Despite Obama’s Claim, the Poor are Not Getting Poorer

"Need is not demand. Effective economic demand requires not merely need but corresponding purchasing power." — Henry Hazlitt

An Article in the Daily Caller debunks Obama’s claim that the rich are getting richer and the poor are getting poorer. Caroline May reports; “In his mid-April speech on the budget deficit, President Obama echoed conventional wisdom when he cited the rich are getting richer and the poor are getting poorer as a reason to raise taxes on the wealthy in order to reduce the national debt.

Research, published at The Journal of Policy Analysis and Management, from Cornell economist Richard Burkhauser, Joint Committee on Taxation economist Jeff Larrimore, and Indiana University economist Kosali Simon, however, suggests that the president’s piece of conventional wisdom isn’t entirely accurate. According to the findings, while the rich have indeed been getting richer, for the last 30 years so too have the poor and middle class.”

“Burkhauser told The Daily Caller that Obama’s suggestion that the poor are getting poorer understates the amount of income to which Americans actually have access. The president does not take into account, Burkhauser explained, tax unit shifts, government transfers, and other sources of income such as health care benefits.”

“The bottom line is [conventional wisdom] asks what’s been happening to private personal income over time and they are right if you look at that for tax units, things do not look very good for the middle class,” he said. “But if you take other things into account, the reason the country has not gotten in a civil war is because things are not that bad. In fact everybody has done better.”

“Burkhauser’s research shows what has actually been happening to the lives of Americans over the last thirty years — not just counting the amount of money individuals made in the market, but the actual income that people get in their hands to spend.”

“This isn’t a zero sum game, where one group wins at the expense of others,” Burkhauser said. “The growth in productivity of Americans in the top twenty percent of tax units increased the size of the economic pie sufficiently to register major gains across the entire distribution of after-tax income.”

No group in our nation is poorer than the Native Americans. I have driven through Indian reservations in Arizona and New Mexico and seen some of the most deplorable living conditions of any location in this nation. These reservations reminded me of some of poverty stricken areas I have seen in third world counties. There are broken down automobiles parked in front of dilapidated homes or trailers. The people look unhealthy and many suffer extreme obesity. Alcoholism is no doubt a major disease and unemployment reaches upwards of 50%. Education is second rate and most kids do not graduate from high school.

One thing you will notice when you enter a reservation are the signs warning you not to take photographs or video. The roads are marked with federal highway signs noting you are on an Indian reservation. It’s almost as if you are entering another country. In fact you are. It’s the nation of the Bureau of Indian Affairs.

I know when you read this you will ask, “what about the Native Americans who own the casinos?” I’m talking about those tribes that have casinos and resorts. Those Native Americans do not represent the majority of Indians living in his nation. They are the fortunate ones who live close enough to a big city where there is a demand for gaming facilities. The Native Americans I am talking about are the ones who are basically wards of the Federal Government living in squalor on government controlled reservations.

The BIA is an agency of the federal government of the United States within the US Department of the Interior. It is responsible for the administration and management of 55,700,000 acres of land held in trust by the United States for Native Americans in the United States, Native American Tribes and Alaska Natives. The Bureau of Indian Affairs is one of two Bureaus under the jurisdiction of the Assistant Secretary — Indian Affairs: the Bureau of Indian Affairs and the Bureau of Indian Education, which provides education services to approximately 48,000 Native Americans.

The BIA's responsibilities once included providing health care services to American Indians and Alaska Natives. In 1954, that function was legislatively transferred to the U.S. Department of Health, Education and Welfare, now known as the Department of Health and Human Services, where it has remained to this day as the Indian Health Service (IHS).

Why is this? It goes back to the whole process of herding Native Americans onto reservations and then having the federal government “take care of them.” They were never allowed to integrate into the American fabric and they depend on the largess of the federal government for their sustenance.

If you talk to bureaucrats in the Bureau of Indian Affairs you will hear that what we need is more taxpayer money to improve the lives of these impoverished people. In essence more welfare payments will make things better.

There is, however, one tribe of Native Americans that never fell under the control of the BIA. They are the Lumbees. In 1956, the United States Congress passed H.R. 4656, known as the Lumbee Act, which recognized the Lumbee as Native Americans. In consultation with the tribe as a condition of recognition, Congress at the same time excluded the Lumbee from receiving the federal services ordinarily provided to federally recognized tribes through the Bureau of Indian Affairs.

You might think this was injustice forced on his tribe of Native Americans If you think this you are mistaken. The Lumbees are not interested in federal control.

A few weeks ago John Stossel, of Fox News, had a segment of his program devoted to the Lumbee Tribe. Here is what Stossel wrote in Human Events on April 27, 2011; “The U.S. government has "helped" no group more than it has "helped" the American Indians. It stuns me when President Obama appears before Indian groups and says things like, "Few have been ignored by Washington for as long as Native Americans."

“Ignored? Are you kidding me? They should be so lucky. The government has made most Indian tribes wards of the state. Government manages their land, provides their health care, and pays for housing and child care. Twenty different departments and agencies have special "native American" programs. The result? Indians have the highest poverty rate, nearly 25 percent, and the lowest life expectancy of any group in America. Sixty-six percent are born to single mothers.”

“Nevertheless, Indian activists want more government "help.”

“It is intuitive to assume that, when people struggle, government "help" is the answer. The opposite is true. American groups who are helped the most, do the worst.”

“Consider the Lumbees of Robeson County, N.C. — a tribe not recognized as sovereign by the government and therefore ineligible for most of the "help" given other tribes. The Lumbees do much better than those recognized tribes.”

“Lumbees own their homes and succeed in business. They include real estate developer Jim Thomas, who used to own the Sacramento Kings, and Jack Lowery, who helped start the Cracker Barrel Restaurants. Lumbees started the first Indian-owned bank, which now has 12 branches. The Lumbees' wealth is not from casino money.”

“We don't have any casinos. We have 12 banks," says Ben Chavis, another successful Lumbee businessman. He also points out that Robeson County looks different from most Indian reservations.”

"There's mansions. They look like English manors. I can take you to one neighborhood where my people are from and show you nicer homes than the whole Sioux reservation."

“Despite this success, professional "victims" activists want Congress to make the Lumbees dependent — like other tribes. U.S. Rep. Mike McIntyre, D-N.C., has introduced the Lumbee Recognition Act, which would give the Lumbees the same "help" other tribes get — about $80 million a year. Some members of the tribe support the bill.”

“Of course they do. People like to freeload.”

“Lawyer Elizabeth Homer, who used to be the U.S. Interior Department's director of Indian land trusts, says the Lumbees ought to get federal recognition.”

"The Lumbees have been neglected and left out of the system, and have been petitioning for 100 years. ... They're entitled, by the way."

“People like Homer will never get it. Lumbees do well because they've divorced themselves from government handouts. Washington's neglect was a godsend.”

“Some Lumbees don't want the handout.”

"We shouldn't take it!" Chavis said. He says if federal money comes, members of his tribe "are going to become welfare cases. It's going to stifle creativity. On the reservations, they haven't trained to be capitalists. They've been trained to be communists."

“Tribal governments and the Bureau of Indian Affairs manage most Indian land. Indians compete to serve on tribal councils because they can give out the government's money. Instead of seeking to become entrepreneurs, members of tribes aspire to become bureaucrats.”

"You can help your girlfriend; you can help your girlfriend's mama. It's a great program!" Chavis said sarcastically.”

“Because a government trust controls most Indian property, individuals rarely build nice homes or businesses. No individual on the reservation owns the land. So they can't develop it," Chavis added. "Look at my tribe. We have title and deeds to our land. That's the secret. I raise cattle. I can do what I want to because it's my private property."

“I did a TV segment on the Lumbees that I included in a special called "Freeloaders." That won me the predictable vitriol. Apparently, I'm ignorant of history and a racist.”

“The criticism misses the point. Yes, many years ago white people stole the Indians' land and caused great misery. And yes, the government signed treaties with the tribes that make Indians "special." But that "specialness" has brought the Indians socialism. It's what keeps them dependent and poor.”

“On the other hand, because the U.S. government never signed a treaty with the Lumbees, they aren't so "special" in its eyes. That left them mostly free.”

“Freedom lets them prosper.”

As I watched Stossel’s show and saw the interviews I keep thinking of those reservations in Arizona and New Mexico. I also thought of the third world and developing nations, especially in Central and South America that I have seen or worked in. These nations also are socialistic in nature. People look to the government to relieve them of poverty and provide jobs and education. This is what got Hugo Chavez elected in Venezuela.

Stossel has it right. Freedom and private ownership of land is the key to wealth. I have written blogs and published articles on this subject. It is the private ownership of land and the security of that ownership that separates the rich from the poor, not the largess of any government program.