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A simple poverty test

There's a simple way to tell whether the Republican Party's newfound commitment to fighting poverty is more than rhetoric: Follow the money.

Follow the trail in the party's recent budgets and what you find, hidden between appendix tables, are deep cuts to programs for the poor. That's the inevitable consequence of Republican commitments to favored constituencies. The party promised its antitax wing no tax increases and lower tax rates. It promised older voters that Medicare and Social Security would not change for those over age 55. It promised defense hawks that sequestration cuts to military spending would be reversed. And it promised its tea party allies that it would cut trillions from government spending and balance the federal budget.

The only way to square all those promises is through draconian cuts to programs for the poor. The liberal Center on Budget and Policy Priorities estimates that programs for lower-income Americans would account for two-thirds of proposed Republican budget savings. The Kaiser Family Foundation estimates that as many as 37 million Americans would lose access to Medicaid, which was targeted for hundreds of billions in cuts.

That's an agenda that would result in more poverty and deprivation, not less. Yet all the Republicans now talking about poverty — Sens. Marco Rubio (Fla.), Mike Lee (Utah) and Rand Paul (Ky.) and Rep. Paul Ryan (Wis.) — either voted for or, in Ryan's case, authored these cuts.

The notion that the main problem of the poor and jobless is their generous indulgence by the federal government is apparently too seductive to resist. Senate Republicans recently filibustered an extension of emergency benefits to the long-term unemployed. Some have argued that the existence of unemployment benefits is itself the problem.

"When you allow people to be on unemployment insurance for 99 weeks, you're causing them to become part of this perpetual unemployed group in our economy," Paul said.

This is a correlation/causation mistake of staggering size and consequence. In effect, Paul sees that people who take medicine are more likely to die and concludes that we need to take away their medicine. When there are three job seekers for every open position, it's pretty clear that a lack of jobs, rather than lack of interest in getting jobs, is the core problem for the long-term unemployed.

Some conservatives are beginning to develop more realistic approaches to joblessness and poverty. In the latest issue of the journal National Affairs, Michael Strain, a scholar at the conservative American Enterprise Institute, lays out a compelling agenda for any Republican politician brave enough to pick it up.

Strain's article acknowledges there is a jobs emergency. It pulls together almost every job-creating proposal Washington policymakers have thought of — as well as a few they haven't — and suggests implementing them simultaneously.

Some of Strain's ideas will thrill conservatives. He calls for policies that would reduce "oppressive licensing requirements" at all levels of government, reform the disability insurance system so it rewards work, facilitate immigration by highly skilled foreigners and expand union-busting right-to-work laws to more states.

He also proposes reforming the unemployment insurance system so it gives workers a cash bonus when they find a job, paying the long-term unemployed to move to regions with tighter labor markets, subsidizing employers to enable them to pay the long-term unemployed less than the minimum wage (the government would make up the difference), and massively investing in infrastructure.

"What if we bought a whole bunch of buses and had them run express from low-income communities that are in exurbs into commercial centers?" he asked me during an interview. "We know mobility is inversely correlated to the degree of sprawl in a city. I think a simple explanation is that if you have people living two hours away from the jobs, that the commute is killing them and their economic potential. If you can cut that two-hour commute down to an hour, all of a sudden they can apply for a lot more jobs."

That's not the kind of idea you normally hear from Republicans. But Strain's point is that these aren't normal times — and Republicans have to stop acting as if they are.

"I don't think traditional solutions that people on the right typically turn to would be particularly effective here," he said. "Lower taxes are important for long-run growth. Less debt is important for long-run growth. But cutting the top marginal income tax rate this year or doing draconian spending cuts to balance the budget won't be particularly effective in getting the unemployed back to work."

Strain's article doesn't offer much in the way of budget estimates. So I asked him point-blank whether his proposals would require spending more money.

"Yes," he said.

Elected Republicans who want to do something serious about poverty are going to need to get comfortable with that answer. In recent years, Republicans have backed themselves into a corner; virtually everything they've proposed entails deep cuts to programs for the poor. They've tried to escape this trap — and allegations by opponents that they are indifferent to suffering — by arguing that various reforms, such as turning federal programs over to the states, will unleash such miraculous efficiencies that meager budgets will stretch to cover existing needs.

They won't.

The model they cite is welfare reform, which was enacted in 1996 during the highest-growth economy since the 1960s. Welfare cuts didn't make the fight against poverty magically more efficient; they simply made it stingier. In 1996, 68 of 100 families living in poverty with children received welfare benefits. In 2010, two years after the worst economic shock since the Great Depression, only 27 of 100 such families were receiving benefits. The assistance once provided by welfare is now supplied by tax credits such as the earned income tax credit, which the government has vastly expanded.

Taking poverty and joblessness seriously doesn't mean the government needs to spend more forever. But it does mean the government needs to spend more now — when poor people are squeezed by high unemployment and low growth. That spending could be reallocated from other programs, or it could be offset by future tax increases or spending cuts. But there is no getting around it: Any policy that sharply reduces government spending to alleviate poverty is a policy that will lead to more poverty.

© 2014 Washington Post

A simple poverty test 01/23/14 [Last modified: Friday, January 24, 2014 5:06pm]
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