Poverty in the United States

The question of poverty in the US is closely related to other issues, notably the level of unemployment, the level of wages, and the extreme disparities in income. But today I'll focus on poverty.

Having seen the poverty level cut in half in the 1960s under President Lyndon Johnson's War on Poverty, ending the decade at 11.1 percent of the population--had I pushed the fast-forward button and landed in the US in 2004 and found that the poverty rate was at 12.7 percent (and had fluctuated between 11 and 15 percent during the last 35 years) , I would have been in shocked disbelief. What happened? Johnson showed us how to cut the level of poverty. Are we in a recession? No, would be the answer, the economy is strong and the Dow Jones Industrial Average has broken a record in each of the last few days.

Poverty does not even appear as one of the most important issues the country is facing today. Although there was a flurry of attention after Hurricane Katrina made us aware that 28 percent of the population in New Orleans was living in poverty and that that had been the reason that those trapped in the water had been unable to leave the city, the issue has again disappeared from the national dialogue.

And what is perhaps the saddest of all, around 20 percent of children under the age of six are living in poverty. What is happening to their ability to learn in those crucial first years when basic services are being denied them? Children are our future.

It is a national disgrace that, in the richest country in the history of the world, some 12 percent of the people are living in poverty, and, worse, it is a national tragedy. Following are some of the things I think we might look at to help to reduce the poverty level.

• Fiscal policy. This refers to the level and structure of federal taxes and expenditures. During World War II it was demonstrated that these factors could drop the level of unemployment to less than 2 percent, and following the war fiscal policy was used deliberately to keep the level of income reasonably high. Now, however, fiscal policy seems to have fallen out of favor. Both the level and the structure of taxing and spending are seriously amiss. Taxes for the highest brackets of income are being continuously reduced, while taxes for the poor and middle incomes are being increased, mostly at the state and local levels because federal money for mandated programs is being cut. What should we do about this? We should make the structure of federal taxation progressive and spend enough on lower income people to stimulate the economy to full employment, say, less than 4 percent. This did happen during the Clinton administration.
• Monetary policy. This determines the rate of interest and the quantity of money and is the other major tool traditionally used to keep the economy operating more or less acceptably. The law requires monetary policy to be employed to fight inflation and to keep the economy at full employment. For some years the Federal Reserve has used its tools, fairly successfully, to control inflation. But it seems to pay no mind to the level of unemloyment. The Fed should return to concern about both inflation and unemployment.
  
• Wages. The minimum wage, now at $5.15 an hour at the national level, has not been increased since 1997, and this has become a major cause of workers falling below the poverty level.
• Health care. Lack of health insurance has become a major factor causing families to fall below the poverty level.
• Pensions. The loss of pensionsl has become a second cause of poverty, particularly as major corporations reward CEOs excessively even while falling into bankruptcy and/or problems with the law and thus depriving workers of jobs and pensions.
• Help for families. The poverty rate for both women and children is higher than for the rest of the population. The provision of day care for young children, elder care, maternity and paternity leaves, and other help for families would help to alleviate poverty.
• Education. Lowering tuition, lowering the rate of interest on student loans, more income-related grants for students, and the like would help students to attain the highest possible level of education. In fact, why not extend tuition help to all, as was done with the so-called G.I. Bill after World War II? That provided a major boost to the economy. The US is falling behind other developed countries in providing education to its citizens.
• Help for workers. As union membership has fallen sharply and as it is made less available by governments and businesses, both low wages and a longer workweek have caused the level of poverty to increase. As jobs are being allowed to go overseas, the least that could be done for workers would be to provide retraining, relocation, and unemployment compensation and/or wage insurance for those whose jobs have disappeared, not to mention pursuing policies of full employment.