March 1, 2013

Senate and House leaders met today with President Barack Obama in the White House in an effort to strike a budget deal to avoid $85 billion in budget cuts due to go into effect by the end of the day. The cuts, known as the sequester, were passed in 2011 in an effort to push Congress to strike some kind of reasonable budget deal. Political analysts note that the sequester was deliberately designed to be so draconian (severe and cruel) that Democrats and Republicans would be forced to compromise and forge a better way of balancing the budget.

The Democrats under President Obama’s lead want to implement what he calls a “balanced” approach to deficit reduction, combining cuts with tax raises for upper income Americans. The Republicans demand budget cuts, including cuts to such social programs as Medicare and Medicaid, with no new taxes. The president has criticized Republicans for placing the entire burden on the poor and the middle class while refusing to close “a single tax loophole that benefits the well-off and well-connected.”

Political gridloock in the U.S. Congress has resulted in a series of budget crises, including the "sequester." (Robert H. Glaze, Artstreet)

If the sequester is allowed to go into effect, both defense and domestic spending will be cut across the board, likely throwing hundreds of thousands of people out of work. Economists estimate that the U.S. gross domestic product (GDP) would grow by just 1.4 percent in 2013, compared with 2.2 percent growth in 2012. (GDP is the market value of all final goods and services produced in a country during a given period.) The International Monetary Fund, a United Nations agency, has stated that such drastic cuts could have an impact on global economic recovery from the 2008-2009 recession. Much of Europe, for example, has already fallen back into recession, with unemployment at more than 25 percent in Greece and Spain.

Additional World Book articles:

• John Boehner
• Mitch McConnell
• Nancy Pelosi
• Harry Reid
• Congress of the United States 2011 (a Back in Time article)
• Entitlements—Benefit of doubt (a special report)
• Medicaid in Distress (a special report)

Nov. 10, 2011

The number of United States citizens classified as poor hit a record 49 million in 2010, 16 percent of the total population, announced the U.S. Census Bureau this week. Under a broad new measure intended to supplement the official standard, poverty is classified at or below an annual income of $24,343 for a family of four, compared with $22,113 under the earlier measure. To determine the new thresholds, the Bureau included housing and household expenses, medical costs, regional differences in the cost of living, and such government benefits as food stamps. (To fight hunger and to improve the diet of Americans, the U.S. Department of Agriculture runs the Supplemental Nutrition Assistance Program–formerly the Food Stamp Program–which helps needy people purchase food.) 

Out-of-pocket expenses for medical are a major factor in poverty among the elderly. © Photodisc/Getty Images

The greatest increase of poverty occurred among people aged 65 and older. Roughly one-in-six senior citizens, or 15.9 percent, is now officially living below the poverty line. According to officials, the primary cause is out-of-pocket medical expenses, including premiums and co-pays from Medicare. Advocates for the elderly are currently lobbying against congressional measures to cut Medicare funding as a means of bringing down deficit spending and the national debt.

Additional World Book articles:

• Standard of living
• Welfare
• Health Care Reform: What’s In It for You (a special report)