Monday, October 27, 2003

Time For a New War on Poverty?

By David M. Fine

"…we have never lost sight of our goal -- an America in which every citizen shares all the opportunities of his society, in which every man has a chance to advance his welfare to the limit of his capacities. We have come a long way toward this goal. We still have a long way to go.

The distance which remains is the measure of the great unfinished work of our society. To finish that work I have called for a national war on poverty. Our objective: total victory."

                                          - President Lyndon Johnson

Lyndon Johnson began his war on poverty with that speech in 1964. Forty years later, one can reasonably say, America has lost sight of that goal - eliminating poverty is no longer an ideal we strive toward as a nation.

During the Johnson administration, 36 million people, making up 7.1 million families and 15 percent of households, qualified as poor. According to 2002 estimates, 34 million people, making up 9.6 percent of households are currently considered poor according to federal guidelines. And if you take out non-cash assistance such as food stamps and Medicaid, that number goes up to 55 million.

Indeed, not only has America failed to meet Johnson's objective of "total victory," the public debate veered sharply away from that goal during the 1990s and in its place embraced a debate over welfare dependency, personal responsibility, and taxpayer fatigue with paying for poor people who were taking advantage of the welfare system. For many liberals it seemed as though the prevailing attitude toward the poor had begun to approximate that of the Senate in Mel Brooks' comedy "History of the World Part I."

[ Click here to listen to the movie clip ]

Thence came Welfare Reform, taking the form of the Personal Responsibility and Work Opportunity Reconciliation Act, (a.k.a. Welfare-to-Work), that Bill Clinton signed in 1996. The new law capped cash assistance to needy families at a maximum of 5 years and required family heads to be working at least 30 hours per week after two years on the dole. Most importantly, the law threw responsibility for managing the programs to the states, funding each state via a Temporary Aid for Needy Families (TANF) block grant.

Some states, such as Wisconsin, jettisoned simple cash assistance entirely and pushed all recipients immediately into work - while simultaneously spending large sums on child care. Conservatives quickly crowed that the program was a 'miracle" though they seem to gauge success simply by how many people leave welfare - not whether they were earning a living wage, obtaining stable employment, or receiving benefits.

Other states, like Ohio, took a made a more gradual transition. The State of Ohio's 2002 report on TANF, "Reinvesting in Ohio's Families" calls TANF a "success story," noting that "two thirds of the families that left…were working…" Of those who did find work, they averaged a wage of $8.65 per hour, most at full time, which amounts to an annual take of about $17,300, just barely above the poverty level for a family of three. And while Ohio boasts that "more than 83 percent" of the children had health care coverage, that indicates a significant number of kids were without health insurance.

Not to say that Ohio and other states aren't trying - Ohio used $185 million of its TANF budget of $1.3 billion (56 percent of which is federal funds) for a program it calls PRC - Prevention, Retention and Contingency - which aims to keep people between 100 and 200 percent of the poverty line from ever needing cash assistance.

PRC is actually a compendium of 9 program categories, spanning short-term financial assistance for basic needs, job training and support, helping new mom's with their pregnancy or newborn, family planning, education, coping with domestic violence, and programs for the kids themselves.

Has welfare reform been as harsh as Mel Brooks' Roman Senate? No and Yes. Most families are finding work and managing, with the help of other government programs, to keep themselves from dire straights. Nevertheless, there remains a group of people, a significant minority of welfare recipients, who are falling through the cracks. The Ohio report does not mention what became of the one-third that did not find jobs.

Researchers from The Urban Institute and Northwestern University interviewed 95 extremely poor families who were unemployed and not receiving cash assistance. 68 percent of these families reported having difficulty providing food for their children. Surprisingly, 40 percent of these families avoided participating in the TANF program, for reasons of pride, too much hassle, wanting to take care of their kids, and other reasons. One-third of those interviewed said mental or physical health issues prevented them from working. Limited skills and education made finding decent employment challenging for these mostly single parents. Most likely, these people suffer from depression, if not chemical dependency.

* * * * *

So while America can honestly claim to have solved the problem of welfare dependency, the scourge of poverty stubbornly remains. Even recipients coming off of cash assistance will likely need food stamps and government-assisted child care, as members of another large category of "near-poor." Many, too, find themselves back on welfare again at some point. And if or when they do succeed in lifting themselves above the poverty line, many states will punish them by taking away their health care - Medicaid.

One might think it shouldn't be so challenging to get out of poverty given that America sustains $60 to $70 billion in antipoverty programs, not counting Medicaid. The federal government doles out some $22 billion annually for its food stamp program, $17 billion for TANF, $6 billion for Head Start, $4.8 billion for child care, $1.8 billion to help people pay their energy bills, and billions more for public housing, Pell Grants for higher education for the poor, as well as various job training programs.

Unless we are going about it all wrong. We keep the poor, for the most part, from going hungry and being forced to live on the streets. Meanwhile, the poor face myriad obstacles, not the least being familial dysfunction, domestic violence, substance abuse and mental health issues. Perhaps, too, the involvement of so many government programs in their lives reinforces their lack of confidence in their own ability to succeed.

"What does this poverty mean to those who endure it? It means a daily struggle to secure the necessities for even a meager existence. It means that the abundance, the comforts, the opportunities they see all around them are beyond their grasp. Worst of all, it means hopelessness for the young."

Joe Lieberman, Senator from Connecticut and a candidate for the Democratic Presidential Nomination, is one of the few candidates who is explicitly suggesting that we fight poverty, promising, "to reduce the poverty rate to its lowest in our nation's history within four years." He would do this, he says, by tweaking the welfare legislation, raising the minimum wage, modifying the earned income tax credit, investing in public education, and creating Individual Development Accounts (which he doesn't explain, but sounds something like a government-run 401k).

Lieberman is on the right track, but America can afford to be more ambitious. As we prepare to invest some $80 billion to rebuild far-away Iraq - and spent however many billions on the war itself - you might wonder what would happen if we made that kind of investment in a modern-day War on Poverty in our own back yard.

Currently, welfare reform pushes people into work through a coercive work-or-else strategy. Work, or else you lose your benefits. But what if we rewarded work - by increasing cash assistance?

Yes, increase cash assistance along with work to provide people with a living wage and an opportunity to save or invest in themselves. People who currently qualify for welfare who find a full-time job, would receive the equivalent of an extra $2 per hour for a 40-hour week, or $320 per month, or half of that if they work 20 hours per week and are getting some sort of approved job training or education that would lead to an in-demand occupation. This generous assistance would be provided for only two years.

This program should be supplemented with Senator Lieberman's idea of an Individual Development Account - call it an Individual Opportunity Account instead. Account holders could donate up to $1000 per year and the government would match that 1-for-1. They could only redeem the account to buy a house or pay for education that would lead to an in-demand occupation for the recipient or any approved education spending for their children. These accounts would have to be used after 10 years of inception and could be open to any citizen at or below 150 percent of the poverty line.

Last, we would want to make a significant federal investment in education. Creating more schools with smaller class sizes, initially for the youngest students - kindergarten through 6th grade - would be a good beginning.

These programs and additional schools and teachers wouldn't come cheap. But no one would expect this country to skimp on the war with Iraq. If we're going to fight a war on poverty, shouldn't we fight to win?

Still, before we plan on spending such vast sums, the federal government could do what John F. Kennedy did with the food stamp program (see sidebar above) - create pilot programs in ten of the poorest counties in the U.S. After five years, compare the programs to standard programs in other states.

Everybody wins if those with the lowest incomes improve their lot - businesses win because that means there are more capable workers out there; the economy wins, because more people are able to buy durable goods and services; the community wins because the social ills spawned by poverty will decrease and more people will feel they are stakeholders in their community; and the taxpayers win because over time fewer governmental services will be required to deal with problems arising out of poverty, such as criminal behavior and drug abuse, or the need for other government assistance.

America has celebrated personal responsibility and self-sufficiency. These are good values. But many of us walk into life having all the advantages - stable, educated, financially-sound families - while others come into life with all the disadvantages - dysfunctional, low-skilled, barely-educated and broken families.

We should recognize that, as Johnson noted, being poor is a "daily struggle… for… a meager existence." It is time this wealthy nation made a commitment to provide its citizens, unequivocally, with the tools to realize a decent existence. Parents and kids who genuinely believe that goal to be attainable will focus better on education, plan for the future, postpone childbearing, and become productive members of society. We've reformed welfare, but we can do more to end poverty - and provide opportunity.

Related Links

And interesting NPR poll regarding perceptions of why people are poor.

About the book "Poverty in America," by John Iceland.