Poverty in America, Why So Bad, and What to Do About It

New Orleans      The answer to the perpetually plaguing question of why we have such intractable poverty in the United States, arguably the richest country in the world, is always perplexing.  Every comparison of the US with other economically developed countries finds us at or near the bottom.  Recently the conservative business weekly, The Economist, looked at the issue with a different set of eyes to try to determine why the results of spending trillions over the years still has us struggling.

The heart of their argument is that our poverty programs focus on the “problems of the past, largely elderly and the working poor, leaving behind non-working adults and children.”  And it shows:

  • 40 million poor in 2017 or 12% of the population that amounts to individuals in a family of four living on $17.64 per day.

  • 18..5 people make only half that amount.

  • Children fare the worst with 13 million in poverty or 17.5% of all American children.

The Economist writers were not afraid to ask “Why?”  Their answer: “the safety net does not work as elsewhere.”

Countering the rightwing consensus, they argue that the poverty program has been a success, as far as it went.  Using the supplemental poverty measure, the “1967 safety-net taxes and transfers barely dented poverty:  26.4% of Americans were poor before, and 25% remained poor after.  Without a safety net, nearly the same proportion of Americans… would be poor today as were 50 years ago.”

No back-patting though.  They also find that poverty is now moving to the suburbs where 15% are at that level compared to 11% in cities.  Youngstown, Ohio gets special attention as sinking fast and Cleveland, where half of the children live in poverty, is no model despite some claims and hype.

Of course, poverty is also not colorblind with people of color paying the most painful prices for poverty.  With reparations in the news but not likely on a short list of potential policy agreements not matter the overwhelming justice that lies in the arguments, what are race-neutral problems that would move the needle?

The Economist doesn’t have the answer here, but refreshingly they do not default to the notion that philanthropy and charity are the answer.  Even with total charitable giving at $438 billion, that only accounts for 2.1% of GDP, and despite all the claims of the techsters and the rich who claim they know and do better, “charitable giving has stayed roughly the same for 40 years,” as they point out.

What might help break the cycle?

Help on rent and more affordable housing, they recognize, as we have argued, would be huge.  A lot more investment in children, which means more for HeadStart, an entitlement to daycare for all, and other programs perhaps too far out for their taste would also move the needle.

Of course, just plain cash support for out of work men and women and a restoration of welfare supports that make a difference for mothers and their young children, would be huge.  Just saying, because The Economist hinted at those answers without advocating them.


The Horrors of Estate Recovery

New Orleans    The horrors visited on low-and-moderate income families are numerous and their damage inestimable and often devastating now and onward to future generations.  Even knowing this, it is still shocking to find additional examples hidden right before our eyes.

A case in point is estate recovery.  The Medicaid Estate Recovery Program in its present form is a legacy of the Clinton Administration.  Prior to 1993, estate recovery for repayment of Medicaid debts was voluntary, but President Bill Clinton signed the bill that year making it mandatory as a part and parcel of his deficit-reduction act and the false rhetoric of changing “welfare as we know it” and the mythical hype of personal responsibility as an antidote for poverty.  Much of the recovery was linked to the aging boomer population and the soaring costs of long-term care in nursing homes.

Medicaid, remember is not Medicare.  Medicare is available for those individuals over the age of sixty-five.  Medicaid is for the very poor.  Since the expansion of Medicaid through Obamacare, the Affordable Care Act, many understand how critical the program is for both the poor and lower waged workers.   In short, let there be no doubts on this score, this was a program deliberately designed and made obligatory in order to punish the poor by trying to raid whatever small estates that they might have when they die in order to impoverish their relatives as well as the deceased.

According to an article in the October issue of The Atlantic, the full level of the mean-spiritedness of this program is revealed, contrary to former Speaker Newt Gingrich and the Clintonista myth of the poor’s irresponsibility, in the almost infinitesimal level of recovery involved relative to the total cost of the Medicaid program or the long=term care program and its cost recovery, and the disproportionate horror it brings to the families trying to pay the bills.  As the story is reported in The Atlantic,

“…the overwhelming majority of estates are not worth hundreds of thousands of dollars.  In 2005, the Public Policy Institute of the AARP published a study of the first decade of mandatory estate recovery, Massachusetts, it found, recovered of $16,442 per estate in 2003,…offsetting a little more than 1 percent of long-term-care costs that year….In Kentucky…the average amount collected from an state was $93; the state recovered just 0.25 percent of its long-term-care costs.  The total amount states recouped jumped from $72 million in 1996 to $347 million seven years later – but even so, estate recoveries accounted for less than 1 percent of Medicaid’s total nursing-home costs in 2003.”

If it’s not just to hurt the poor and their hapless heirs, what’s the real point of this program?   It probably cost more cumulatively for states to administer the recovery program, than they are able to recover!

The Atlantic detailed one story after another of lower income families losing their homes or farms or their folks’ couple of acres and heirlooms passed on through the generations because of this predatory recovery.  The irony of the same program paying hundreds of thousands of dollars for operations and expecting no recovery compared to nursing home care is obvious.  The outrage that allows wealthy families to shield millions from taxation to bequeath to their heirs, while the poor are forced to become poorer and leave their own poverty as their inheritance to their children is equally obvious.

What excuse can there be for such a horror?