article: Low-Income Elderly Hurt by Bush Policies

May 20, 2006

Low-Income Elderly Hurt by Bush Policies

For some time now, economists have warned of the dire consequences attendant on the present administration’s fiscal strategy. They note that persistent yearly budget deficits, having already led to a gigantic national debt, may undermine confidence in the currency, which is supported by foreign investment in U. S. securities. Tax cuts are seen as a contributing factor.

The Federal Reserve had for long insisted that inflation was tame, but recently inflationary jitters became prominent. They were blamed for last week’s selloff on Wall Street. In fact, the rise in the price of gold over the last twelve months has been spectacular, indicating the quest for a shelter from the falling dollar. The Euro, which had been originally meant to be on par with the dollar, is now worth considerably more, and of late the Japanese yen has also appreciated.

To be sure, the price of oil works to the same effect. The Iraq war and the current conflict with Iran further destabilized the Middle East. Some of the major oil-producing countries of South America have switched politically, dissatisfied with what they consider America’s peremptoriness and unilateralism.

Meanwhile, however, the oil companies have made unprecedented profits that could hardly displease an administration as heavily implicated in oil interests as the present one. The President decries the high price of oil, yet he appears to be paying merely lip service to the development of alternative sources of energy.

Actually, although treasury officials are publicly committed to a strong dollar, many of the administration’s moves are clearly in the opposing direction and are instead even calculated to trash the U. S. currency. Bush has exerted strong pressure on China to devaluate the renminbi. A lower renminbi would doubtless help the trade balance, but it would also contribute to the decline of the dollar.

From official quarters, one hears the oft-repeated mantra that Americans don’t save enough. But the threat of inflation is no incentive for saving. Money invested in savings accounts will gradually lose its value at the present rate of inflation. Affluent people do not invest their fortunes in savings accounts, and in point of fact regard those who do with condescension. For one thing, they put their money in stocks, and investing in stocks generally pays only for the wealthy insider, while the unsophisticated small investor is apt to lose.

A neglected aspect of the inflation that has been engendered by the Bush administration is that it particularly penalizes the less well-off, retired people living on fixed incomes and having their arduously earned life savings in bank accounts.