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"Comments on CAP Report:,"

by Christopher Howard July/August 2007 issue of Poverty & Race

From Poverty to Prosperity performs a valuable service by describing the poverty problem clearly and collecting many good ideas to remedy the problem. Now comes the hard part —figuring out how to translate these ideas into practice. Frankly, we have known for a while that more childcare assistance, a larger Earned Income Tax Credit (EITC) and many other recommendations in this report would reduce poverty. The main difficulty, now and throughout US history, is convincing people in power to embrace these changes and fight for them. We need to think about politics as much as policy.

The authors of the report believe that the United States has an opportunity to do something significant about poverty. This opportunity is supposedly rooted in a national yearning for change (which is asserted but never proven) and upcoming elections. While I can see some positive signs, I also see trouble. As the authors note, poverty remains stubbornly high in the United States while inequality is growing. The report’s recommendations, if enacted, would reduce both poverty and inequality. Nevertheless, the relationship between poverty and inequality has become more complicated in recent years, and it is possible to reduce inequality without doing much at all to relieve poverty. Politically, the temptation to do so is strong, which is why a report drawing attention to poverty is particularly important right now.

The missing piece here is the middle class. While inequality has worsened in recent decades, literally all the growth has occurred in the upper half of the income distribution. The gap between the rich and poor in this country has grown because the gap between the rich and the middle class has grown; the income gap between the poor and the middle class is virtually identical today to what it was 30 years ago. Thus, when you tax the affluent to pay for benefits targeted at the middle and upper-middle classes, you reduce inequality without reducing poverty. The US government currently spends hundreds of billions of dollars each year doing just that. Major tax expenditures for homeowners and for workers with health and pension benefits are the best examples, but the Child Tax Credit qualifies as well. Some of our social regulations, such as the Family and Medical Leave Act, also help the haves more than the have-nots. This trend could easily continue. Many middle-class families are experiencing greater economic insecurity and having trouble affording health insurance, saving for their own retirement or saving for their child’s education. Because political participation varies directly with income and education, and because fiscal constraints seem daunting, many elected officials will be inclined to focus on the middle class before they worry about the poor and the near-poor. Advocates who worry about poverty need to make sure that discussions about inequality do not leave out the most disadvantaged members of society. They should insist that any changes in policy address poverty and inequality.

As far as politics, the report is largely silent. The basic strategy consists of setting an ambitious goal, listing dozens of policy changes that would help achieve that goal, and arguing that the benefits of change would outweigh the costs. From Poverty to Prosperity is long on charts, tables, statistics and references to previous studies—the kind of evidence that policy experts and academics find persuasive. I’m just not sure that anyone else does. For instance, as Kent Weaver demonstrates in Ending Welfare as We Know It (Brookings, 2000), social scientific research did not have much impact on the 1996 welfare reform law. Instead, elected officials used such studies as ammunition to justify policy changes they already planned to support for personal, partisan or ideological reasons.

If part of the strategy is to attract more attention to poverty, my reading of recent history says to be careful. When issues surrounding poverty have been in the spotlight, the trend has been to retrench means-tested social programs; dramatic cuts in 1981 and 1996 are the best examples. On the other hand, when policymakers have worked a bit more behind the scenes, growth has been possible. During the 1980s and 1990s, eligibility for Medicaid and the EITC was expanded on several occasions, and EITC benefits increased substantially. In each case, there were few Congressional hearings and little media coverage. Advocates shrewdly attached their changes to much larger bills and watched while legislators debated other, more controversial provisions. Admittedly, “Be Quiet and Be Clever” may not be the most inspiring or most democratic strategy in the world. To win a truly public debate, however, the authors of this report may need to recast some of their recommendations in order to distribute benefits across a larger constituency, ranging from the poor to the middle class.

Christopher Howard is Professor of Government at the College of William and Mary and author of The Welfare State Nobody Knows: Debunking Myths About U.S. Social Policy (Princeton University Press, 2007).

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