Poverty in America remains stuck at record levels. But people who are poor aren't that bad off—because they can afford booze, cigarettes, and TVs, the car insurance industry said Monday.
The odd rationale was included in a letter to the Federal Insurance Office, an insurance industry watchdog, in response to a request for comments on whether auto insurance is affordable for low-income Americans.
The National Association of Mutual Insurance Companies (NAMIC), which represents half of the nation's car insurance companies, asserts in its letter that households in the lowest two-fifths of the income spectrum spend nearly as much on alcohol and cigarettes as they do on car insurance, and even more on "audio and visual (A/V) equipment and services." Therefore, the industry group says, "it seems implausible to suggest that automobile insurance is not 'affordable' for these consumers."
The Consumer Federation of America (CFA), a consumer advocacy group, calls the trade group's comments not only "offensive," but "factually incorrect." Here's why: Only about 19 percent of all low-income households spend any money on cigarettes in a typical three-month period, and only 22 percent spend any money on alcohol. When you average all low-income household spending, you find that these households spend about $102 more a year on car insurance than on cigarettes and alcohol, according to the most recent numbers from the federal government’s Consumer Expenditure Survey.
"Many households spend nothing on these products and this abuse of statistics reveals the underlying disrespect that many auto insurers have for low-income drivers," CFA's director of insurance J. Robert Hunter said Tuesday.
To fix this, a bipartisan group of Representatives introduced legislation earlier this year that would reinstate many of the VRA's voter protections. House majority leader Eric Cantor (R-Va.)—after trekking to Selma, Alabama on a civil rights pilgrimage—became the only member of the GOP leadership to back the bill, called the Voting Rights Amendment Act (VRAA). Now Cantor is out of the picture, and some advocates say that without his support, a voting rights fix is doomed.
"I think that Cantor’s loss is the nail in the coffin for the VRAA," says one Democratic House aide who has worked on the legislation. The GOP chair of the House judiciary committee has blocked the bill for months now, and conservative groups opposed to the measure have been making a ruckus. Now "there isn't anyone like Cantor... working to bring Republicans to the table," the aide says.
"I don't see other Republican leaders or candidates for Republican leadership showing any interest in picking up... that mantle," another House staffer adds.
Some voting rights advocates are holding out hope that Cantor will push the VRAA through the House before he leaves office. "It has been clear that his feelings on voting rights were grounded in his personal experience of going to Selma with [civil rights icon Rep.] John Lewis," says Estelle Rogers, the legislative director at the voting rights advocacy group Project Vote. "We hope he can now act…without politics clouding the issue."
There's still time. If Cantor convinces House judiciary committee chair Rep. Bob Goodlatte (R-Va.) to bring the voting rights fix bill up for a vote in the next few weeks so that it can move through the full House and the Senate, there's a chance that the legislation could protect voters in the midterms this fall.
Cantor's office did not immediately respond to requests for comment.
Some of the schoolgirls Boko Haram kidnapped in mid-April.
Blessing sits on the floor, knees into chest, in an empty room in Bukakotto village in eastern Nigeria. She's "40 something," but looks 25, and her face is scarred with tribal markings razor cut into her face as a baby. Just the day before, her sister was murdered. She went to her farm to look for firewood, Blessing says through a translator, and she was knifed to death by nomadic cattle herders with machetes. "They hacked her all over."
A pink and white scarf hangs off Blessing’s head, and she arranges and rearranges it as she speaks, looking straight ahead into nothing. "We picked up her corpse and buried it yesterday."
Blessing's sister is another casualty in Nigeria's long-running battle between mostly Christian farmers and mostly Muslim cattle herders over access to land. This increasingly violent clash is playing out alongside the Boko Haram terror campaign that has captivated the world since the group kidnapped more than 300 schoolgirls in April. On the surface, the two conflicts—which have both resulted in thousands of deaths over the past few years—appear unrelated. One is centered around Islamic fundamentalism, the other around grass and water. But look a bit further and you find that both conflicts are deeply tied to a massive ecological crisis that is breeding desperate poverty in the north of the country.
For centuries, the nomadic Fulani people drove their cattle east and west across the Sahel, the expanse of land just south of the Sahara desert. With the onset of a string of droughts in the early 20th century, Fulanis began to shift their migratory routes north to south. Land battles between nomadic Muslim cattle herders and Christian farmers were first reported about 60 years ago. The clashes have intensified since the start of another series of droughts beginning in the late 1960s that parched the land up north, driving more farmers and herders south for longer periods of time.
"They come [south] because of the nature of the climate in the north," says Mohammed Husaini, a Fulani herdsman and official with Nigeria's cattle breeder trade association. He's seated on a plastic lawn chair inside his spartan cattle vitamin shop in the eastern Nigerian town of Garaku. Just outside the open front door, a young man chants the Koran into the afternoon heat.
"The period of time that northern Fulani nomads used to spend in the middle of the country used to be December to May," he says. "Now it's December to June or July, and some nomadic Fulanis decide to just stay here." Why? Because, he explains, the grasses up north "don't grow totally" any more.
Mohammed Husaini's cattle vitamin shop in Garaku, Nigeria. Erika Eichelberger
Climate change has also contributed to the environmental changes in northern Nigeria, though it is not yet clear how much. Scientists are unsure, for example, how global warming has affected rainfall over the past few decades. What is clear is that the air over Nigeria has warmed by about 1.4 degrees Fahrenheit since the mid-20th century, and even more in the north of the country. Hotter temperatures mean that water is evaporating more quickly from Lake Chad, according to Chris Lennard, one of the lead authors of the most recent massive report from the UN's Intergovernmental Panel on Climate Change (IPCC)—though he says the effect of evaporation is relatively small compared to the devastation caused by droughts and irrigation.
Hassan Garaba, a 24 year-old farmer and cattle herder who spends part of the year in the north of the country, calls the farmland up there "bakyau"—unfavorable. Three years ago, he harvested 30 bags of corn. This year, only 20. "The crops have been getting bad," he says through a translator. "Some just died off."
Elizabeth Warren is at it again. On Wednesday, the senator from Massachusetts and her colleague Sen. Jeff Merkley (D-Ore.) called out the Federal Reserve—the US central bank charged with setting monetary policy and regulating big banks—for being too lax on financial reform, and urged the Obama administration to fill two open seats on the Fed's seven-member board with candidates committed to cracking down on Wall Street.
"As the events of 2008 showed, when the Federal Reserve and other financial regulators failed to engage in appropriate financial regulation, the results were the worst financial crisis in 80 years," the two senators wrote in a letter to President Barack Obama Wednesday. "Financial regulation and oversight obligations must be front and central to the Board's work."
The Fed's banking watchdog duties include imposing penalties on financial firms for violations such as inadequate money laundering protections and faulty foreclosure practices. Federal Reserve board members also vote on restrictions on CEO pay and rules governing how much emergency capital banks have to keep on their books.
This is not the first time that Warren has pushed the Fed to take its financial regulatory role more seriously. Earlier this year, she called on the heads of the central bank to stop delegating big decisions on bank oversight to staffers. Of the close to 1,000 formal enforcement actions taken by the Federal Reserve over the past decade, only 11 were voted on by the board itself. The rest were delegated to Fed staff, sometimes mid-level employees. In a letter to the Fed in February, Warren contended that the delegation of authority has resulted in bank penalties that are too lenient.
Last September, Warren and fellow Democrats on the Senate banking committee opposed Obama's plans to nominate former Treasury Secretary Larry Summers to run the Fed, citing Summers' work on behalf of the banking giant Citigroup and his past efforts to deregulate the financial industry. (Obama ended up withdrawing Summers' name from consideration.)
And at Fed chair Janet Yellen's Senate confirmation hearing in November, Warren told Yellen, "I’m concerned that [financial regulatory] responsibilities just aren’t a top priority for the board of governors."
In addition to the two Fed posts Warren and Merkley are concerned about, there are three other openings on the Fed board for which Obama has already nominated candidates. Those nominees are Lael Brainard, a former Treasury official; Jerome Powell, who has been a Fed board member since 2012 and is up for a second term; and Stanley Fischer, the former head of the Bank of Israel, whom the Senate just confirmed. There has been no real opposition by Senate Dems to any of these three nominees.
In his State of the Union address in January, President Barack Obama promised to devote 2014 to tackling inequality. When French economist Thomas Piketty's book Capital in the Twenty-First Century was released in March, it pushed the problem of growing income disparity further into the global spotlight. In April, Pope Francis tweeted, "Inequality is the root of social evil." Now Christine LaGarde, the head of the International Monetary Fund—best known for lending money to developing countries on the condition that the those states make policy changes—is taking on inequality too, warning in a speech Tuesday that rising inequality is threatening global financial stability, democracy, and human rights.
"One of the leading economic stories of our time is rising income inequality, and the dark shadow it casts across the global economy," LaGarde said.
The richest 10 percent of people in the world hold 86 percent of the world's wealth, and just 0.7 percent own 41 percent of global riches, according to the Credit Suisse 2013 Global Wealth Report. The bottom half of all adults in the world own just one percent of global wealth:
Here's what the very top of that pyramid looks like. About 10,000 people have more than $50 million:
Countries that are more unequal tend to be less stable and have lower economic growth, according to the IMF. Income disparity can bring more dire consequences too. "Disparity…brings division," LaGarde said. "History…teaches us that democracy begins to fray at the edges once political battles separate the haves against the have-nots."
What to do about growing income disparity around the world? The IMF chief suggested countries implement "redistributive" measures, including expanded access to education and health care, increased property taxes, and more progressive tax systems. Here's how the US tax system has helped the rich get richer over the years:
LaGarde said cracking down on the banking sector is part of the puzzle, too, since the 2008 financial meltdown increased the wealth gap. In her speech, LaGarde said that although governments have made progress in reining in big banks, most countries have not yet imposed strict enough reforms on the financial sector. The problem of banks being so large their collapse would endanger the entire financial system—a.k.a. too big to fail—is still with us, she noted. Here is how banks got too big to fail:
LaGarde also urged that rules governing how banks operate across international borders be tightened. And she called for a change in the banking "culture," pointing to recent scandals in which financial firms were accused of money laundering and rigging interest rates.
LaGarde slammed the banking sector's resistance to reform. "The behavior of the financial sector has not changed fundamentally…since the crisis," she said. "The industry still prizes short-term profit."