The American Way of Poverty: How the Other Half Still Lives (48 page)

Whatever the exact date of insolvency, on current trajectories all agree that at some point soon either benefits will have to be cut, or more money will have to be injected into the fund. Held hostage to an unbending anti-tax rhetoric, the program’s stability looks increasingly precarious.

Were Medicare’s funding model to collapse, that by itself would be calamitous for tens of millions of elderly Americans. But compounding the crisis—adding to Hacker’s Great Risk Shift—is the fact that the Social Security trust fund is in almost as unhappy circumstances.
In 2012, the fund’s trustees concluded that it was likely to head into insolvency in 2033, just a little shy of a century after it had been created. From 2033 on, they warned, absent new money being injected in, Social Security would only be able to pay out about seventy-five cents on the dollar.
²²

The point needs to be made once more: These are artificial crises, caused not by any impending bankruptcy on a national scale but by an insane reluctance to tax those individuals and companies at the top of the economy enough to sustain the civic structures upon which the vast majority of the population either already rely or one day will. They are crises triggered by a collapse in the very notion of a common good.

Social Security and Medicare were carefully designed to build up huge financial reserves. They were, in a sense, a vast pool of communal wealth, into which everyone contributed, from which everybody could gain. Had we tended these funds well, they ought never to have come close to running dry. Instead, we have treated them like the huge Ogallala aquifer, deep under the country’s plains states: as things so big, so inexhaustible, that we could tap them with impunity. And now, just like the Ogallala aquifer, a reserve of ground-water built up over millions of years, is rapidly running dry—so too are these great financial commons.

There is still time to reverse this risk shift, but we need to do so soon. Unlike the Ogallala, into which it is impossible to pump large amounts of new freshwater reserves, the Social Security and Medicare trust funds
can
still be replenished.

In fact, given the amount of ink that has been spilled on the enormity of this problem, it turns out that the solutions, at least for Social Security, are actually fairly simple. We could, for example, modestly raise the Social Security tax burden on high earners. Simply opening up income above a quarter of a million dollars to the Social Security
tax would, many analysts believe, keep the system solvent almost into the twenty-second century.
²³
It’s as close to a painless fix as one could hope for. Or we could very modestly increase the Social Security tax imposed on workers at all income levels. Alternatively, we could perhaps gradually increase the retirement age to meet the realities of our newly expanded life expectancies. For those without higher education, who tend to earn less over a lifetime than do their bettereducated peers, we could shore up Social Security with the additional moneys detailed in my EOF proposal. And if the political will isn’t there to raise the Social Security tax on the most affluent, or to implement something akin to the EOF, at the very least we could have a calm national conversation as to whether it makes sense to reduce the Social Security payments sent out each month to wealthy seniors so as to preserve benefits for the rest of the population.

While Medicare presents a somewhat thornier set of problems, given the huge advances in medical technology and the expenses accompanying the uses of these new diagnostic procedures, medicines, surgeries, and so on, in essence the same set of solutions holds. Because this is a program that benefits virtually
all
elderly Americans, it ought not to be impossible to convince American workers that they have a self-interest in paying slightly higher payroll taxes to ensure that when they retire, they have healthcare available to them.
²⁴
Framing that issue in a way sellable to voters is a
political
challenge more than an economic one. Nor ought it to be beyond our collective capacities to work out a way to rein in costs—after all, most advanced democracies have found a way to adequately deliver quality healthcare to their elderly populations.

That there is even the possibility of Medicare heading toward insolvency, or the $2.6
trillion
Social Security reserve fund being depleted over a twenty-year period, is testament not to the bankruptcy of the funds themselves, but to the straitjacket that anti-tax politics have wrestled the country into in recent years.

When it comes to how we protect the economic security of aging Americans, we need a Social Security system with protected, and
properly funded, benefits and cost-of-living adjustments. We need more portable retirement accounts to fully meet the needs of a mobile, flexible workforce. Given the number of self-employed workers, we need something like the 401(k) model to be extended to these workers, perhaps with the government serving to meet matching fund commitments in lieu of the employer. And, above all, we need to protect and expand the web of defined benefit pensions rather than run roughshod over the few that remain. Yes, these changes would come with a cost attached, but if done smartly, perhaps in tandem with raising the retirement age to meet twenty-first century life expectancies, they would be affordable. And, to repeat a point I have made elsewhere in this book, to not act would, in the long run, be even more costly.

PUTTING DEPOSITS IN THE EMPATHY BANK

To sum all of this up, if we want to break long-term, ingrained, vicious cycles of poverty, if we want to create a society in which opportunity is widely dispersed and economic dignity is the norm for the vast majority of Americans from the time they are born until the time they die, we need far more policy deposits in what I’ll call an empathy bank. We need a societal commitment to share the pain during hard times and a willingness to think through the long-term consequences on one’s community of not so doing. It’s not too dissimilar from a strategy that Germany embraced a few years back, when it began increasing the unemployment insurance contributions it required of companies that laid off workers during recessions before first seeing if they could trim their costs while keeping their workforce intact by reducing the number of hours worked by
all
employees.

The central idea is simple: As a community, we strengthen ourselves when we find ways to protect our most vulnerable. When we work out mechanisms to boost the wages of earners trapped at the bottom of the economy. When we think up creative solutions to
keep poor people housed and with access to healthcare. We bolster the country when we invest in educational infrastructure in a way that makes it possible for poorer children to have as much opportunity in life as their more affluent peers, and when we make sure that pension systems are strong enough to keep the elderly out of poverty. We enrich ourselves as a society when we reinvigorate our sense of the common good.

As our journey comes to a close, let’s return, briefly, to college lecturer Jim Miller, and his walk through California’s Central Valley to highlight the hardships faced by so many of the state’s residents and the cost to the social fabric of letting basic public services crumble.

“The march forced you to slow down; the act of walking itself forced you to come face to face with people,” he recalled, months after he had returned home to his wife and son in San Diego.

We were in a small town called Planada, and we pulled into town, a tiny town mostly of farm workers. The school was so devastated; the principal came out and told us that 80 percent of the kids who were in his school were on some kind of state aid. They said, “Come onto campus,” and so we drove the truck on. The entire elementary school emptied out and joined us, came out cheering. This one guy came out with tears in his eyes. He’d marched with Chavez. They impromptu scheduled a community dinner. The parents came. They did a dance, fed us, and we told our stories and listened to their stories about what was happening in their communities. Dozens of small stories like that, day after day. They weave together into a mosaic. How is it that the lives of people who frequently don’t even think of each other are connected in some way? How are most people’s interests interconnected?

CODA

ATTENTION MUST BE PAID

New Mexico colonias.

I
n a renovated Victorian-era Unitarian church just north of Detroit’s downtown, a young African American community organizer named Charity Hicks held forth on the problems facing her city.

Hicks had arrived in town in 2002, she said, to work with a team that had been awarded a National Institutes of Health grant to study the impact of deep poverty on the lives of the Motor City’s residents. She had encountered what she called a below-the-radar economy, based around barter, casual labor, and groups of marginal people moving from one part of the city to the next in search of scraps: scrap metal, scavenged recyclables, the leftovers of a decayed industrial behemoth. Since the 1960s, she argued, neither industry nor government had invested in what she called “The Commons.”

Education was a ramshackle, haphazard affair at best—half of the people Focus: HOPE tested in its workforce development program couldn’t survive a ninth-grade math class or tenth-grade reading tests, Will Jones had announced during our meeting. Unemployment was endemic. Crime rates were bad enough that for some residents it could cost upward of $5,000 annually to insure a car in the city—but public transport was so dilapidated that not having a car often meant having no way to get to what little work there was available. To cap off the indignity, tens of thousands of impoverished residents were living in homes without running water and without electricity. Officially, there were only about 12,000 homeless people living in Detroit. Unofficially, if you factored in all the people squatting in abandoned buildings, Hicks estimated, you had to multiply that number at least four-fold. Meanwhile, tens of thousands of these abandoned properties had recently been put up for sale by the Wayne County treasurer.

Charity was a community organizer and advocate for environmental justice. But that didn’t pay the bills. When I met her, she had been unemployed for four years, had run out of cash, and had recently lost her home to foreclosure. She called hers “the downsized generation.” In Detroit, she explained, thousands of outcast residents had almost become a “sovereign” people: too poor to survive in the economic mainstream, and too forgotten by government to have
their lives ameliorated by social programs. For food, they farmed their subsistence plots. For shelter, they slept wherever empty buildings beckoned. They neither paid taxes nor received assistance. They expected nothing from the state, and they weren’t disappointed.

“The only people who can solve poor people’s problems,” Hicks had concluded, “is poor people. We have to develop agency and participation—and think of ourselves not as consumers but as human beings. How do we flip the frames, to see everybody as important, as an asset?”