‘It was $5, right?” I was at a convenience store in northern Missouri, filling up with gas, and the guy next to me was checking his gas budget with the lady in the passenger seat of his car. He was driving what might be the last K-car on the road. He noticed that I had overheard their conversation and turned to me and said: “I hate dollar and diming it, but if five bucks is all you have, that’s all you can spend.”
The ongoing chatter about the income gap means inequality will surely be an election issue in 2016. I live in a small and relatively poor community in northwest Missouri. I’ve never heard my neighbors discuss income inequality in line at the local quick stop or anywhere else, although poverty is widespread. If my admittedly anecdotal evidence is any guide, income inequality is an issue trickling down from the top rather than bubbling up from the bottom of society. That the national conversation is about relative inequality rather than absolute poverty is because the former issue is particularly vexatious to the academics, journalists, and civil servants who are driving the conversation. Although they have the kind of incomes my neighbor with the clapped-out Dodge can hardly imagine, they’re prickly, because even a couple with two low-six-figure incomes is an order of magnitude short of private jet and summer in the Hamptons territory. I’d love to know the average income of the folks showing up to hear Bernie Sanders, but I’d bet that few of Bernie’s fans are stuck in 40-year-old junkers with duct tape securing the brake lights.
While the president constantly complains about our country’s income inequality, two important environmental rules put forward this summer by his administration will only make the income gap bigger. When President Obama famously promised to use his veto pen and his power to issue executive orders to do what the Republican Congress wouldn’t, it may not have been entirely clear that his activism would be aimed at people with bald tires and balky transmissions. His environmental rules are bad news for poor people in rural Missouri and the rest of the country.
The Clean Power Plan rule will lead to huge increases in electricity costs in states like Missouri, where coal provides the majority of our electric power. Analysis of an earlier version of the rule projected double-digit annual increases in electricity costs for the next decade, but the final rule demands even larger cuts in carbon emissions. The National Black Chamber of Commerce commissioned a study that predicts the average family will see its electric bill increase by more than $1,200 a year. The average Missourian pays just over $100 per month for electricity. If rates increase by just $10 a month, then my neighbor’s K car will be parked. A doubling of electric bills over the next few years will be a burden for many of us, but catastrophic for low-income Americans. All this for a barely measurable projected decrease in global temperatures.
The EPA is well aware of the regressive nature of the rule, so it commands states to provide aid to those on the lower end of the income scale and even helpfully offers some examples of programs that will pass muster with its enforcers. From cleaning up Lake Erie and reducing damaging air pollution in the 1970s to administering social programs in the 21st century, the EPA is the perfect example of a government agency that has slipped the bonds of democratic restraint.
The new Waters of the United States rule, which went into effect in much of the country at the end of August, threatens low-income budgets as much as the Clean Air rule does. As farmers scramble to comply with the increased costs and lowered productivity that will result from enforcement of the rule, U.S. agriculture will struggle to meet increasing demands for food. World food demand is reliably expected to increase by 70 percent over the next three decades: It will be difficult to nearly double food production while the most productive farmland in the world is under the thumb of a government agency that consistently oversteps the elastic boundaries set by an inattentive Congress.
The new rule was written in response to two Supreme Court decisions that slapped the hands of the EPA and the U.S. Army Corps of Engineers for overly broad interpretations of the Clean Water Act. But the EPA ignored the Court while writing the final rule, and the result is a rule even more invasive than the EPA actions that raised the ire of the Court. In fact, mapping software that incorporates the new rule shows that well over 95 percent of Missouri is now a Water of the United States! Farmers, builders, local municipalities, and other landowners will see the present state regulation replaced with federal oversight. The rule has been met with near-universal disdain: The House has passed legislation that would halt its implementation; dozens of states are opposing it in court; the Corps of Engineers has written a series of leaked memos criticizing the rule; and a U.S. district court judge in North Dakota has granted an injunction halting its implementation in 13 states.
For those who remember their first economics class, there are two facts about food that are everywhere and always true. The first is that increases in the cost of food are highly regressive. The average American spends around a tenth of his income on food, but people in the lower end of the income distribution spend much more, with the lowest income quintile spending over one-third of their income feeding their families. Second, the demand for food is inelastic. Decreases in the supply of food lead to commensurately larger increases in the price of food.
This summer provided a real-world illustration of freshman economics: A 10 to 15 percent decline in the number of eggs on the market due to a poultry disease led to a short-term doubling of the price of eggs. When unnecessary regulations hammer farmers’ ability to produce, the resultant increases in food prices will harm low-income consumers the most.
We can ease poverty with any number of programs, from the Earned Income Tax Credit to food stamps to subsidies for health insurance. Heck, even the EPA’s programs to help folks cut their electric bills may have some efficacy. But no antipoverty program can replace the satisfaction that comes from earning enough to pay your own way. My neighbor in the K car didn’t discuss his life with me. I have no idea if he is employed, if he’s broke because he doesn’t earn enough, or if he’s poor because he spends all of his spare time inside the convenience store buying lottery tickets. I do know that he was mortified when he realized that I had inadvertently become privy to his inability to buy more than two gallons of gas at a time.
Whatever the reasons for his situation, it is about to get worse. Not only that, but I’m willing to bet he’d much rather earn enough to pay his own way than depend on the federal government to replace the spending power he’ll lose when his food bill goes up and his “electric” doubles. The greatest cost to all of us from the famous Obama pen is not the increase in the cost of living, but the damage done to the self-respect of those who can no longer support themselves.
Blake Hurst is a farmer in Missouri.
