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Jeff Madrick

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The Republican War on the Poor

Posted: 08/29/2012 9:00 am

Much is rightly made about the Republican War on Women. But the Republicans are fighting a more deliberate battle against the poor. It is audacious, insensitive and ugly. Republicans have clearly decided that the War on the Poor is good politics.

Today, 46 million Americans live in poverty, or 15 percent of the population. Some 20 percent of all children live in poverty. Nearly 40 percent of black children do.

Yet the Paul Ryan budget would take two-thirds of its non-military cuts from low-income programs like Medicaid, food stamps, job training and Pell grants for college, according to the Center for Budget and Policy Priorities. While the Ryan plan would cut the tax rate for the rich to 25 percent, the non-partisan Tax Policy Center reports taxes for those who make $30,000 or less would go up.

Robert Greenstein, the president of the CBPP, calls it "likely... the largest redistribution of income from the bottom to the top in modern U.S. history."

The budget policy is only the spearhead of the war on the poor. Mitt Romney and Paul Ryan would also reverse as much of Obamacare as possible, including if they can the enormous expansion of Medicaid passed by Congress. Few may realize that Medicaid, the healthcare plan for the poor, was designed only for families; no matter how poor, individuals did not qualify. Moreover, the typical cut-off for qualification even for families was two thirds of the poverty rate. This all changed with Obamacare. Some 15 to 17 million poor Americans would now get healthcare coverage.

Romney and Ryan would also change Medicare radically -- at least the Ryan budget would. Whose pocket would that come out of? The elderly, who are generally low-income Americans, have low poverty rates only because of Medicare and Social Security. They would immediately start to lose benefits if Obamacare were reversed. The Romney-Ryan camp try to cover this up by saying their plan would only affect those 55 and under today. Not so. And the Ryan plan of offering premium support -- vouchers -- rather than guaranteeing healthcare as is now done under Medicare would be highly costly to the elderly.

A recent Center for American Progress report found that ending Obamacare would cost today's seniors $11,000 due to higher premiums and higher drug costs as the famed doughnut hole was set to close. As for those who turn 65 ten years from now, the losses are huge because premiums under Romney-Ryan will not keep up with healthcare costs. That could come to $60,000 in higher payments over the typical 2023 retiree's span of retirement.

It's not just Romney and Ryan among the Republicans who are fighting a war on the poor. Republican states led the legal challenge against Obamacare, which would have provided healthcare coverage to two-thirds of Americans who have none, some 30 million people. They effectively lost in the Supreme Court. But when the Court ruled in June that states could reject the Medicaid portion of Obamacare, five Republican governors said they would, including the governor of Texas, where 25 percent of the population has no healthcare coverage. The national average is about 18 percent. These five and perhaps as many as roughly 20 more, all led by Republican governors, will do so even though the federal government will pick up 100 percent of the costs in the first few years, and 90 percent thereafter. It's worth mentioning that a new study from Harvard University finds that Medicaid does indeed save lives, reducing the death rate in several states where Medicaid had earlier been expanded.

Then there is the minimum wage. Republicans may now be trying to reduce its reach. In Arizona, Republicans have tried to repeal the minimum wage, claiming business can't afford it in a recession. But the federal minimum wage, now $7.25 an hour, has been raised so rarely in the last few decades, that it is well below its 1968 high when discounted for inflation. Mitt Romney has now backed off his long-held position to raise the minimum wage along with inflation to satisfy his fellow Republicans. They argue the old simplistic economic story that any increase in wages means lost jobs. But what America needs now is more spending -- and higher wages would help do that. America grew rapidly in the 1950s and 1960s when the minimum wage was relatively much higher than it is today.

One pro-Republican interviewee on Moyers and Company recently asked whether anyone really believed Paul Ryan was cruel and didn't care about the poor. People baring harsh policies do not grow fangs. The Ryan argument is a very old conservative one: that social programs make people dependent. One wonders whether he believe there were any poor when there were no substantial programs to redistribute money in America -- say, in the 1800s.

The Republicans of course say they want to provide jobs. Free markets, once released to work their magic, will enable workers to get a job and provide them the pride they lack. And Romney and Ryan they know how to do it -- tax cuts.

We'll get back to tax cuts. But, first, the markets don't work their magic -- anywhere. Economists like Tim Smeeding and political scientists like Lane Kenworthy have pored over the data on incomes across countries and have found that markets create a lot of poorly paid work, not only in the U.S. but also in much of Europe. The U.S. households with incomes less than 40 percent of the disposable income of the typical household comes to nearly 18 percent, but it is higher in England and not much lower in Germany or Sweden (Foreign Affairs, sept. oct, 2012, Campbell). One third of Americans have incomes below 200 percent of the poverty line -- the poverty line is about $14,000 for an individual, $22,000 for a family of four.

What makes this tolerable is that social programs, such as the Earned Income Tax Credit, Medicaid and Medicare, redistribute income. Europe requires those same programs, and theirs on balance are far more generous.

Paul Ryan has never, to my knowledge, presented evidence that reducing sharply these redistributive programs will work -- to motivate these people to find better jobs. His is an ideological argument, based on no serious theory and no serious experience. He knows, I suppose in his heart, that such a laissez-faire social state is better for the poor. And the Republicans pull out the Obama record to prove their point. The poverty rate went up in in 2009 and 2010 under Obama: he is clearly doing something wrong. Of course, Obama inherited that Bush recession.

But what they propose is more of what George W. Bush did. Big tax cuts to motivate the rich to create more jobs! It is worth noting that Bush's job creation record was the worst of any recovery in the postwar period. Moreover, wages remained essentially flat. And finally, Bush, who inherited a poverty rate from Bill Clinton of 11.3 percent, still had a poverty rate of 12.5 percent in 2007 after years of the housing-led economic expansion. In 2008, he left Obama a poverty rate of 13.2 percent, nearly two full percentage points above the one he inherited, and moving up inexorably. What about Reagan, the tax cutter? He left George H.W. Bush a poverty rate of 12.8 percent. Poverty rates had fallen to well below 12 percent in the 1970s as a result of Johnson's war on poverty. In the 1950s, the poverty rate was estimated at 22 or 23 percent.

Romney and Ryan promise jobs to reduce poverty. There is little doubt it is the healthiest of cures. But their policy of tax cuts is merely a repeat of the failed Bush years. And the only way the Reagan years look passable is if you lop off the severe recession of 1981 and 1982, a habitual trick of The Wall Street Journal editorial page. Under Reagan, the great American wage stagnation began, and productivity growth remained slow.

Romney and Ryan also claim that their cuts of social programs will get the nation's books in better balance and stoke confidence. What we need is a new stimulus to generate business and encourage companies to invest.

Are Romney and Ryan cruel? They are politicians who know their base believes the poor are getting way with something. It is a policy driven by fear and scapegoatism. They have sponsored highly deceptive ads about how Obama has taken the work requirement out of welfare and about how Medicare will rob from the elderly to finance coverage for the poor. One man's insensitivity and ignorance is another's cruelty, especially in difficult economic times. Better people would soften the anger, not stimulate it. Racism is always close to the surface when discussing social programs, even if the majority of the poor are white. The flip side of the War on the Poor is War on Minorities. It is a tragically sad country which will deliberately neglect its least advantaged -- especially when income inequality so starkly favors the rich and taxes are lower than in any other major nation. There is a hole in the Republican's moral fabric.


This post is part of the HuffPost Shadow Conventions 2012, a series spotlighting three issues that are not being discussed at the national GOP and Democratic conventions: The Drug War, Poverty in America, and Money in Politics.

HuffPost Live will be taking a comprehensive look at the persistence of poverty in America August 29th and September 5th from 12-4 pm ET and 6-10 pm ET. Click here to check it out -- and join the conversation.

 
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