A Thank You to the American Taxpayer

I want to offer my thanks to the readers of the Nouveau Poor and the American taxpayer. For the past several months you’ve been helping to buy my groceries. But I’m relieved to tell you that business has now recovered enough that we are back on our feet and ready to totter forward.

The past few years have been extremely difficult. Because of you, our family has had one bright spot in our daily life—the knowledge that we could afford food. When you can’t afford anything else, your next meal becomes incredibly important.

I’m happy to say the safety net worked like it should. Your help not only got us through some impossible months, it saved the jobs of our remaining employees, so their families could keep eating also. Still, when over 46 million Americans are on food stamps—one of every seven people in the U.S.—you know something is wrong. When the number of people receiving food assistance rises more than 70% in four years, and the cost of the program reaches $72 billion, you realize the system is broken.

But it’s fair to ask which system. While I’m very grateful for the assistance, I would have been even more grateful for a solution that made food stamps unnecessary. Since October, we’ve received nearly $5,000 in assistance or $687 per month for a family of four. Of this, we spent about $3,700. How much better would it have been to lower our taxes that amount so we didn’t need food stamps? Or how about removing the government’s foot from the neck of business so that buyers and sellers could make rational decisions? How about stripping out the endless regulations and requirements that make it almost impossible to make a profit if you’re a small business owner? How about not using businesses as the faceless cash cow for every harebrained scheme to come out of Washington? “Tax the rich” sounds great until you end up with no jobs.

I’ve tried to convey in these posts over the past months what it’s like to walk into a grocery store and buy food with an EBT card—all the while knowing that the cashier and the people in line behind you are eyeing your purchases and evaluating the worth of your clothes and your car. Those critics constantly whisper in my head. I can hear them now saying that if I didn’t like using food stamps we should have quit being leeches and gotten jobs—as if it’s that easy. Never mind that approximately 41% of the people on food stamps, including us, already live in working households.

Many people complain that the system is corrupt and riddled with fraud. And I’ve tried to be honest. Food stamps do warp buying decisions. The money comes at no cost except to dignity, and you don’t get to keep what you save—any money that isn’t spent rolls over, but at the end of the day the savings go back to the government. That makes it hard to be conscientious. Only the benefit amounts and a person’s own ethics act as a brake.

That said, many of the current proposals to “fix” the food stamp program are expensive and/or damaging. Some states have proposed limiting the types of food that can be purchased. But determining what to allow and policing such a system is costly. Others states, like Pennsylvania, have instituted asset testing, which makes sense as long as the asset limits are reasonable. If you force a family to sell a car they need to get to a job or look for work, how does that help taxpayers?

Other proposals include requiring photo identification on EBT cards, instituting a work or volunteer requirement (which would penalize job seekers and parents) and drug testing recipients, which besides being demeaning would be too expensive to be worthwhile. A more targeted approach might be to test only those who request replacement cards.

None of these solutions address the real problem: Taxpayers don’t want to see the person next to them getting for free what they have worked for. If you ask 10 people if they are willing to help the poor, nine of them will say yes. But if you take those same nine people to Wal-Mart and show them a woman (or man) using an EBT card, the majority will be outraged by something the person is buying, by her clothes or haircut or the number of children surrounding her or by her car. They will be sure the person is abusing the system.

Again, they’re focusing on the wrong issue. Food stamps are a blessing when you can’t afford food. Are they the right solution? I still don’t think so. Fix the country’s economic woes, and the majority of people receiving food stamps will be able to solve their own money problems. Lower taxes. Reduce regulation. Encourage education.

It’s hard to make the decision to go off food stamps. It’s hard to give up that safety in the face of uncertainty. The construction industry is showing faint signs of life, following the rest of the limping economy, but it’s far from certain that business will continue to move in the right direction. Much of Europe is back in recession, and the U.S. economy shows many troubling signs as well.

So we make this decision with trepidation. On the one hand, walking into a grocery store and paying for our own food will be a huge relief. On the other, the thought of going back to the days of walking out with as little as possible is daunting. But it’s the right thing to do.

I worry about the lessons my kids are learning. Will they decide there’s no point to saving money and working hard? Will they conclude that a college degree is a waste of time? I’ve wondered all those things the past few years. How has reading or overhearing the negative comments about welfare affected my children? What have they made of our choices with food stamps? For example, when they ask why we can’t buy ice cream or cookies, do they understand our decisions? How do they account for the fact that we’ve told only a handful of family and friends about being on food stamps?

I hope they take away some positive lessons: Help is available if you need it. People can be wonderfully kind and generous. You don’t need the latest gadgets and new clothes and entertainment to be happy. We have gotten good at re-creating foods we used to buy out and at baking our own treats. When you can’t afford any entertainment or extra expenses, being able to make a batch of cookies may be the bright spot of the week. And a packet of oatmeal eaten in a tent is more fun than any fancy breakfast at a restaurant.

This will be the final post for the Nouveau Poor as we re-join the self-sufficient. I want to thank my readers for your comments and encouragement and your own amazing stories. I’ve learned much and been given much to think about. I hope I’ve done the same for you, and I wish you all the greatest success.—The Nouveau Poor

Growth or Grim Times Ahead?

So last week’s survey asked if it’s ethical for those on food stamps to spend money on Christmas gifts. By a two-to-one margin, those responding okayed such spending. This isn’t entirely consistent with last week’s response that said recipients should use benefits only on healthy or basic foods. By that reasoning, if people have money for gifts, shouldn’t they spend it on food and ease the need for assistance? But this is another instance where my kids counted more than my ethics.

For today’s survey, I thought about discussing my New Year’s resolutions, but they’re too simple to sustain a blog: I hope to make enough money in the coming year so that I don’t have to sell my house, my body (which has dubious value), my kids or my dog. (Well, actually, I might entertain offers on that one. She’s a well-trained, six-year-old Black Lab with a tennis ball fetish.)

So instead I’ll ask readers a simple question: Do you think the economy in 2012 will be better or worse? Most experts agree conditions in the next 12 months will improve, with growth limping along at 2.4% GDP (up from 1.8% in 2011), unemployment at 8.8% (down slightly) and inflation at 1.9% (also down from 3.6%). (Research Department, Federal Reserve Bank of Philadelphia Survey of Professional Forecasters Fourth Quarter 2011).

Dr. Nariman Behravesh, Chief Economist of IHS, a financial information provider, predicts sluggish growth between 1.5% and 2%. But he cautions that two big dangers could derail his forecast: a financial meltdown in the Eurozone and a sharp slowdown in China.

Scott J. Brown, Chief Economist at Raymond James & Associates, also sees Europe as a threat to the U.S. economy. “There is still hope for Europe,” he writes in his 2012 forecast, “but it’s not looking good. A more substantial meltdown would have a significant impact on the U.S.economy and long-term interest rates.”

A recent survey of chief financial officers from throughout the country by Bank of America Merrill Lynch also shows tempered optimism. About half of those surveyed say they expect their corporate revenues to grow, and only 7% expect further layoffs. But they worry the government won’t be up to the job of repairing the economy. “Senior financial executives are more concerned about more factors that could effect the economy than in any previous point in the CFO Outlook survey’s history,” says the study. “Heading into a critical election year, it’s telling that 70% of CFOs cited concern about the effectiveness of U.S. government leaders and 63% cited the U.S. budget deficit.”

While the majority of forecasts foresee slow growth and gradual improvement, some take the opposite view and say these gains will simply be the last gasps before a major downturn. One such cheery prognosticator is Robert Wiedemer, Managing Director at Absolute Investment Management, and co-author of “America’s Bubble Economy,” a book that accurately predicted the current downturn. In his follow-up work Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown,”  he warns that the dollars being pushed into the system now will lead to massive inflation, a collapsing dollar and skyrocketing unemployment.

If you ever feel like spending money on an extra latte, watch the upbeat video on the Aftershock website. Or for an even more fun time you can search “2012 Depression” and come up with any number of blood-curdling predictions about the coming collapse of the economy.

So what do you think? Will the economy improve in 2012? Limp along slowly or hurtle back into the black? Or we will see the next Great Depression? And please let me know if there are any good bids out there for the dog.

Merry Christmas

Merry Christmas everyone. May you all find joy and renewal this holiday season and hear the Whos singing. We delivered our homemade stollen bread to our neighbors this morning; my family has arrived to share Christmas with us; and the music is loud and strong. I want to leave you with a final link this season. These are Christmas stories collected by Yahoo’s The Lookout national affairs blog for its series “Down and Out.” Some of them are tough to read, but they also convey courage and determination. Again, Merry Christmas!

Is Your Penny-Pinching Permanent?

The Wall Street Journal carried an article Oct. 4 by Ann Zimmerman on the “Frontier of Frugality.” It discussed the growing realization among retailers that consumers may not revert to their free-spending ways. Certainly, the numbers suggest they haven’t yet, despite a slight rise in October’s numbers—a 3.4% year-to-year jump in retail sales. But nothing in the economic or political tea leaves indicates spending will return to past numbers anytime soon.

So I’m wondering. Have people really changed their spending habits? And if so, are the changes permanent, like the article suggests? I’m more inclined to believe that those who still have money are spending it—just that fewer of us have it. Certainly, the carts I see at Costco have TVs and garden statues and laptops in them. Someone is buying all those iPads and Kindles and Xboxes.

So are you saving money, and if so how? Have your spending habits really changed? Will you stick to your new plan if times improve? Following are some of the changes we’ve made. 

  • No eating out and no more stops at Starbucks.
  • We put off non-essential home repairs. These delays have lead to some interesting discoveries. For example, our 30-year-old fire extinguisher really does work.
  • We wait on some dental care and don’t fill every prescription. When we do need medicine, we look for generic drugs.
  • No more packaged foods or non-essentials at the grocery store—goodbye Doritos and ice cream. We buy generic and make most of our own treats like cookies or bread. No fancy beauty or cleaning products—vinegar, baking soda and homemade soap work for most chores.
  • No more cable TV. No texting on our cell phones and minimal minutes. Basic, dinosaur phones that are only good for a short conversation and embarrassing the teenager. 
  • No vacations except backpacking, which costs only the price of a Forest Pass and a small donation of blood to the mosquitoes.
  • No events or activities, except the free sort. We’re blessed to live in an area with an abundance of these.
  • No new clothes that don’t come from Goodwill, except for the kids.
  • No nonessential purchases, except for the kids’ birthday and Christmas presents, and we shop resale for those. No more exchanging gifts outside the family, except for those we grow or make.
  • We drive an ’88 Toyota pickup (go Toyota!) with minimal insurance instead of a more expensive vehicle.
  • We turn the heat way down and pile on the blankets.
  • We carry high deductibles on all our insurance.
  • Repair what we can, live without if we can’t.
  • We’ve dropped all magazine subscriptions, museum memberships, etc., and read magazines at the library instead. Our county has the best library system in the world.

Some of these measures we’ll stick to when things improve. Some we won’t. I’ll definitely turn up the heat and replace some dangerous appliances. But I love the library, and I don’t miss cable.  What changes will you keep?

Up in Smoke

After much research, we bought two cords of maple for our woodstove today.  A beat-up dump truck fought its way up the hill to my barn and dumped the wood in a sprawling heap.  The grizzled guy in the truck squinted for a moment at the check I handed him, then asked me to rewrite it so he could pass it to his employees under the table.  In return, he didn’t charge me the taxes he would have paid.  Unethical?  Maybe.  But in a world where the cost of every regulation and tax is no longer a number on a piece of paper, but instead a meal or a school cost or a prescription, my ethics and morals have been beaten into a new pragmatism.

Take the wood, for example.  The old me might have argued that wood smoke harms air quality.  Certainly more than using our gas furnace.  In the before time, I dialed the thermostat to 68 degrees and told the kids they could put on a sweater and do their part to slow global warming.

Last winter, with the thermostat set at 63 during the day and 50 at night, I quit worrying about global warming.  When your feet are freezing and your fingers are too numb to type and you can’t tell which kid is which because they’re swathed in layers of coats and blankets, it’s amazing how quickly your priorities shift.

Last year, we had enough wood for a short fire each evening—until about February.  Even with our cost-saving measures, our heating bills approached $200 per month during the coldest months.  With wood here at about $250 per cord, even my cat can do the math.  Burning wood will make us a lot more comfortable and save us money.

The same dynamic holds true at the grocery store.  In the before time, I bought organic fruit and cage-free eggs and local produce that hadn’t been shipped from Australia.  Now I look for the lowest prices, no questions asked.

Magnify my family by a world of poor people, and you realize that environmentalists are fighting on the wrong front.  Don’t waste time trying to convince rich people to buy recycled toilet paper.  Instead put the resources into making running water available first.  People living on the margins don’t care about the environment.  They can’t afford it.