edf.org/health/how-are-our-air-and-climate-connected

— And the most detailed description of the global climate change/air pollution connection, and what various countries are doing to correct it, from the the Institute for Advanced Sustainability Studies. It also lists the various “critical health risks worldwide” of air pollution.

https://www.iass-potsdam.de/en/output/dossiers/air-pollution-and-climate-change

Fianlly for this evening, I’m going to share two recent articles from ProPublica that I think are quite astounding:

— In what ProPublica calls a “first of its kind” mapping of air pollution zones in the U.S., we can see what neighborhoods in which areas of the country suffer the most from toxic chemicals emitted into the air and have the highest rates of resulting illness.

“In all, ProPublica identified more than a thousand hot spots of cancer-causing air. They are not equally distributed across the country. A quarter of the 20 hot spots with the highest levels of excess risk are in Texas, and almost all of them are in Southern states known for having weaker environmental regulations.”

https://www.propublica.org/article/toxmap-poison-in-the-air?utm_source=sailthru&utm_medium=email&utm_campaign=dailynewsletter&utm_content=river-links

— And here’s exactly how ProPublica put that map together.

“We analyzed billions of rows of EPA data to do something the agency had never done before: map the spread of cancer-causing industrial air emissions down to the neighborhood level.”

https://www.propublica.org/article/how-we-created-the-most-detailed-map-ever-of-cancer-causing-industrial-air-pollution?utm_source=sailthru&utm_medium=email&utm_campaign=dailynewsletter&utm_content=river-links

Did you grow up in or move to an area with an extreme amount of air pollution? I’d love to hear your stories in the comment section below:

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“The ultimate test of man's conscience may be his willingness to sacrifice something today for future generations whose words of thanks will not be heard.”

—Gaylord Nelson (1916-2005), former governor of Wisconsin, founder of Earth Day

“Conscience” and “sacrifice” are two concepts that have long seemed in short supply, at least from businesses. It’s not hard to understand why, though, because the bottom line is always money. And more money. And as much short-term profit that a company can extract with the least outlay of, you guessed it, money. On the other hand, think of the real sacrifices that low-wage, front-line workers, like grocery store clerks and health care employees have made over the last 18 plus months—they have sacrificed with their lives, and some gambled with their lives, betting against contracting a deadly virus to keep their jobs and their paychecks. And too many lost that bet.

But companies that are subject to environmental regulation are especially obscene when it comes to avoiding a conscience or even minimal sacrifice for the good of the planet and future generations.

I can’t explain why, maybe it was rooted in my love for animals, or that I came of age in the 1970’s at the birth of our country’s environmental movement, that I felt a calling to “protect the environment”. And I chose law school to achieve that aim. I interned at the Ohio Environmental Protection Agency while in law school and landed a job there as a staff attorney, where I stayed for nearly 15 years. I wish I could say that I helped to “protect” the environment all that time, but that is not what happened or how I felt after several changes of our state’s administrators. I still have many close friends from my OEPA days, and know how much they cared about saving our land, water and air (and protecting the people who live on that land and drink that water and breath that air) from pollution, and they did their part. But it was startlingly clear whether a new governor, new director of the agency, new head of the legal department and a new Attorney General cared about enforcing state environmental laws, and everyone, including the businesses who did the polluting, knew it.

But let’s return to the glorious 70’s for some background on our first environmental laws. We have President Nixon to thank for the National Environmental Policy Act, otherwise known as NEPA, which he signed into law on January 1, 1970. It was our nation’s first federal environmental law that set the stage for all the others. It established the Council on Environmental Quality (CEQ) and required federal agencies to access the environmental impact of projects through a report conveniently called an “Environmental Impact Statement” or (EIS). As you might have noticed, NEPA also set the stage for a slew of acronyms to easily prevent anyone from even attempting to understand environmental laws.

Later in 1970, the Environmental Protection Agency was established, “which consolidated environmental programs from other agencies into a single entity.” And then each state was required to have their own version of an EPA and adopt state statutes and regulations that were at least as strict as the federal laws.

Throughout the 1970’s and early 1980’s, Congress passed laws specific to regulating water pollution, air pollution, hazardous waste, including what became known as Superfund sites, and where all our non-recyclables still go—solid waste landfills. As a charming aside, I was affectionately known as the Ohio EPA’s “garbage attorney” for a few years…oh, the good ole’ days!

It’s important to understand that before these environmental laws, our land, air and water were a free-for-all, dumping ground for pollutants of every kind. This environmental summary from ABC News touches on just some of the environmental catastrophes that were recorded in the 1950’s and 1960’s, and the initial laws that followed to rally concerted environmental action. Note that as one of his first acts as President, Lyndon Johnson signed the original Clean Air Act in December 1963.

But let’s return to how companies finagle their way out of complying with environmental laws. First, they fight every statute and regulation, through lobbyists on Capital Hill and in every state capital in the country. The lobbyists and company CEO’s not only fight statutes and regulations being enacted in the first place, they donate big bucks to candidates who they believe will be susceptible to their campaign or PAC donations, in an attempt to forestall even more strict regulations. I detailed these shenanigans in a prior post concerning the infrastructure bill negotiations.

Then to continue its fight against compliance, companies hire high-priced attorneys to parse every word of the regulations impacting their client. Let me give you just one example from my work involving hazardous waste law: Companies use lots of hazardous materials, like chemicals, in their production of products. But these chemicals are not regulated until they become “waste” after the production process. This waste is then discharged into the water, air and/or stored in onsite landfills through permits issued by state EPA’s The clever attorneys, forever looking for ways to spare their client a dime, would claim time and again that the deadly chemicals being stored on site in an unlined, dirt pit, for example, were not “waste” but stuff waiting to be re-used in the manufacturing process at some point in the distant future; therefore, it couldn’t be regulated and could continue to just sit there, usually vulnerable to the elements, and seep into the groundwater. Nope, nothing to be regulated here! Usually this argument didn’t hold up because the OEPA tested the material and made the company prove that it was still usable in their processes, but until that happened, it could just sit and rot and leak.

And finally, the turning point for my tenure at the OEPA, was when a new governor decided that our agency must refer to the regulated community, the polluters, as our “customers”. I was seething when in a staff meeting, I quipped, “Does that mean the customer is always right?” We were in charge of regulating these businesses and now they suddenly became our customers. And you can bet the companies and their attorneys jumped on this to become even more lax in their compliance, because they knew, courtesy of our wink and a nod, that we didn’t care.

This is the tone and attitude I’m referring to when I say that environmental laws matter and their strict enforcement matters even more. So what can you do to help prevent this evisceration of our environmental protection laws? At least, vote for only those candidates who have a proven track record of standing up for the environment and not business — who is in charge, matters. And attend as many local meetings hosted by your state’s EPA and environmental organizations as possible and comment for the record.

Stay tuned for an announcement of a question and answer thread on environmental issues to be posted soon!

As always,I’d love to know your thoughts because I’m writing to create a community who cares about these issues.

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Additional Reading:

https://www.theatlantic.com/science/archive/2017/03/how-the-epa-and-us-environmental-law-works-a-civics-guide-pruitt-trump/521001/

https://www.propublica.org/article/toxmap-poison-in-the-air?utm_source=sailthru&utm_medium=email&utm_campaign=dailynewsletter&utm_content=river-links