The American Way of Poverty: How the Other Half Still Lives (43 page)

All of this gelled well with onetime candidate for Mississippi governor Bill Luckett’s emphasis on his state’s education system. Luckett had entered politics because he was disgusted with the levels of poverty in his state. He had hoped to run an administration that would focus, laser-like, on cutting the Gordian knot. And he had concluded that huge expansions in education investments represented the best route to success. Schools, he believed, had to serve as the central hub from which the spokes of reform would emanate. “We’re the only state in the South that doesn’t have state-supported pre-K. We have the most need and we don’t have pre-K. I tried to address it from the educational standpoint. We have a very good system of community
colleges, but they find the students who enroll are so far behind when they come out of high school that they just can’t achieve.” For the attorney-cum-politician, it made no sense for his state to short-change so many students year in and year out. All it did was lock in place Mississippi’s unfortunate status as poorest, and least educated, state in the union.

We also have to convince parents’ of the value of an education. A lot of parents need an education and need counseling to appreciate what they don’t have and what their children are not attaining. Without the proper education, the jobs aren’t going to materialize. It’s a many-faceted problem with many different solutions. It’s gonna take a huge collaboration of people willing to mentor, people willing to help parents get the early childhood element in place, partner with daycare centers, with Head Start; get the teachers trained, the right people in the right places. Break some of the patronage we see so much in our school systems. We have the lowest teacher pay in the country so that’s reflected in the quality we can get to teach here. It’s a big, big, problem. And we have to address it from so many areas at once. There’s not a silver bullet, not a single answer here.

Think about these problems in isolation and they appear overwhelming. Think of them as pieces of a whole, and, paradoxically, the problems become more solvable. Fixing America’s education system cannot be done simply by focusing on schools; but understand the specific challenges faced by low-income kids who go to school hungry, who lack basic medical attention, who might have never been tested for eye problems, whose parents have lost jobs or landed themselves in prison, and more realistic solutions present themselves. Understand homelessness as simply a personal catastrophe and it is difficult, if not impossible, to fathom why so many millions
of Americans lack stable housing options; but approach this crisis as the collateral damage caused by unemployment, by the systemic marketing of bad debt, by underinvestment in mental health and foster care systems, by overinvestment in criminal justice systems, and, again, new and creative solutions can be generated.

As a country, we have the political tools to break both old cycles of poverty and also the new ones produced in the wake of financial collapse. Add in a credible dose of empathy, of moral imagination and indignation, and there’s no reason that we couldn’t, to deliberately misquote Grover Norquist, shrink the problem of entrenched poverty down to a size at which it could be drowned in the bathtub.

That someone is born poor in a country as wealthy and dynamic as is the United States ought in no measure to determine that they will die poor. And yet, for millions of Americans today, their birth is indeed their destiny. Ensuring that the democratic aspiration of mobility and opportunity for all becomes a reality once more should, I believe, be one of twenty-first-century America’s top political and moral priorities.

CHAPTER THREE

BOOSTING ECONOMIC SECURITY FOR THE WORKING POOR

Walmart worker Mary Vasquez, at a union hall in a suburb of Dallas, Texas.

T
he last and in some ways most complex part of the anti-poverty puzzle is about building up security, creating firewalls against recurrent hardship once people have gotten educational qualifications and found employment, and ensuring those people have enough opportunity and economic security to stay out of poverty not just for a while but permanently. After all, it’s one thing not to be destitute. It’s something else not to be afraid that a single illness or a minor car accident; an arbitrary reduction in the hours your employer allots you one week; or a spike in food, gas, or electricity prices might not send you straight back to financial square one.

In 2011, congressional Democrats in the Progressive Caucus, led by a onetime community organizer from Tucson named Raul Grijalva, pushed a federal budget proposal that, had it been enacted, would have gone a long way toward addressing this challenge. They called it a “People’s Budget,” in a nod to the radical social reform legislation of that same name passed by the British Parliament 102 years earlier. This budget built in proposals that over ten years would have massively ramped up, to the tune of $1.7 trillion, the nation’s commitment to investing in job training, public works, national infrastructure projects, and social safety net programs. At the same time, it carefully accounted for the additional expenditures through reductions in military spending, as well as targeted tax increases, including a series of extra income tax bands topping out at 49 percent for the very wealthiest sliver of the population, higher taxes on capital gains, and higher estate taxes on large inheritances. As a result, despite the expansion of government that it envisaged, analysts with the Economic Policy Institute found that the People’s Budget wouldn’t further balloon the national debt; rather, they calculated, unlike other suggestions on the table, a budget proposal like this could actually lead to a federal budget
surplus
by the year 2021.

Grijalva, who lives with his wife, Mona, in a Spanish-speaking, working-class neighborhood of Tucson, is in his mid-sixties, with a thick salt-and-pepper goatee and a penchant for wearing jeans and T-shirts to official functions. He has lived by a motto his father used
to quote to him: “‘Don’t hang your hat where you can’t reach it.’ It meant, ‘You’re trying to act too big. Don’t treat people like that.’”

Grijalva slouched his large shoulders as he talked. He drank a lot of coffee and smoked cigarettes incessantly. “The disparity between those who have and those who are trying to have and those that don’t have is just wider and wider,” he argued.

The disparity of wealth, the disparity of income, the shrinking of wages. We find our country moving into the most stratified class distinctions that we have ever seen. And with it comes an increase in poverty. It’s a very dangerous social crisis that faces this country. Every time we cut a vital support program the poverty rate goes up and the misery quotient goes up. For us to tolerate a poverty rate and a permanent underclass of poor people in this country goes against everything that we believe we are as a nation in terms of our values.

The People’s Budget contained a series of ambitious proposals to counter these trends that, taken as a whole, would have packed a heavy punch. Perhaps that’s why it didn’t go anywhere. In a politically degraded environment, it actually proposed serious solutions to serious problems.

TAX CREDITS AND LIVING WAGES: WHY PAYING MORE IN ALABAMA IS BAD, BUT PAYING MORE AT WALMART JUST MIGHT BE GOOD FOR THE SOUL

And so, we return to a more piecemeal approach, to using existing programs more effectively, and to pushing new solutions into the forefront of policy debate.

Let’s start with the Earned Income Tax Credit.

Once employed, whether it be in newly created private sector jobs or in public works–funded green ones, whether it be in a new factory or on an old farm, many workers are at first likely to earn too little to
be able to fully support themselves. So let’s again use the Robin Hood pool of cash, garnered by taxing wealthier Americans and their financial dealings at slightly higher levels to bolster the income of these men and women and, in the process, to increase their purchasing power and boost the broader economy. This time around, let’s do so by expanding and protecting the extra income generated by the Earned Income Tax Credit.

While the “flat tax” and related proposals pushed by anti–big government conservatives sound superficially fair and in their simplicity seem inherently seductive—everyone pays the same percentage of their income, and all the complexities of a modern tax structure can be put to one side—in reality tax systems work best when they are steeply progressive. In other words, the wealthier one is, the higher percentage of one’s marginal income that goes toward taxes; the poorer one is, the smaller the percentage that goes toward taxes.

“Simplifying” the tax code by eliminating all but one or two tax brackets, as most GOP politicians advocate, makes for a snappy sound bite but is bad public policy. A flat tax or a system that significantly reduced the number of tax brackets could not accommodate the needs of the working poor or those who suffer income declines during recessions. In fact, almost by definition, a flat tax reduces the rate paid not by those at the bottom of the economy (as Mitt Romney notoriously pointed out during the 2012 election campaign, the bottom part of the population currently pays either no, or very little, federal income tax) but by those at the top—thus failing political philosopher John Rawls’s test for who benefits from significant political decisions. Similarly, a two- or three-tier system, implemented in a climate when anti-tax advocates are on the offensive, probably means poor people will pay what they used to, while the higher up the income scale one goes, the less taxes one will end up paying. And because at least a minimum level of social services and government infrastructure have to be provided for even in the most conservative of states, when income, corporate, and capital gains taxes are limited—either by state constitutional provisions, as in, say, Alabama, Mississippi,
and several other states, or by supermajority provisions for raising taxes, as in California, Oklahoma, and elsewhere—the result is that states adopt a grab-bag of other, more regressive revenue-raising measures. Among these are sales taxes, including on food, and fees paid for in equal measure by poor and rich alike.

That’s one of the main reasons why a poverty-line resident of Alabama will pay several dollars more each week when she goes to the supermarket to buy her groceries than will people elsewhere in the country. Her food purchases are being taxed. Nationally, it’s why the wealthiest Americans only pay about 5 percent of their income in state and local taxes; middle-income Americans pay more than 9 percent; and those at the bottom of the economic heap, who spend most of their income purchasing necessities that are subject to sales taxes, pay more than 10 percent. According to a 2009 analysis by the Institute on Taxation & Economic Policy, in ten states the poorest residents pay state and local taxes that, as a percentage of their income, are six times higher than that paid by the wealthiest residents.
¹

Denude the federal tax system of its remaining progressive elements, and you end up having to hike a whole bunch of fees and sales taxes disproportionately paid by poorer people. Yes, tax forms and tax collecting can and should be streamlined. But taking advantage of computer technologies to make it easier to work out how much different people owe the IRS is very different from “simplifying” the system and eliminating its progressive qualities in a way that only the already-affluent benefit from.

Far better to move in the opposite direction. For the working poor, instead of paying more money in taxes, come the end of each tax year you actually get a credit; the IRS pays you rather than the other way around.

University of Chicago economist Milton Friedman, whose supply-side economics generally won him conservative plaudits and liberal criticisms, argued in favor of a credit that, he hoped, would be palatable across the political spectrum. Conservatives who opposed “handouts” could defend it as being a “hand-up,” a benefit that promoted
its recipients’ independence rather than what they believed the welfare system did—encouraging a do-nothing dependency on the state. Go out and get a job, they could say, and even if it paid a pittance, with a form of negative income tax in place you could make it work for you. Liberals could be sold on the program as one that used government dollars in a sensibly redistributive way, helping poor workers—and helping them even more the poorer they were and the more family members they needed to support.