According to a new analysis from the Urban Institute, this year will have the lowest poverty rate in American history, at just 7.7 percent. It turns out that cutting poverty is super easy. People are poor because they lack money and so — stay with me here — when you give them some money, poverty falls. This counts as a penetrating policy insight in the United States.
Yet most of the programs that created this big drop in poverty were one-off events from the pandemic rescue packages, like the stimulus checks, or will expire soon, like the boost to unemployment insurance and food stamps. It raises the question of whether Democrats, and the American people more broadly, can take the lesson to heart that we really can fight poverty with one simple trick.
According to the Urban Institute paper, the three largest reasons why poverty fell were the survival checks, which pulled 12.4 million people out of poverty; the boost to food stamps, which pulled out 7.9 million; and the boost to unemployment insurance, which pulled out 6.7 million.
Jason DeParle at The New York Times reported on what this meant in real terms for a number of low-income families. In every case, the money was a godsend: "Without that help, I literally don't know how I would have survived," said Kathryn Goodwin, a single mother. A man named John Asher used $3,200 in checks to get his own apartment and take custody of his autistic son.
Yet, depressingly, Goodwin and Asher were not exactly on board with the programs. Goodwin fretted that her ex-boyfriend had used the money to buy drugs, and that others had used them to buy big TVs. "Why should taxpayers pay for that?" she wondered. "If you want to change your life, you have to get up and do something — not sit home and get free money," said Asher.
This attitude likely comes from the fact that working-class Americans are clubbed over the head from birth with the ideology that it is morally wrong for people to receive income in any way aside from working (or owning property). Both political parties have been flogging this moral framework for decades — Bill Clinton slashed welfare to poor single mothers so they could "draw a paycheck, not a welfare check," while last year, Sen. John Cornyn of Texas said: "We should never pay people not to work … we should try to help people get back to work."
Of course, nobody actually lives up to this standard. All people get all kinds of money and benefits from the state, from public schools, infrastructure, or basic scientific research (like on advanced vaccine technology), or programs like Social Security and Medicare, or access to the legal system, and so on.
Nobody benefits more from the state than the ultra-rich, who get vast oceans of tax subsidies (and pay a smaller portion of their income in tax than anyone in the country, including the poor, incidentally.) Oligarchs like Jeff Bezos would not be able to collect billions in (nearly) tax-free capital income without lifting a finger if it were not for the state's creation and protection of property rights. Fundamentally, the whole economy is structured at every point by government laws and regulations, and the rate of poverty is a policy choice.
Welfare shaming is one of the principal methods that the grotesquely unequal distributions of income and wealth are politically defended in this country. Meager benefits that go to the working class and poor are smeared as immoral handouts to disgusting, lazy moochers, while the mountains of more subtle government cheese collected by people like Elon Musk (in addition to actual state contracts) are carefully ignored.
So when Robert Rector of the conservative Heritage Foundation tells DeParle that a cash handout is "not good for the poor because it produces social marginalization," he is talking aspirationally. He wants poor people to feel ashamed for collecting welfare, so as to reinforce the status quo social hierarchy. Alas, all too many poor people have internalized this ideology.
The brute reality is that about half the people in the country do not work, because they are children, students, retired, disabled, and so on. It follows that only the welfare state can actually seriously cut poverty. Nations with the lowest poverty in the world, like Iceland and Denmark, have gotten there through the Magic Money Trick: handing out money to nonworkers to cure their shortage of money.
The Biden administration is crowing about this achievement on poverty, for obvious reasons. "We need to keep this going," tweeted Brian Deese, a Biden economic adviser. But there are no plans to make the gains permanent — no more stimulus checks are even being discussed, and the boosts to unemployment and food stamps will also expire soon, despite a possible coming economic slowdown caused by the Delta variant. Biden delayed doing anything about the expiring pandemic eviction moratorium, and plans to resume student loan payments on October 1. The only anti-poverty program that remains is the Democrats' expansion of the child tax credit, which will expire next year, and on the current track is going to leave out most of the poorest parents because they disproportionately do not file their taxes — a problem the administration has seemingly done nothing about, as Sen. Ron Wyden (D-Ore.) recently pointed out.
Next year, poverty is going to go back up by a lot.
That said, I still believe the coming post-pandemic period will be a once-in-a-generation opportunity to reconfigure America's attitude toward government and welfare. We all saw how when the pandemic struck, the state had to step in and help everyone to stop the economy from collapsing. Nobody bothered with these impossible and idiotic arguments about the dignity of work, or trying to make sure that the rescue payments went absolutely only to those in dire need. Instead, Congress just shoveled money out the door to practically everyone. The state support that everyone depends on at all times became very visible and blatant.
And it turns out people like getting free money! The survival checks, in particular, got about three-quarters approval in several polls. Leah Burgess, a part-time chaplain and student in D.C., told DeParle: "If our resources in a pandemic could change millions of people's lives, then what's stopping us from continuing to do that?" The answer is nothing but politics. Free money is great, and all Americans — not just the poor — should be demanding more of it at all times.
