Dear Members: As promised/threatened last night, here are the notes with links to sources that were used to conduct last night’s discussion.
DISCUSSION TOPIC: COMPASSION, INCOME INEQUALITY AND GOVERNMENT AID
- What, IF ANY is our responsibility, as a nation, regarding helping those in our country raised and living in poverty?
- What is the Social Safety Net? Where did it come from?
- Who Qualifies?
- Does governmental support help or hinder individual initiative/well-being?
- Does it help or hinder entrepreneurship and job creation?
- What can be done to make the ‘safety net’ better, MORE EFFECTIVE?
- BOTTOM LINE: Is government aid a ‘hand up’ or is it an impediment to personal responsibility?
RELEVANT NEWS ITEMS
- DNA DAMAGE IN URBAN POOR (See MAY NEWSLETTER located elsewhere on this site)
- EPIGENETIC CHANGES AS A RESULT OF TRAUMA (See MAY NEWSLETTER located elsewhere on this site)
- 5/20/15 DURANGO HERALD (Page B-8): STUDIES PUBLISHED IN NATURE NEUROSCINECE AND PSYCHOLOGICAL SCIENCE OF 1,100 CHILDREN AND YOUNG ADULTS (3-20) SHOW A MARKED DIFFERENCE IN THE SIZE AND THICKNESS OF THE NEO CORTEX BETWEEN THOSE WITH LOW INCOMES (LESS THAN $25,000) AND THOSE WITH HIGHER INCOMES. SURFACE AREA OF POOR CHILDREN WAS 6% SMALLER….THEY PERFORMED POORLY ON COGNITIVE TESTS. NEO CORTEX = LANGUAGE, SPATIAL SKILLS, MEMORY AND REASONING.
- ONE OF THE LEAD RESEARCHERS: “ WE’VE KNOWN FOR SO LONG THAT POVERTY AND LACK OF ACCESS TO RESOURCES TO ENRICH THE DEVELOPMENTAL ENVIRONMENT ARE RELATED TO POOR SCHOOL PERFORMANCE, POOR TEST SCORES AND FEWER EDUCATIONAL OPPORTUNITIES…BUT NOW WE CAN REALLY TIE IT TO A PHYSICAL THING IN THE BRAIN”
- ANOTHER SAID: “SOME PEOPLE FEEL IF YOU SHOW THESE BRAIN DIFFERENCES, YOU’RE POLITCALLY CONDEMNING THE POOR. WHICH IS THE OPPOSITE, I THINK OF WHAT WE NEED TO DO. I THINK WE WANT TO UNDERSTAND ADVERSITY AND MINIMIZE ADVERSITY
WHY THIS TOPIC? The topic springs from a discussion on the Politics and Religion FB site. Is it compassion or foolishness to try to address poverty via governmental programs?
- As it often does online, the discussion rapidly devolved into name calling along these lines: ‘Conservatives’ are heartless meanies who despise “The Poor” and begrudge every penny spent on ‘welfare programs’ ‘Liberals’ who are empty headed, do-gooders who are profligate spenders wasting the hard-earned money of Real Americans.
- Put another way, there are two armed camps: those who believe in CUT-THROAT CAPITALISM vs. those who believe in CUDDLY GOVERNMENT.
- THINGS WE CAN AGREE UPON:
- EXCESS TAXATION = BAD
- WASTE IN GOVERNMENT = BAD
- FRAUD IN GOVERNENT WELFARE PGMS = BAD
- HAVING PEOPLE MIRED IN POVERTY IN THE RICHEST COUNTRY IN THE WORSD = BAD
- ISSUE IS COMPLEX AND WEEDING OUT THE WEASLES = EXPENSIVE AND CONFUSING
CUT-THROAT CAMP’S MOTTO:
- GIVE A MAN A FISH, YOU FEED HIM FOR A DAY. TEACH A MAN TO FISH AND YOU FEED HIM FOR A LIFETIME.
- ONUS TO IMPROVE IS TOTALLY ON THE INDIVIDUAL
- ALTERNATE MOTTO: A RISING TIDE FLOATS ALL BOATS
- IMPROVING THE ECONOMY AND PROVIDING MORE MONEY TO THE WEALTHY
- GOVERNMENT PROGRAMS THAT AID ECONOMICALLY STRUGGLING INDIVIDUALS AND FAMILIES MAKE THE RECIPIENTS LAX AND COMPLACENT, DEPENDING ON THE GOVERNMENT TO SUSTAIN THEM.
- LETTER TO HERALD REFERENCING WELFARE RECIPIENTS BREEDING ‘LITTERS’ GENERATION AFTER GENERATION THAT DEPEND ON THE GOVERNMENT
- REFERENCE THE ARTICLE IN TODAY’S HERALD RE: EFFECT OF POVERTY ON BRAIN DEVELOPMENT.
- REFERENCE DETROIT STUDY OF DNA DEGREDATION
- THE CUT-THROATS BELIEVE THAT ONLY THE THREAT OF THE YAWNING ABYSS WILL GALVANIZE THE LAZY POOR TO GET OFF THEIR ASSES AND GET TO WORK.
- PAUL RYAN: “We don’t want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency that drains them of their will and their incentive to make the most of their lives”
- FROM MIT SUPPORT FOR THE NOTION THAT THE INCOME GAP BETWEEN SUCCESSFUL AND UNSUCCESSFUL ENTREPRENEURS INCREASES POORER PEOPLE TO WORK HARDER BECAUSE THEY FEAR BEING ‘POOR’. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2132939
ON THE CUDDLY SIDE OF THE LEDGER
- MOTTO: A CHAIN IS ONLY AS STRONG AS ITS WEAKEST LINK
- SAFETY NET PROGRAMS ALLOW PEOPLE TO TAKE MORE RISKS AND ALLOWS THEM TO RISE ABOVE CIRCUMSTANCES BEYOND THEIR CONTROL
- OBAMA: “…[the government’s role] is to give people the tools to make something of themselves.”
- The sense of ‘the community has your back’ empowers people to ‘go for the gold’.
- FROM THE HARVARD BUSINESS SCHOOL IS THE FLIP-SIDE OF THE MIT ARGUMENT ABOUT GOVERNMENT ASSISTANCE EFFECTS ON ENTREPRENEURSHIP
- FOOD STAMP ASSISTANCE RESULTS IN SIGNIFICANTLY HIGHER ENTREPRENEURSHIP.
- HARVARD BUSINESS SCHOOL: 13% MORE ATTEMPTS WITH AN 8% SURVIVAL RATE AMONG HOUSEHOLDS RECEIVING SCHIP BENEFITS (State Children’s Health Insurance Program)
- http://hbswk.hbs.edu/item/7589.html THIS STUDY SUGGESTS THAT INCENTIVE FROM WELFARE RECIPIENTS MAY BE INCREASED, NOT DIMINISHED
- PROGRAMS TO SPUR BUSINESS CREATION BY PROVIDING A SAFETY NET MAKES PEOPLE MORE WILLING TO WALK THE WIRE.
- U.C. BERKLEY STUDY OF FRENCH EXPERIMENT IN 2002. Granted extended unemployment benefits to those who started their own businesses…if business failed, benefits were extended further. http://www.oecd.org/sti/ind/Hombert_Schoar_Sraer_Thesmar_2013.pdf
- Rate of entrepreneurship increased 10% across all industries. New businesses were of equal quality to other new businesses in terms of job production, growth and survival rates.
HISTORY OF GOVERNEMTAL ASSISTANCE PROGRAMS
100 YEARS AGO MANY, IF NOT MOST, SENIORS LIVED IN POVERTY
- SAVINGS FROM LIFETIME OF WORK WAS NOT SUFFICIENT TO PROVIDE FOR A SECURE RETIREMENT
- MANY MORE WERE FORCED INTO POVERTY BY THE GREAT RECESSION OF THE 1930’S
- SOCIAL SECURITY, PART OF FDR’S NEW DEAL SOUGHT TO AMELIORATE THIS CONDITION
- AFTER SOCIAL SECURITY, POVERTY RATES AMONG SENIORS DECLINED FROM WELL OVER 50% TO 10% – 15%
- LBJ’S 1964 ‘WAR ON POVERTY’ REDUCED POVERTY RATES FROM 19% TO 11% WITHIN 10 YEARS.
- SINCE THEN, POVERTY RATES HAVE VARIED FROM 11% – 15%.
- HIGHER POVERTY RATES IN RECESSIONS. (See Charts, below)
- LOWER POVERTY RATES IN BOOM TIMES (See Charts, below)
- WHY IS POVERTY STILL WITH US? LAZY PEOPLE? CHRONIC CONDITIONS OF SOME SORT? MEDICAL/BIOLOGICAL REASONS?
- REFERENCE GRAPHS (BELOW) THAT SHOW STAGNENT WAGES FOR THE BOTTOM 60% OVER TIME
From the Center on Budget and Policy Priorities: SOCIAL SECURITY KEEPS 22 MILLION AMERICANS OUT OF POVERTY. Although most of those saved from poverty are elderly, over 33% of SS recipients are under age 65.
- Children under 18: 1,021,000
- Adults 18-64: 5,886,000
- Adults 65+ 15,281,000
- Women 65+ 9,005,000
- Total all ages: 22,188,000
A state-by-state analysis can be found here (no surprise that states with the largest populations have the most people accepting benefits from Social Security): http://www.cbpp.org/research/social-security-keeps-22-million-americans-out-of-poverty-a-state-by-state-analysis
13 programs comprise Social Safety Net, administered by 8 Agencies.
- Negative Income Tax (aka Earned Income Tax Credit): Cash paid to families who pay no income tax
- SNAP – Supplemental Nutritional Assistance Pgm (aka ‘Food Stamps’) Debit cards provided to buy food
- Housing Assistance: HUD rent vouchers, public housing and community development programs
- Supplemental Security Income: Cash to disabled, blind, seniors/kids http://www.ssa.gov/sf/FactSheets/aianssavsssifinalrev.pdf
- Pell Grants: Grants to students for tuition, room & board
- Temporary Assistance for Needy Families: Cash to needy families for support and to move them from welfare to work
- Child Nutrition: School lunches, breakfast and after-school food programs
- Head Start: Preschool program
- Job Training: Various employment and support programs
- WIC – Women Infants and Children: Provides high-protein food for pregnant women and children up to 5-years old
- Child Care: includes after-school programs
- Low Income Home Energy Assistance Program: Aid for heating or cooling residential dwellings
- Lifeline (aka, ‘The Obama Phone’): subsidy for phones including cell service
TOTAL COST OF (13) ‘WELFARE’ PROGRAMS (2013): $365B
MEDICAID (2013): $265B
TOTAL FEDERAL EXPENDITURE ON SOCIAL SAFETY NET: $630B
MINIMUM WAGE ANNUAL INCOMES:
$ 7.50/hr. = $14,400
$ 9.00/hr. = $17,280
$10.00/hr. = $19,200
$15.00/hr. = $28,800
HOW IS POVERTY MEASURED?
Single person household – $11,720 $11,888
Two person Household – $14,937 $15,142
Three person household – $18,284 $18,552
Four person household – $23,492 $23,834
Five person household- NA $28,265
Six person household- NA $31,925
INCOME QUALIFICATIONS BY PROGRAM:
EITC – $13,460 for individual, $35,535 for a family with one child.
SNAP – 130% of poverty threshold.
Housing Assistance – 50% of median income in a local area (50% of median income totaled $24,888 for the U.S. as a whole).
SSI – $17,196 for an individual and $25,284 for a couple.
Pell Grants – $50,000+ in family or student income, most awards under $30,000
TANF – Unique by state but generally 50% – 100% of poverty threshold.
Child Nutrition – 130% of poverty threshold, partial benefit below 185% of threshold
Head Start, Child Care, Job Training – Unique by state and program.
WIC – 185% of poverty threshold.
LIHEAP – 150% of poverty threshold or 60% of state median income.
Lifeline (Obama Phone) – 135% of poverty threshold or participation in numerous other programs.
SELECTED PUBLIC OPINIONS AND PERCEPTIONS (See background notes for discussion elsewhere on this site)
- 43% OF AMERICANS FEEL THAT WE SHOULD DO MORE TO HELP NEEDY EVEN IF IT INCREASE THE DEBT…51% SAY WE CAN’T AFFORD TO DO MORE (Pew Poll graph)
- Lower income says ‘more’, Higher incomes says ‘less’
- 47% SAY POOR PEOPLE HAVE HARD LIVES BECAUSE GOV’T WON’T HELP. 44% SAY POOR HAVE IT EASY BECAUSE THEY CAN GET HELP WITHOUT ANY EFFORT (Rassmussen Reports)
- Lower income say poor have harder lives…wealthy say opposite
- POOR PEOPLE HAVE IT EASY 37% POOR PEOPLE NEED MORE 62% (Pew)
- 83% THERE SHOULD BE A WORK REQUIREMENT. 7% SAY NO (Rassmussen Reports)
- RAISE MINIMUM WAGE TO $9.00 HOUR ($17,280/YR) 71% YES 21% NO (Gallup)
WHAT ARE POSSIBLE SOLUTIONS?
HERITAGE FOUNDATION The antipoverty programs of the Federal government are very expensive when calibrated against the numbers of people in poverty. By coordinating the entire system and focusing on those most in need we could lower our costs by at least a third and save over $100 billion annually.
STREAMLINE EXISTING PROCESS: Some people start out in a poverty status but combined benefits from multiple programs move them to well above the poverty threshold. This is because benefits from one program are not considered in qualification for another program. There are no cap on total benefits people can receive nor is there a limit to the number of programs in which people can participate. With no coordination of program benefits some people get very few benefits while others participate in several programs. The result is that we are inconsistent with the support we give to the poor.
Put a cap on total benefits. This cap could be set based on a percentage of the poverty threshold. Once an individual or family had been raised to a set percentage of the poverty threshold, for example 100%, or 125%, of the threshold, they have hit their maximum benefit. This would require coordination of all the programs which today operate in an independent fashion.
The 13 antipoverty programs are administered by 8 large Federal Agencies. Each agency has its own databases, procedures, forms and policies which makes the overall system very expensive to manage.
REFORM THE SYSTEM: Rollup the 13 welfare programs into a single program that pays cash to the poor and lifts them out of poverty. This would cost us $178 billion a year and would end poverty in America. We currently spend $357 billion on 13 welfare programs so take the savings, $179 billion, and pay down the deficit by $100 billion a year. Then take the remaining savings, combine them with state and local welfare spending and subsidize low paying jobs to the tune of a $3.00 an hour subsidy. That is a big raise for low-income Americans and will encourage work, independence and job creation.
- At the same time change the philosophy of welfare to add a quid pro quo before benefits are paid – work, education or community service. No more pure handouts; low-income Americans of sound mind and body have much to offer and the nation has many needs.
- HOW DOES A PERSON WORK 40 HOURS, TEND A FAMILY AND DO SERVICE VOLUNTEER WORK? IS THIS PUNITIVE?
- IS DEFICIT REDUCTION AS IMPORTANT AS, SAY, INFRASTRUCTURE?
- PAY TO INDIVIDUALS? HOUSEHOLDS?
LIBERAL/LIBERTARIAN REFORM : ‘MINCOME’: From 1974 through 1978, about 30 per cent of the population of Dauphin, Manitoba was provided with a “mincome,” as the guaranteed level of income came to be called.
The goal of the program, which cost $17 million, was to find out whether a guaranteed income would improve health and community life. If a household’s income dropped below a certain amount, the program would top it up to an income equivalent to the welfare rates at the time.
3 years of research suggests that people appear to live healthier lives when they don’t have to worry about poverty.
“Hospitalizations for mental health issues were down significantly,” she said, adding that teenagers stayed in school longer as a result of the initiative.
The initiative, which started in 1974, was terminated in 1978 as political support for the experiment faded. www.youtube.com/watch?v=_0BlCveuMDI
In 2014 dollars, individuals would receive a ‘top off’ to raise them to $16, 094….families of two persons would be topped off to $20,443.
Heritage Foundation and some conservative economists also back a version of direct cash payments to raise ‘the poor’ above the official poverty level.
- The issue of governmental intrusion when deciding who is ‘worthy’ and who is not. http://poseidon01.ssrn.com/delivery.php?ID=131074121084085070095102004092103093109023030014084091014027005126031072108084005090035056097013011097115070068028018091020112027020011005061089100080116110009070003041022007070105091028117113020031124103116007004080019070090111081072000023095095&EXT=pdf&TYPE=2
Note on the graphs: Gray bars indicated periods of recession. All income levels have seen reductions since the 2008 Great Recession, but the lower quintiles have suffered losses at or more than twice the rate of the top quintile. What is your opinion of the following statement: Losses for the poorest Americans strikes at essentials such as food and shelter while losses at the top are more easily absorbed.
Not shown is that the wealth of the top .01% is equal in value to the cumulative wealth of the bottom 90% of the population.