$77 billion a year to cut child poverty in half? A bargain, report says.
Child poverty seems an intractable problem in the US, but a new study suggest major progress could be made for less than the cost of closing a corporate tax loophole.
When the Children’s Defense Fund went about putting together its latest report on child poverty in America, it did something new: It put a price tag on its proposals. To reduce child poverty by 60 percent in just a few years would cost $77 billion a year, it found.
That number probably makes the proposal a nonstarter on Capitol Hill. At a time when huge federal deficits are placing an emphasis on cutting rather than expanding, social policies have to meet a high bar to justify themselves economically. Those that don’t include some element of incentives for the poor to work rarely get through Congress’s front door. And people in poverty have less political influence because they vote and make political donations at much lower rates than wealthier peers.
But the CDF and other child-advocacy groups are undaunted. The need is great, with America sitting above only Romania on a list of poverty rates in 35 industrialized countries, in one comparison. Moreover, the CDF argues that America has the money. Over two decades, the cost of the CDF's child-welfare reforms are almost exactly equal to the projected cost of the F-35 Joint Strike Fighter program, which is behind schedule and over budget, the CDF noted.
Given the relative wealth of the US, what makes child poverty seemingly so intractable? The question is one of priorities, the group says. British politicians vowed to cut child poverty in half in 1999; they did it in 10 years. America could be a similar success story, Wednesday's report argues.
In America, “it’s a tough political environment right now to push poverty-alleviating policies,” says Taryn Morrissey, a professor of public administration and policy at American University in Washington.
But as President Obama prepares to unveil his budget proposal next week, there is at least room for debate. Mr. Obama’s proposal is expected to include expanding child tax credits and investing more in high-quality child care and early education. The CDF, in its report, is imploring Washington to think much bigger.
“Child poverty is not something we have to accept in this country,” says Caroline Fichtenberg, director of research at the Washington office of the CDF and the principal author of the report. “We’ve provided a road map.”
The road map puts specific price tags on recommended policy changes and suggests some tradeoffs to pay for them.
- Expanding housing assistance to include the three-quarters of eligible families who currently don’t get help because of funding limits would reduce child poverty by 21 percent. Cost: $23.5 billion.
- Increasing the value of nutrition assistance (SNAP) benefits for families with children by 30 percent would decrease child poverty by 16 percent. Cost: $23.2 billion.
- Making the lowest-income families eligible for the full $2,000 Child Tax Credit would cut child poverty by 12 percent. Cost: $12.4 billion.
- Expanding child care subsidies to all families under 150 percent of the poverty level would reduce child poverty by 3 percent. Cost: $5.3 billion.
- Boosting the Earned Income Tax Credit (EITC) for low-income workers with children would cut child poverty by 9 percent. Cost: $8.2 billion.
The CDF sees the overall cost of $77 billion as money that would be well invested, given the prominent role that child poverty plays in America’s social ills. For example, a separate study released Tuesday found that good parenting practices were far more connected to income than family situations such as single parenthood. The best way to help parents do a better job, the nonpartisan Council on Contemporary Families said, was to address child poverty.
The CDF laid out how the $77 billion could be offset through various options, including closing tax loopholes that allow US corporations to shift profits to subsidiaries in tax havens ($90 billion a year) or allowing capital gains and dividends to be taxed at the same rates as wages ($84 billion).
“The barrier of cost is not insurmountable,” says Robert Doar, a resident fellow in poverty studies at the American Enterprise Institute in Washington.
The expansion of the EITC has particularly good potential for bipartisan agreement, because it’s predicated on the idea that people are working, Mr. Doar notes.
In Washington, there is “a divide between some who feel assistance should be granted regardless of what people do and others who think it should be conditioned on … at least trying to work,” Doar says.
Indeed, one impediment to congressional action is the perception among many Americans that giving more to the poor can unintentionally perpetuate cycles of poverty.
But debates on specific policies should come second to agreeing, across the aisle, on a concrete goal to cut child poverty within a certain time frame, says Ed Walz, a vice president of the bipartisan children’s advocacy organization First Focus.
That’s what happened in Britain. Here in the US, it’s not a matter of the public not caring, Walz says. Among 1,200 likely voters, 82 percent (including 76 percent of Republicans) said they would like to see Congress and the White House plan to cut child poverty in half within 10 years, in a survey commissioned by the First Focus Campaign for Children.
What’s different about Britain and some other countries that have invested more heavily in children is that they have left-leaning labor parties that tend to feel more solidarity with children in poor families. In the US, “we tend to think it’s other people’s children who are needy” and we ignore the fact that many of them live with parents who are working, says Julia Isaacs, a senior fellow at the Urban Institute. (Although the Urban Institute provided analytical expertise and estimates on the impacts and costs of particular policies for the CDF report, Ms. Isaacs was not involved.)
One reason for hope: Child poverty has already been reduced by about a third since 1967, using a broad measure that includes benefits such as tax policies and nutrition assistance, the CDF report notes.
The value of the CDF report, experts and child advocates say, is that it highlights both the damages that poverty causes and the positive changes already being brought about by key policies.
“This is not just another document. This has life-changing recommendations for children,” says Sheila Smith, director of early childhood at Columbia University’s National Center for Children in Poverty.
If the US doesn’t shift it’s spending priorities soon, Ms. Isaacs says, it will be spending more on interest on its debt than on children.
The policies recommended are not a handout but “a hand up that helps children out of poverty and keeps them out for their lifetime,” Ms. Fichtenberg of CDF says. Politically, she says, “what’s feasible is what we demand” of our politicians.