This is the first of a two-part series on poverty. The article will examine why despite trillions pumped into anti-poverty programs and outspoken support from the Left has failed to end poverty in any meaningful way. The second article will examine conservative’s weaknesses with the urban poor and how they can fix their issues while helping the poor succeed.
Liberal attempts to end poverty date back to the days of FDR. FDR, the founder of the modern left, initiated the New Deal. At the time it was meant to simply employ unemployed men. But he also helped create Social Security citing the success of Germany’s program. He also shepherded through a law mandating employers must equal their employees payroll tax deductions (upheld by the SCOTUS in 1943). At the time FDR made clear Social Security was not to be used as part of the permanent social safety net. But today, more and more Americans rely on their Social Security for just that.
Following up FDR was another liberal icon, JFK. But unlike FDR, JFK had dueling priorities. JFK wanted to cut taxes. During FDR and WWII tax rates had skyrocketed to a high of 94% in 1945 to those making $200,000. A family making $50,00 paid a whopping 78% income tax rate. By the time JFK entered office the rate was 91% on those making $400,000. But JFK also wanted to fight poverty. It was a major pitch during his 1960 campaign against Nixon. Due to the economic boom of the time he was able to indulge both. Kennedy cut taxes but he also indulged in a liberal wish list of programs including increasing the minimum wage, expanding unemployment benefits, boosting Social Security benefits to encourage workers to retire earlier and spending more for highway construction. This gave rise to the “War on Poverty.” LBJ renamed it the “Great Society.”
Historians can debate whether Kennedy and LBJ would have started the “Great Society” if the economy was not dramatically improving but the result is the same. The “War on Poverty” in America has resulted in a bloated administrative system, trillions in spending and deficits (under both parties) and minimal results.
This might be a cynical, conservative analysis but the results speak for themselves. According to Politifact.com the poverty rate in 1965 was 17.3%. A report from the Stanford Center on Poverty found poverty at 15% in 2012. Choosing these two years for comparison is not random. In 1965 the economy was starting to slow while in 2012 the economy was just starting to grow (from 08 recession). The Stanford report credits the poverty rate holding steady since the 2009 recession due to the social safety net. However, the goal of a safety net is to aid people until they no longer need help. Instead, the safety net is endlessly propping up those in poverty but not lifting them out of it. This gave rise to a new kind of Democrat in the early 90’s.
Liberals held significant sway in the Democratic Party between 1968 and 1992. Unfortunately, this did not help the party win elections. 68-92 were the golden years of the GOP where they dominated national elections (Nixon, Reagan, HW). Only in 92, when liberals in the party had been weakened by so many defeats did a little known Arkansas Governor, Bill Clinton, run on a centrist platform in 92 and again in 96. Under Clinton and his centrism the Left has seen its greatest success at combating poverty (working with a GOP Congress).
In 1996, Clinton, facing a tough reelection and looking to woo moderate Republicans and Independents, aided by a GOP controlled Congress, implemented welfare program coupled with new work training programs. The results were stunning. According to a 2003 Heritage Foundation report, overall poverty dropped dramatically, hunger among children was cut in half, welfare caseloads dropped almost 50% and the percentage of out-of-wedlock births stalled.
Clinton did not ignore liberal concerns on welfare reform. He preserved Medicaid coverage, protect food stamp standards and strengthened day care support for welfare recipients. Despite this most Congressional Democrats, including moderates balked. A solid majority in the House opposed the bill (30 voted yes). Of the 24 no votes in the Senate, 23 came from Democrats. Their greatest criticism, the requirement that the head of welfare recipient households must find work in two years or see benefits terminated.
Enter George Bush. Presiding over a Clinton recession Bush’s goals of combating poverty through lower tax rates were stymied until 2003. That year, with a Republican controlled Senate the Jobs and Growth Tax Relief Reconciliation Act of 2003 passed. The Left remains fixated on the fact the Bush tax cuts benefited the rich but they also lowered rates for the poor. Bush also implemented No Child Left Behind, aimed at combating public school weakness and Medicaid Part D (benefits the elderly).
It did not go unnoticed by the Left income inequality grew dramatically under Clinton and Bush. True to partisan form Democrats put all the onus on Bush and leave Clinton’s culpability out of the discussion. Obama’s win in 2008 signaled the ascendancy of liberals within the modern Democratic Party and an increased emphasis on combating this trend.
Obama’s success in this regard is lacking. Ardent supporters of the President will argue it is due to a recalcitrant Congress and a worried public but PPACA and Dodd-Frank only threw more money into the coffers of wealthy bank and health insurance CEOs. The Stimulus, a smaller and modern New Deal type work program, has largely been a failure (saved or created). Obama’s education initiative, Race to the Top, has done little but re-anger states over No Child Left Behind standards (punish instead of incentivize).
This little history lesson should highlight one thing; liberal attempts to end poverty have largely failed. At best they have merely maintained the status quo from the 60’s.
If we follow the liberal argument to its conclusion only massive spending, higher taxes and increasingly stringent regulation can end poverty. While most, if not all, Democrats agree with this view to varied degrees, it would require the party to do things they could never electorally embrace nor survive.
First-off, considering trillions have and continue to be spent simply to hold poverty steady, a massive new infusion of cash is needed to start bringing poverty down. This would require Democrats to back off their 2012 legislation making the Bush tax cuts permanent and substantially increase all marginal tax rates. Not only would this require those making $400K or above to pay more but it would easily require the middle class to pay more in taxes. The middle class is already shrinking and requiring them to pay more would accelerate this trend and drive them into the mostly anti-tax GOP arms. Also, the modern Democratic base is made up of wealthy suburbanites and low-income individuals. The wealthy (a subjective term) would need to bankroll a substantial chunk of this new funding and many left leaning suburbanites might finally find it in their best interests to side with the GOP (if only in the short term).
Second, the party would have to confront their old allies, unions. Public sector unions are notorious for fighting school reform and paying more to make state pension and healthcare systems solvent. Poverty is inescapably linked to education and thus reforming education is essential. A few Democrats have taken up the challenge but the darlings of the party (Elizabeth Warren most notably) have said little about this facet of poverty.
Lastly, the Democratic party would have to ultimately ditch their dual mindset and go all in one idea. The centrist idea of tolerable tax rates would have to be ditched. Since JFK, no Democrat, not even Obama, has fully embraced the progressive movement’s idea that higher and higher taxes can end poverty. The President embraces higher taxes on the wealthy but Joe Biden’s last-minute Bush tax cut deal was made for an electoral reason; preserve the Democrats strength among those making around $250K (pay no new taxes) and the middle class.
Since JFK the party has been reasonably able to balance these two ideas. Even under Obama, arguably the most liberal President since Johnson, Democrats have balanced this trend. But the newest crop of leaders in the Democratic Party may finally ditch this idea and go all in on ideology.
The idea of higher taxes to pay for new programs has already caused clashes within the party at the state level. NYC Mayor Bill de Blasio, another darling of progressives, proposed a new tax on those making $500K or above in the city. The city already has a millionaires tax so this would have been millionaires tax 2.0. New York State Mayor Andrew Cuomo, personifying the dual personality of most Democrats, killed the idea but promised to fund pre-K some other way.
Democrats have been able to reconcile these two ideas; tolerable tax rates and more funding for poverty programs until now. But the new ideological movement engulfing the party is driving them down the route the GOP is going; ideological rigidity. So far Republicans have been unable to capitalize on this growing weakness within the Democratic Party. But a new crop of conservative leaders in the party are promoting new ideas for reform and finding bipartisan solutions to end poverty. If they communicate these ideas effectively to all voters and point out the failure of the progressive vision the newest crop of Democratic leaders advocate they could revitalize their party.
Addendum: Considering GOP struggles and Democrats strength among those in poverty (cuts across racial, geographic and educational strata) my second post will focus a little less on policy and more on the electoral implications of GOP ideas.