The war on poverty is winnable

Economists paint a gloomy picture of poverty in America. But lawmakers can make a difference.

By , Columnist

The United States could dramatically reduce poverty – if it really wanted to. Instead, the number of American households in severe poverty (those with incomes less than half that of the official poverty level) has been growing, not shrinking.

"Poverty persists, not because we lack effective antipoverty policy options, but because we lack the political will to expand our policies," says Sheldon Dan­ziger of the National Poverty Center, University of Michigan, Ann Arbor.

In 1964, President Lyndon Johnson launched the War on Poverty with the goal of lifting the "forgotten fifth" of the nation above the official poverty line. His economists predicted success by 1980 as the benefits of economic growth were shared over the years.

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It didn't happen. The nature of the economy changed with globalization, high immigration, less unionization, and slower economic growth per capita. Instead, the income gap between the poor and the rich, especially the extremely rich, has greatly widened. This trend was recently acknowledged by President Bush, Secretary of the Treasury Henry Paulson Jr., and Federal Reserve Chairman Ben Bernanke.

"There's rising public concern about growing inequality," notes Peter Edelman, chair of a poverty task force at the Center for American Progress, a "progressive" think tank in Washington. His group will report later this month with recommendations for reducing poverty. "We know a lot more today [about] what to do," he says.

Nor would a serious antipoverty effort be inordinately expensive, he says. Its costs could be met by ending the "unnecessary and undeserved tax cuts" given the wealthiest Americans this decade, he claims. Winding down the Iraq war would also free funds to help the poor.

But will Washington step up such efforts? "There are no shakers and movers and lobbyists for the poor," says Neal Wolman, a social scientist at Manchester College, North Manchester, Ind.

Several observers speculate that a Democratic Congress and a Democratic president, should that occur, would be more likely to tackle poverty. "It takes presidential leadership," says Mr. Danziger. "It's not going to happen on its own."

Mr. Edelman and other poverty experts get some encouragement from the fact that Britain, under Prime Minister Tony Blair, has greatly reduced poverty by adapting or expanding various anti­-poverty measures, some developed in the US. The proportion of British children living in poverty, for example, fell to 11 percent of the population in March 2005, down from 24 percent in 1998. Children's poverty in the US has been rising for the past few years to 17.8 percent in 2005.

The overall poverty rate in the US, reported by the Census Bureau last August, leveled off in 2005 at 12.6 percent, or 37 million. It had risen from 11.3 percent in 2000 with the onset of a mild recession.

Mr. Wolman is pleased by a decrease over the past 10 years in the high poverty rates of blacks and Hispanics. But nonwhites are still 2.6 times more likely to live in poverty than are whites. And children are 1.6 times more likely to be poor than adults are.

The rise in severe poverty has been noted by Dr. Steven Woolf, at the Department of Family Medicine, Virginia Commonwealth University, Richmond. In a paper in the American Journal of Preventive Medicine last October (joined by two other physicians), he found that the proportion of Americans earning half or less of the official poverty level (which is $8,000 a year for an individual) grew by 20 percent from 2000 to 2004. In that time, the receipt of government aid (Medicaid, food stamps, tax credits, etc.) by the poor has not risen in real terms. The authors note that the risk of severe poverty is greater among blacks, Hispanics, and children.

Dr. Woolf's great concern with this trend is that it will worsen mortality rates and the incidence of disease among the poor. Social determinants like poverty and inadequate education do more damage to health than improving technology (new drugs, better medical devices) boost it, he says. The result of this trend could be even higher healthcare costs. "It will be very significant," he says.

A new study for the Center for American Progress offers an economic argument for reducing poverty, especially among children. It finds that costs associated with childhood poverty total about $500 billion a year, or nearly 4 percent of gross domestic product (GDP), the nation's total output of goods and services. Adults who grew up poor are more likely to be less productive and experience low earnings, engage in more crime, and suffer poorer health. Childhood poverty reduces national economic output each year by about 1.3 percent of GDP, raises the cost of crime 1.3 percent of GDP, and raises health costs by 1.2 percent of GDP.

An author of the study, Harry Holzer, an economist at Georgetown University in Washington, and other experts, list some antipoverty measures that should help: higher tax credits for the poor, health insurance coverage for all, more subsidized child care, more prekindergarten schooling, extra adjustment help for those leaving prison, and improved unemployment compensation.

Properly designed measures won't discourage people from working, adds Timothy Smeeding, a poverty expert at Syracuse (N.Y.) University.

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