Taking On Poverty and Inequality

by Katrina vanden Heuvel

The theme at the Democratic Convention in Denver yesterday was "Renewing America's Promise"--the Democrats' plan to grow the economy and restore fairness so that it works for all of us. The 2007 Census data on poverty, income and health insurance was also released yesterday and it showed just how tall an order Senator Obama and the Democrats face in reversing eight years of failed Bush economic policies - policies we will continue to pay a price for in 2008 and beyond.

While the 2007 numbers don't even include the devastation wrought by the housing and credit crisis, and high energy costs, they nevertheless paint a bleak picture with poverty on the rise and working people's pay stagnating despite increased productivity.

Robert Greenstein, Executive Director of the Center for Budget and Policy Priorities said, "Though 2007 was the sixth (and likely the final) year of an economic expansion, 4.4 million more Americans were poor, the median income of non-elderly households was $1,100 lower, and nearly six million more Americans were uninsured than in 2001 - even though the economy was in recession that year.... Never before on record has poverty been higher and median income for working-age households lower at the end of a multi-year economic expansion than at the beginning. The new data add to the mounting evidence that the gains from the 2001-2007 expansion were concentrated among high-income Americans."

"We have the biggest gap between the rich and everybody else since the Great Depression," said Independent Senator Bernie Sanders on Vermont Public Radio.

Jared Bernstein, Director of the Living Standards program at the Economic Policy Institute, agreed with Sanders. He suggested that we have the greatest concentration of wealth in the richest 1 percent of the country than we've had since 1928. Bernstein noted that the economic expansion failed to lift working people's incomes despite that fact that "output per hour, or productivity, rose 2.5 percent per year during the 2000 to 2007 cycle, compared to 2 percent in the 1990s, when family incomes fared much better.... The economy... expanded in the 2000s, but that growth clearly failed to reach most households, a dynamic that implicates growing income inequality.... The fact that these disappointing income, poverty, and earnings trends occurred in the context of strong productivity growth is a reminder that in today's economy, productivity growth creates only the potential for higher living standards. As long as most workers lack the bargaining power to claim their share of the growth they have helped to generate, that potential will not be realized."

The Bush administration will tout 2007 as the first decline in number of uninsured during its tenure. But Greenstein pointed out that private coverage continued to erode and "the improvement in health care coverage in 2007 was due to more Americans obtaining coverage through government health insurance programs, principally Medicare and Medicaid." Surely, that's not what the Bush Administration was gunning for. In fact, Greenstein said the Congressional Budget Office estimated that four million more children would be insured had President Bush not twice vetoed expansion of the State Children's Health Insurance Program (SCHIP). In all, nearly 46 million Americans did not have health insurance last year.

As for poverty, it's first worth noting that the standard of measurement is woefully inadequate. The federal poverty guideline for a family of four is $21,203 in 2007. Bernstein has suggested a more accurate measure of "material deprivation" using recommendations from the National Academy of Sciences. But even using the federal standard, 816,000 more people slipped into poverty in 2007, meaning 37.3 million Americans or 12.5 percent of our population lived below the federal poverty line. That figure includes 18 percent of all children under the age of 18, and over 20 percent of related children under age six. The poverty rate was 24.5 percent for African-Americans and 21.5 percent for Hispanics. 50.9 million people , or 17 percent of all Americans, lived on less than 125 percent of the federal poverty level in 2007 (approximately $26,000 for a family of four).

The Food Research and Action Center (FRAC) - a national non-profit working to address hunger and poverty - wrote in a released statement, "The 12.5 percent rate in 2007 compares to 11.3 percent in 2000. It is unprecedented that poverty is higher at this point in an economic growth cycle, and the damage from the failure of the economy's growth to lift more people out of poverty is huge: if the 2007 poverty rate were just the same as in 2000, approximately six million fewer Americans would have lived in poverty in 2007. All signs are that the poverty rate will be driven higher in 2008 by a slowing economy and skyrocketing costs for housing, energy and food."

There seems to be little disagreement about that.

"The data for 2007 are of particular concern given that the economy is now in a slowdown, and poverty is almost certainly higher now--and incomes lower--than in 2007," Greenstein said. "The 2007 levels... are likely to constitute a high-water mark for the next few years."

"When the data become available for 2008, the picture will undoubtedly grow more grim," wrote Michael Ettlinger, Vice President of Economic Policy at the Center for American Progress. "Average real weekly earnings are down 2.4 percent so far this year, according to the Bureau of Labor Statistics."

So where should an Obama Administration and Democratic Congress set their sights?

Greenstein said the next President and Congress should set a national goal to reduce poverty and act on it. Other organizations have pushed hard on this too. The Association of Community Organizations for Reform Now (ACORN), the Center for American Progress Action Fund, the Coalition on Human Needs, and the Leadership Conference on Civil Rights are together cooperating on the Half in Ten project, working to promote a national goal to reduce poverty by 50 percent in ten years. Greenstein also argued for supporting state Medicaid programs by temporarily boosting federal support, and reconsidering the Bush-vetoed legislation expanding coverage for children.

FRAC President Jim Weill focused on a second stimulus package and the need to boost food stamps as a record number of people turn to them. "We will hear a lot this fall from Presidential and Congressional candidates about their vision for America's economic future. A reinvigorated fight against hunger and poverty must be an essential part of this vision," he said.

When it comes to vision on poverty there is little comparison between the presidential candidates. Senator Obama is talking about a new energy economy, rebuilding our crumbling infrastructure, union organizing, pay equity and a more progressive tax system. While his policies may not be bold enough during the campaign, the facts on the ground---mounting foreclosures, more people out of work--will demand more of a Democratic administration.Senator McCain, on the other hand, is hopelessly out of touch--saying the economy is "fundamentally sound" and poverty isn't even listed as an issue on his campaign website.

These recent figures show there is a powerful need for Obama and Democrats to put poverty back on the national radar. The grim stats on the ground and the lives intertwined with them demand a bold agenda. Beyond Obama and the Democrats, such an agenda needs independent organizing to drive it, much the way the 1963 March on Washington eventually helped drive the War on Poverty. Ending a trillion dollar war and redirecting some of those resources back home is key as well.

Unless (and until) we tackle the gap between the very rich and the rest of America--including the growing number of people falling into poverty --it will be increasingly difficult to confront the major challenges of our time.

The truth is, lifting the boats at the bottom has historically been good for all Americans.