Penny Wise, Pound Foolish, but Punitive to the Poor and All People

ACORN Citizen Wealth Financial Justice

New Orleans  I happened to be sitting next to Washington University professor Mark Rank on a post-Katrina panel at Tulane University a decade or so ago.  In the intervening years Rank’s research into the real costs of poverty have become the benchmarks for assessment that the current political strategy for dealing with the poor is penny wise and pound foolish.  Attention to Rank’s recent work put him on the other end of the microphone recently for a Wade’s World radio interview  on our “voice of the people” stations.

Rank and his colleagues looked at the impact of childhood poverty and its short and long-term impacts.   Contrary to the conservative ideologues, they found that the cost of such poverty was staggering, not in payouts, but in lost potential and related costs.  They were able to crunch the numbers of lost income potential, criminal justice tensions, health care, and other key factors and found that the price tag for our current program of no-prevention-all-punishment is a staggering $1.3 trillion a year equally 5.4% of GDP.  Let these figures sink in.  By not spending the money on the front end to reduce poverty, nationally we lose that much money by our inaction.  In fact, if we were willing to actually try to reduce poverty, the economic benefits would be huge.  Rank found that for every single dollar spent to alleviate poverty we would save another seven dollars in national expenditures.   Adding a couple of other measures to their study, Rank and his team found that we would save as many as twelve dollars for every single buck we spent preventing poverty.

Yes, that’s the opposite of what we hear in the current drum beating in Congress by the Republican majority that wants to make accessing the social services safety net harder, not easier as Rank proves that it should.  They claim they are going to reduce the cost of social and health programs by requiring work.  As the Times’ columnist Eduardo Porter pointed out, the economic and historical record of such strategies only proves it is a political and ideological program not a bridge to self-sufficiency.  People simply stay poor or get poorer.  Porter writes that, “Before welfare reform kicked in [under President Clinton], 68% of poor families got help from the federal entitlement to the poor.  By 2016, its replacement served only 23%.”  The upshot is that there are four million more poor people than there were.

Looking at Rank’s work it is clear.  If we really want self-sufficient families contributing fully to the national economy and easing federal expenditures related to poverty, we need to stop pretending and playing politics with the poor, and start spending the dollars to reduce poverty.  Just as we find in the nation’s other wars, the war on the poor is more expensive that solving the problems beforehand.