Institute Notes: A Dialogue on Overcoming Hunger and Poverty

Dispatch from Santa Ana, California

The sunny weather and towering palm trees in the big blue skies of Santa Ana, California belie the incredible stresses cracking the foundation of this community. Hunger and poverty here are widespread. When students at the area schools register each year, one of the questions on the form their parents are asked to complete is will the kids be living in a car. Families pile up in the small bungalow houses. To pool their resources, families will rent out the garages to turn into living spaces. The average cost of a two-bedroom apartment is $1,400 per month, more than what many Santa Ana families earn in a month.

Free Trade and Stethoscopes

For the most part, free trade has been a boon to poor people around the world. Free trade, maybe more than anything, has helped raise hundreds of millions of people out of poverty. There is of course a downside. In the United States, many low-skill workers have lost their jobs because of free trade.

Last year, I toured Michigan and Ohio and talked to lots of people who lost manufacturing jobs because their plant had moved overseas. It was always sad, sometimes poignant, and I can't minimize these people's pain. We need better safety nets for people whose jobs vanish because of free trade. Basically, we need better safety nets in this country that all people could benefit from, not just those who lose their jobs as a result of foreign competition.

Counting All the Children

Because the federal government wants to help families with children, it created something called the Child Tax Credit (CTC). Families with children file for the CTC on their income tax statement. The CTC provides a maximum benefit of $1,000 per child—but not all families get it. Those with incomes below $11,750 can’t qualify. Below $11,750, the family doesn’t have enough taxable income. They get nothing—$0 whether they have one child, two children or many more children.

Recently, I blogged about the Earned Income Tax Credit (EITC), the program Ronald Reagan called the best pro-family, pro-work, anti-poverty program ever created. Let’s be equally blunt about the CTC—this may be the worst anti-poor, anti-family program ever created. "Hey, mom and dad, those kids of yours may mean the world to you, but as far as the taxman is concerned, let’s just say they're pets. Forget about the diapers that need changing, the shoes and other clothes, the visits to the pediatrician, the food those kids eat—mere technicalities. Mom and dad, the taxman wants to ignore all that because you don’t make enough money." 

Is inequality making us sick?

The United States spends more on health care than any other industrialized nation and yet ranks 30th in the world in life expectancy and 31st in infant mortality. How do other countries manage to do better and spend less? Policies that mitigate inequality are the key, starting with universal access to health care.

When we talk about our dysfunctional health care system, we tend to fix on access issues. But lack of aspirin is not the reason people get headaches. For sure, access is a big, big problem, but dig deeper to the root of the health disparities in our society and you’ll find a lot of other issues clustered there.

The social determinants of health are the subject of an upcoming PBS documentary, Unnatural Causes: Is Inequality Making Us Sick? I had a chance to view the first episode in this four-part series that begins airing next week. I highly recommend it. The screening of Unnatural Causes that I attended was hosted by the Joint Center for Political and Economic Studies. One of the nice things about living in Washington is there are countless events like this. It makes up for the many other liabilities.

Dealing Wisely With Recession

Robert Reich, the former Secretary of Labor in the early years of the Clinton Administration and now a professor at Berkeley, and for my money one of the smartest commentators on the US economy, has a terrific editorial in the New York Times today about why the widely anticipated U.S. recession could be far more painful and prolonged than previous ones. Fortunately, Reich also has some good advice for policymakers about what they can do to address the situation wisely.

According to Reich,

To get the economy rolling again, we need to get inject money into it, but where will it come from. The tax cuts in the stimulus package put forward by the Bush Administration and Congress is not likely to do this.

Much of the current debate is irrelevant. Even with more tax breaks for business like accelerated depreciation, companies won’t invest in more factories or equipment when demand is dropping for products and services across the board, as it is now. And temporary fixes like a stimulus package that would give households a one-time cash infusion won’t get consumers back to the malls, because consumers know the assistance is temporary. The problems most consumers face are permanent, so they are likely to pocket the extra money instead of spending it.

So what’s a policymaker to do? According to Reich, first let’s get our heads around the causes of the problem. It requires some clear thinking about trends over the last three or four decades, not something Americans are predisposed to do, especially about the economy. Reich's analysis of the precedents that got us to this point are, as I see them, right on.

Who benefits from housing assistance?

There are many problems with federal housing policy. One is the mortgage-interest deduction. It might seem impossibly dull to think about the mortgage-interest deduction. Peel back the dullness and we find some of the most egregious inequalities in our society. It’s not entirely a joke to say the term itself, seven syllables short of a coma, is what allows those who wish to ensure government’s most generous welfare policies continue to reward the wealthiest members of society.

I’m not going to criticize homeownership. I own a home and want to see everyone who dreams of owning one get a chance to as well. Nothing is wrong with renting. But families, and individuals too, do not achieve financial security by renting, not like they can by owning a home. Once a lease expires, one doesn’t own anything of what was paid for. Renting is strictly about consumption; owning a home is about holding an asset, the largest asset most American families will ever have, and this is what makes it an asset with the potential to propel them out of just getting by into getting ahead.

Energy Insecurity and the Poor

Regardless of how swiftly the planet is heating up, by November there’s a chill in the air, at least around where I live in Washington, DC. For some of us, in Washington and elsewhere, it may be a welcome arrival. As we brace ourselves for even colder temperatures, it’s worth a moment to reflect on how much the plight of the poor is linked to their “energy insecurity,” a situation sometimes referred to as “heat or eat.” 

Two Indias

This morning, as I was getting my fix of world news from the BBC news website, I read about 25,000 landless farmers who marched on Delhi from all over India to demand land reform and land rights. It reminded me of the speech that India's Prime Minister Dr. Manmohan Singh made on the 60th anniversary of India's independence from the British--August 15, 2007--where he said "Sixty years ago the people of India began a new journey as a free nation, inspired by the message and vision of Mahatma Gandhi. But Gandhiji’s dream of a free India would only be fully realized when we banish poverty from our midst". This was an important message to lead with at a time when the Indian economy is growing at a historic and apparently mesmerizing 9%, if the world's media is anything to go by. This weekend's protest in Delhi is a stark reminder that not everyone is benefiting from India's economic growth and that poor people in rural and remote areas are being left behind. By coming to Delhi, the landless farmers were driving home the point that there are two Indias and that the India that is thriving in the global economy will not be allowed to forget about the India that is not. Dr. Singh's speech focused on the need to make key investments in rural development, agriculture, health and education so that all Indians benefit from India's growth. Much the same can be said for countries in Sub-Saharan Africa and Latin America.

Dealing with Poverty and Inequality

On Wednesday the Society for International Development hosted a roundtable discussion with Francis Fukuyama and Rebecca Grynspan on the subject "Reducing Poverty and Deepening Citizenship: Innovative Social Policy for Strengthening Democracies." Much of the discussion focused on Latina America and on the interplay between delivery of social services and democratic governance.

It's clear that accountability through the process of elections and representative democracy help to create better, more responsive governance. But Fukuyama and Grynspan also made the point that these same programs can help to bolster democratic regimes. Programs that help to ameliorate the worst impacts of hunger and poverty can actually quell calls for dramatic political change.

Interestingly, Grynspan also made the point that in the Latin American context addressing poverty alone is not enough.