Safety Net

Want to Lower Child Poverty? Give Families Cash.

This year marks the 20th anniversary of the “welfare reform” that slashed cash income assistance in the United States. At the time, we didn’t have much scientific evidence about how children’s futures are impacted by poverty. Now, we know better.

Poverty can impede children’s brain development and harm biological processes in ways that damage long-term health. Numerous federally supported interventions, including Head Start, children’s health insurance, and child nutrition programs are deployed to ameliorate these disadvantages.  While these programs are crucial, they don’t get to heart of the matter.

What if we tackled the problem of child poverty head-on by providing a modest amount of cash assistance to parents?

In 1997, in the mountains of Western North Carolina—a region affected by grinding rural poverty—one community did exactly that. When the Cherokee Nation built a casino on the border of its reservation, they distributed the proceeds to local tribe members—the average family received $4,000 per year. Since non-tribal communities nearby lived in similar conditions, but were not eligible for the monies, these payments created an opportunity to examine the impact of cash assistance on the children who received it.

Researchers at Duke University tracked the participants from childhood into adulthood, and found that those who received the assistance “used less alcohol and fewer drugs, were less likely to commit minor crimes, and more likely to graduate from high school.”

What’s striking about this assistance—which was given without restrictions, guidance, the stigma of welfare, or the intervention of social workers—is that it paid off large dividends on problems that seemed intractable, such as alcoholism, crime, and education outcomes.  The study also made it clear that when parents have additional resources, they spend it on key investments like education for their kids, safe housing, meeting basic needs, and preventing hardships (like a broken down vehicle) that can push a family into crisis.

These results should not come as a surprise to anyone who has followed the success of the Earned Income Tax Credit (EITC), which provides an average of $3,000 to a working family of three. Studies have found that the EITC facilitates infant development, reducing the incidence of low birth weight. They have also shown that children in families that receive larger credits have higher test scores in elementary and middle school, and are more likely to graduate from high school and complete one or more years of college. In fact, a modest $3,000 increase in annual income for children ages 0-5 is associated with a 17 percent increase in annual earnings as adults.

Given the amount of evidence we have on how much a child’s future can be impacted negatively by poverty, and how that trajectory can be shifted in a positive direction by modest additional resources for their families, it’s time to re-imagine how we ensure that all children have the opportunity to thrive.

Universal child allowances, which exist in many industrialized countries, provide a useful model. These benefits are delivered monthly to help families cover recurring expenses, which is difficult to do with the once-a-year Child or Earned Income Tax Credits. Basic monthly benefits are modest. In Australia, Canada, and Britain they range from approximately $100 to $345 per month per child (USD).

We could establish a universal child allowance in the United States, by reforming our existing Child Tax Credit. Representative Rosa DeLauro’s Young Child Tax Credit Act (co-sponsored by House Democratic Leader Nancy Pelosi and Representative Sandy Levin) would increase the child tax credit to $1,500 per year for children ages three and under, remove arcane earning thresholds that keep the credit from reaching many impoverished families, and deliver the credit monthly (or as frequently as administratively possible).

A report by the Bernard L. Schwartz Rediscovering Government Initiative at the Century Foundation (where I work) modeled a number of different options for a child allowance, and found that a $2,500 universal allowance for children under six would lift 3.2 million children out of poverty—nearly twice as many as the current Child Tax Credit—at a cost of $33.7 billion (that’s less than the U.S. spends on estate tax breaks for millionaires and billionaires). Given the societal costs related to childhood poverty—more than $500 billion annually—it is a price well-worth paying.

Is it possible to move Washington to pass and implement such a bold policy? There is reason for hope. Tax reform is sure to take center stage in the next Congress, and there should be no reduction of corporate tax rates without commensurate help to our most vulnerable residents. Moreover, there is growing support from both the left and the right (and even venture capitalists) for a universal basic income, as well as popular support for family-friendly policies like paid family leave and child care. Given the broad interest in helping both low- and middle-income families, reforming the child tax credit to maximize its reach in the fight against child poverty should be a priority for any new administration.

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Media and Politics

Mitt Romney Says He Wants To “Get Wages Up.” So Why Did He Campaign Against A Minimum Wage Increase?

Former Massachusetts Governor Mitt Romney made waves last week when he reflected on the reasons for his failed 2012 presidential bid. “I was talking about policy when it would have been more effective to talk about why I favor that policy—to get wages up,” Romney told a crowd at the Aspen Ideas Festival. “And of course our Democrat friends they wisely point out, ‘He’s talking about business all the time. He only cares about business people.’ Heck no! Business people do fine under Democrats and Republicans! It’s the middle class and the poor that need conservative principles to see rising real wages.”

First of all, this may be the most Mitt Romney-esque statement of all time (and last we checked, Mitt Romney was “not concerned about the very poor”).

Wages for low-income Americans actually decline under Republican presidents—and increase under Democrats—in part because of changes to the minimum wage.

Second, Romney’s claim that the middle class and the poor “need conservative principles to see rising real wages” flies in the face of the evidence. Researcher Larry Bartels found that income growth is not only faster, but more equal under Democratic presidents. Wages for low-income Americans actually decline under Republican presidents—and increase under Democrats—in part because of changes to the minimum wage.

In other words, “getting wages up” is a policy. It’s called the “minimum wage.” It’s been raised 22 times since 1938—by both Democratic and Republican presidents—but has remained at a meager $7.25 an hour (a poverty wage) since 2009. The reason for that? Romney’s fellow Republican Members of Congress have blocked reasonable increases of the minimum wage. In 2014, a minority of Republican Senators filibustered legislation that would have increased the wage to $10.10 an hour.

Romney, to his credit, broke with his party and came around to supporting a federal minimum wage increase two years after his campaign ended, but his records as a governor and a candidate tell a different story. As Massachusetts executive, he vetoed a minor wage hike to $7.50 an hour (the Democratic legislature eventually overrode his veto). And contrary to his most recent statements, he did talk about why he favored certain policies during his candidacy in 2012—they just didn’t involve wages.

A review of Romney’s 2012 campaign site shows no mention of the minimum wage—or wage growth at all (he did, however, have an entire page dedicated to repealing the Affordable Care Act). When pressed on his wage policy by CNBC’s Larry Kudlow, Romney responded, “Right now there’s probably not a need to raise the minimum wage. What I can tell you is had one indexed the minimum wage back to, let’s say, 1990, the minimum wage would be lower now than it actually is. Democrats make big hay of this every few years, ‘Oh, we’re going to raise the minimum wage,’ and get a lot of hoopla for it.”

Romney’s about-face is not uncommon among’ former Republican politicians. In 2014, former Minnesota Governor Tim Pawlenty said the GOP should favor “reasonable increases to the minimum wage.” But Pawlenty vetoed an attempted minimum wage increase in 2008. And when he left the governorship, Minnesota had one of the lowest minimum wages in the country. And former Pennsylvania Senator Rick Santorum—the only 2016 Republican presidential candidate to support a minimum wage increase—also opposed the legislation to raise the wage floor to $10.10 an hour.

To be clear, Romney and other former elected officials’ support for a minimum wage increase is welcome—if only their views were reflected by Republican leaders in Congress.

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Media and Politics

The Biggest Beneficiaries of Housing Subsidies? The Wealthy.

It’s almost the first of the month, and that means rent’s due. That rent or mortgage check is the single biggest expense in most Americans’ budgets, so it’s no wonder that Congress directs a ton of federal dollars to housing. But what should be surprising—and infuriating—is that a lot of this support goes to housing the wealthy, while very little goes to those who need help landing a stable home. These policies aren’t accidents—they’re bad choices that we should simply stop making.

We’re in the middle of an affordable housing crisis

The United States is in the midst of an affordable housing crisis. Nearly 1 in 3 households with a mortgage devotes more than 30 percent of their income to their home. The situation is even worse for renters—more than half of America’s 38 million rental households are shouldering a cost burden.

Some of this crisis is fallout from the Great Recession, which brought homeownership rates to historic lows. African-American and Latino households were hit particularly hard, because of predatory lending practices that targeted racially segregated communities.

Congress spends a lot on housing, mostly through tax programs

Given these crises in housing affordability and homeownership, congressional strategies to support housing deserve special scrutiny.

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Congress supports housing in two main ways: rental assistance programs and homeownership tax programs. In 2015, the price tag for federal rental assistance programs—which includes Section 8 housing vouchers, public housing, Homeless Assistance Grants, and other programs—was $51 billion. In contrast, two of the largest homeownership tax programs—the Mortgage Interest Deduction and the Property Tax Deduction—cost $90 billion in 2015. That’s nearly double the amount spent on public benefit housing programs.

The biggest beneficiary of the billions spent on homeownership tax programs? The wealthy.

There’s nothing wrong with providing support through the tax code—benefits are benefits, whether you get them from your local HUD office or on your tax return.  The important question is: who benefits? Rental assistance programs are designed to help those who will benefit most—primarily individuals and families with less income and less stable housing. But this isn’t the how Congress designed homeownership tax programs. All told, households making over $100,000 a year received nearly 90 percent of the $90 billion spent on the two tax programs discussed above. Households making less than $50,000 got a little more than 1 percent of those benefits.

It gets uglier. There are nearly eight million low-income homeowners that struggle to pay for housing from month to month. On average, low-income households get about eight cents per month from these two homeownership tax programs. Eight cents. There are also about four million middle-income households paying more than 30 percent of their income on housing. The average monthly benefit from these tax programs for middle-income earners? Twelve bucks. Don’t spend it all in one place.

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In contrast, the top 0.1 percent of earners—folks with an average annual income of more than $9 million—get an average of $1,236 per month (nearly $15,000 per year) from just these two homeownership tax programs. That federal benefit is much more than the typical cost of rent in most American cities, and it’s going to wealthy households who really don’t need help keeping a roof over their heads.

Why these tax programs are so upside down

So why are these tax programs so out of whack? It’s no accident—it’s how the programs are designed. Most low-income families don’t even qualify because they don’t itemize deductions. Even among those that do qualify, every dollar they deduct is worth less than a dollar that a high-income earner deducts. As nonsensical as it sounds, the value of homeownership tax support goes up as your income goes up. In addition, higher-income households get bigger deductions when they buy bigger houses (or bigger yachts, which qualify for the same tax benefits).

If we ran the Food Stamp (SNAP) program the same way we run our housing tax programs, low-income parents buying a simple, nutritious meal for their kids would get somewhere around zero dollars in federal support. Millionaires charging their MasterCard with a $5,000 FleurBurger, seared foie gras, truffle sauce, and bottle of 1995 Château Petrus would get a few thousand dollars in federal benefits.

Clearly, this would be a crazy way to run a social program—but this really is how we structure billions in support for wealthy homeowners through the tax code. Even worse, study after study shows that the Mortgage Interest Deduction doesn’t even succeed in boosting homeownership.

How we can get away from this upside-down system

It’s not hard to think up a better way to spend $90 billion. That’s the focus of the Turn it Right-Side Up campaign, which zeroes in on reforming unfair tax programs like these homeownership boondoggles. We could redirect this spending to help lower-income Americans save for a down payment, or use some of these funds to create a first-time homebuyer credit, or create a simple refundable credit for all homeowners. Or all of the above.

In other words, there are options that don’t include flushing billions in tax subsidies down a golden toilet in a millionaire’s yacht (which he claims as a second home, for the tax break). Next time someone argues that we can’t afford to fix widespread housing insecurity, our response should be that we can’t afford to keep spending so much to house the wealthy. Let’s make a different choice—let’s start using these homeownership tax programs to actually solve the affordable housing crisis.

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Culture

Dear San Francisco Journalists: If You Want to Help Homeless People, Just Ask Us

Today, media organizations throughout the Bay Area are devoting a day of coverage to homelessness in San Francisco.  Aside from the fact that the project seems originally motivated by an editor’s view of homeless people as a nuisance, there is a deeper issue that makes me doubt how authentic and effective the reporting will be.

The fact is that people generally fail to understand homelessness because they don’t ask homeless people what happened to them—how it is that they ended up in the situation they are in and what their needs are.

I saw the consequences of this failure recently in Ocean County, NJ, where I now live in subsidized housing.  The Jon Bon Jovi (JBJ) Soul Foundation announced it would open a JBJ Soul Kitchen in the county. They will provide quality meals at whatever price a person can afford, or people can do some volunteer work in the café if they can’t afford to pay. If people prove reliable as volunteers they can then enroll in a training program that will teach them skills in the culinary arts and other professions.

I don’t want to minimize the importance of access to good meals when it comes to addressing food insecurity, or underestimate the value of good job training that provides marketable skills.   However, a person living in a tent in the woods—and we have more than 600 people in Ocean County living without permanent indoor shelter—does not even have access to a toilet, shower, or a place to wash clothes. What the chronically homeless in Ocean County need, most immediately and urgently, is secure housing.

The money raised to open the JBJ Soul Kitchen restaurant would have been better spent on building a safe, stable, and affordable housing facility for homeless persons in the community.  If the founders had spoken to community members who have experienced homelessness, we would have made that clear.

This communication gap is widespread.  As someone who has experienced homelessness, and spent more than a few nights in hospital emergency rooms because I didn’t know where else to go, I can tell you that when you try to explain to nurses and doctors that you are there because you fear that the continuous uncertainty and anxiety you are enduring might drive you mad, they generally react by giving you a sedative, letting you sleep, and then sending you on your way with breakfast and a few anti-anxiety pills.

I don’t recall anyone—and I mean anyone—ever asking me about my life, and what happened to me that brought me to this moment.

So I was delighted to see a sign of change recently when a professor at New Jersey State College asked me to speak to a graduating class of nursing students so that they could better understand the treatment needs of the increasing number of Americans experiencing homelessness.

Trauma gets resolved by confronting the events that caused it.

I told the class that I originally started thinking about the importance of simply asking people what they are experiencing after reading Healing Neen by Tonier Cain.  Cain experienced severe and extensive abuse during her life: abandonment, rape, physical and emotional violence, and numerous incarcerations. At every turn she was treated in various behavioral modification programs with de rigueur psycho-active medications.  But according to Cain, she did not really begin to heal until someone—a trauma therapist—simply asked, “What happened to you, girl?”

So this is the point I tried to convey to the students: if a person comes to you who has experienced prolonged periods of time without housing, don’t treat their symptoms without asking what happened. Trauma gets resolved by confronting the events that caused it. That takes time and artfulness.

Whether we want to understand the crisis of homelessness in the Bay Area or Ocean County, or a healthcare professional needs to treat a vulnerable patient, it starts with a simple question: what happened?

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Safety Net

House Rep. Mark Pocan on Poverty and What It’s Like to Share a County with Paul Ryan

Earlier this month, I traveled to House Speaker Paul Ryan’s district in Wisconsin to talk to his constituents about their economic struggles and ideas for solutions.  This district has been hit particularly hard by the shipping of middle class jobs overseas, recessions, and the deterioration of labor protections.

While I was there, I also had the opportunity to speak with Representative Mark Pocan (D-WI), First Vice Chair of the Congressional Progressive Caucus.  Rep. Pocan’s district borders on the Speaker’s hometown of Janesville, and the two congressmen share representation of Rock County as well.

Despite seeing the same conditions on the ground, and their constituents having similar experiences in our economy, the congressmen’s ideas about how to reduce poverty in their state and throughout America could not be more different.

Here is my conversation with Rep. Pocan:

Greg Kaufmann: Congressman, your district shares Rock County with House Speaker Paul Ryan’s district.  Can you tell us about the changes you have seen in terms of people’s economic struggles in the area in recent years?

Rep. Mark Pocan: Yes, I share Rock County with Paul, so I have the western side, and he has the eastern side.  I also grew up in Kenosha, which is in his district, so I know the area well.  We used to have a big auto plant, American Motors, for many, many years.  Then it went away.  And we went through some of the difficulties that the Speaker’s hometown of Janesville—which is in Rock County—has more recently gone through with GM leaving.

A couple of things that really stand out.  In Janesville—having an auto plant where a lot of people had good family-supporting wages, and then having that industry and the industries that fed into it really impacted, a lot of people are out of work who had jobs that had good salaries.

Also, poverty programs in Rock County are pretty significant in helping people either transition because of a loss of a major employer, or because a number of employers over the years have left and made life more difficult.

So this is certainly a district that you would not describe as affluent.  In fact, just the opposite.  It’s had a lot of job and manufacturing industry loss in the last 20 years and that’s impacted good family-supporting wages.

GK: From a public policy perspective, when you think of the needs in the area and the way we combat poverty—what comes to mind?

MP: I am on the House Budget Committee.  And when Paul was the Chair last session, he would often put a lot of ideas around poverty out there, which largely were around block grants.  These days they now call them “opportunity granting,” but the bottom line is a lot of these ideas are really stealth ways to cut programs that assist people in poverty.

Also, if you block grant all these effective safety net programs—like housing, food stamps, and Medicaid—and just give a lump sum of money to states, I don’t have a high level of confidence that the right thing will happen for people who are living in poverty.

Take Wisconsin, for example. Governor Scott Walker hasn’t accepted federal monies for a high speed rail program—in fact, he turned back over $800 million dollars in federal monies before he even got sworn in, including $150 million for light rail even though we have the fourth worst roads in the nation and a lack of adequate funding for transit.  He was trying to make a point about not taking federal dollars.  So those are some of the bad decisions we’ve seen in just one state, much less bad decisions you could see in other states. We just can’t rely on all of these governors to continue the level of [federal] programs that are there now.  So conservatives say block granting is about giving flexibility to local governments to most strategically use the money, but the reality is people could very likely just have less money and less help during a difficult time in their lives as they’re trying to find work.

GK: I’m sure you’ve had that conversation plenty of times with Speaker Ryan. What do [conservatives] say to the fact that the TANF block grant [has gone] from over two-thirds of families with children in poverty getting assistance, to less than one-fourth getting assistance?

They don’t actually address the facts.
– Rep. Mark Pocan

MP: Well, they just keep focusing on the flexibility to allow states and local government to best direct money.  They know better than the federal government.  It’s really more of a rhetorical exchange.  They don’t actually address the facts.

GK: In contrast to focusing on block grants as conservatives prefer, what do you think a good anti-poverty proposal would do?

MP: I think most people would argue that the best poverty program is a job and anything we can do to help people find that job we should do. That means helping people acquire the skills to find a job with a family-supporting wage, so their families have the opportunity to live the American dream.  It involves things like job training, and addressing childcare needs, investing in early childhood education, and making sure people can afford higher education.   And of course increasing wages, including the minimum wage.  Right now people are taking second jobs to try to get by, and that’s taking away from spending time with their families.  So there’s a quality of life difference that definitely exists when you don’t have that stronger wage.

I’ve also always been a big fan of apprenticeship programs.  I think Germany has about a tenfold use of apprenticeship-type programs per capita compared to us.  There’s are a lot of things like that we can do to help people get on-the-job training that can turn into a good paying job, or help people overcome barriers—people who literally are going out there every single day trying to find something and can’t.  But, you know, just simply providing less resources for people in poverty and putting artificial work requirements—that actually are barriers to the time and effort needed to find a good job—are going to be counterproductive compared to things that actually help people.

GK: Janesville and Rock County actually seem like a case study in why Speaker Ryan and other conservatives’ views on poverty are entirely wrong. It’s clear that they’ve had auto plants shutting down, offshoring of jobs—that is not the fault of workers who are struggling in poverty.  Do you think Speaker Ryan is blind to this reality, or are his proposals on poverty purely ideological?

MP: Paul is a neocon ideologue, and this is how they think you solve it, based on their papers and all the rest.  But the fact is Janesville is the antithesis of their kind of argument that poverty is about someone being too lazy to work, or someone [not being] out there trying to find a job.  I would argue too many of my colleagues are millionaires and a bit too removed from poverty—that they just don’t understand the reality of the on-the-ground experience.  In fact, too often it seems like until a Republican has something happen to a family member of theirs, it’s not real.  Until they find out they have a kid who’s gay, or a kid who gets addicted to heroin, it’s not an issue, and then as soon as it is a personal issue for them, then suddenly they care.  And unfortunately, we don’t have a lot of people in Congress who are directly affected by poverty.

This interview was edited for length.

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