The American Left loudly proclaims it’s compassion for the poor. Any community organizer worth his salt knows that the role of government is to take from “the rich” (who don’t need it anyway, as President Obama insists) and give to the poor.
But there is a legitimate question. Does our current welfare system really lift people out of poverty, or is the system itself the reason so many Americans seem stuck on the lowest rungs of the income ladder?
It’s not that American taxpayers don’t put out the effort. According to the Congressional Research Service, spending on means-tested welfare programs was $746 billion in 2011. If this amount was divided equally and given directly to all families below the federal poverty line, that would have provided each family with an annual income of $61,000, which is over $10,000 greater than the national average.
Moreover, we have the most steeply graduated income tax system in the developed world. It’s hard to imagine a standard under which the rich aren’t paying their fair share.
What do we get for our money? For one thing, we have nearly eliminated material poverty. Reports showing that our income gap is growing are based on measures of pretax income. However, studies of consumption — after-tax income plus government benefits — more accurately reflect economic quality of life.
While consumption has risen for all income groups, the consumption gap has been remarkably stable. From 2000 to 2010, consumption grew 14 percent for both the top and bottom income quintiles.
Moreover, during this period inwhich lower income Americans were supposedly “squeezed” by “a rigged economic system,” as Obama and others declared, access to consumer goods actually improved. The number of Americans in poverty who owned an air-conditioner rose from 65 to 83 percent. Computer ownership went from 20 to 43 percent, microwave ovens from 75 to 93 percent and 75 percent now own cell phones.
Just because Americans in poverty have a lifestyle that would be considered middle-class in other times and places doesn’t mean we have eliminated all problems. The massive social safety net has resulted in an overgrown government that undermines economic growth and job creation. The mountain of debt we are accumulating to pay for this spending is mathematically unsustainable, so our present approach to poverty cannot be a permanent solution.
But if few Americans experience material poverty, a poverty of the spirit persists. Too many Americans live in dependency and hopelessness, trapped in a mere subsistence which they appear to have little ability to improve.
This is where the perversity of our welfare system comes in. For example, Pennsylvania’s secretary of public welfare gives the case of a single mother earning gross income of $29,000, who would receive a total income including government benefits of $57,000. If she exceeds $29,000 in income, she would begin losing benefits and eventually paying taxes so that her net income would fall. She would have to earn $69,000 before her net take-home income again reached $57,000.
The prodigious effort required of her to go from $29,000 to $69,000 of income would be effectively taxed at 100 percent, a powerful deterrent to hard work and individual achievement.
Practically speaking, she and millions like her are trapped in place.
What to do? Obviously, the question of how to best provide for the truly helpless while restoring the others to their dignity and promise is complex. But at a minimum, we first should reform our welfare system to require and reward work. We should never grant benefits by formulas that encourage the entitlement mentality and discourage personal effort.
Second we must improve educational opportunities for poor children. It’s unrealistic to think we will ever close our economic gap while a large education gap exists among social groups.
Finally we must get serious about strengthening families. Both with our cultural attitudes and government policies, we should do much more to discourage single motherhood, a major driver of intergenerational poverty.
Pouring yet more money we don’t have into a broken system while hoping for different results isn’t the answer.
East Valley resident Tom Patterson (email@example.com) is a retired physician and former state senator.