Income Equality -SOTU will feature Dems latest vogue phrase

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WASHINGTON, January 27, 2014 —  A phrase we will hear, more than once tonight, “Income inequality” the latest “in vogue” phrase for  Democrats  who have begun a rhetorical offensive.

Democratic senators kicked off 2014 by waxing poetic over an unemployment benefit extension, and President Obama indulged them by delivering soap-boxy speeches.  Just as it begins to flesh out the issues that will drive campaigns in the summer and fall, the hyperbolic left seems to have struck an especially resonant chord with its poverty-busting promises. Such messaging coincides perfectly with the 50th anniversary of President Lyndon B. Johnson’s “War on Poverty,” a fact that Democrats have been trumpeting in the papers as frequently and as loudly as they can.

Republicans lost some credibility in this arena when then-presidential candidate Mitt Romney uttered his infamous “47 percent” gaffe in 2012, bolstering the popular claim that the right doesn’t care about the poor. While this is categorically untrue, Democratic strategists have managed to turn that image into public wisdom over the years; Republicans have been squarely branded the ‘party of the rich’ despite mounting evidence to the contrary.

The War on Poverty spawned a slew of new social programs—some successful, some not, but all implemented with the best of intentions. No architects of Johnson’s Great Society aimed to cause problems with their legislation, just as no politicians today aim to create further hardships with their economic proposals.

The oft-repeated claim that Republicans work solely on behalf of the haves at the expense of the have-nots defies all logic. How could a party comprised of nearly half of all Americans shun the majority of all Americans? Indeed, how could a party that serves only 1% of the population appeal so broadly across all economic tiers? No politician—or person, for that matter—relishes high poverty rates or wishes for poor families to suffer. That simply makes no sense.

Since Johnson declared war on the nation’s poverty rate in 1964, roughly $12 trillion has been poured into relief programs at the federal level and nearly $3 trillion at the state and local level. That amount is nearly the size of today’s entire domestic economy. However, the poverty rate over the ensuing five decades hardly budged, and today it hovers around 15%.

Canada, a country whose universal healthcare system has occasionally been hailed as an exemplar for Obamacare, actually spends 16 percent less than the U.S. on social programs. Canada also enjoys a poverty rate two-thirds the size of ours. In 2009, the government parceled out an average of $8,713 per resident in social spending, placing it well above the global average in terms of dollars doled per person.

According to the Organization for Economic Cooperation and Development (OECD), America topped the likes of England, Greece, Spain, and Portugal in its spending. But in the end, the U.S. ended up with more people living on half of the median income or less than almost any other country for which OECD data is available, bested only by Israel, Mexico, Turkey, and Chile.

Essentially, these numbers indicate that America gets less poverty reduction for each dollar spent than almost any other developed nation. Badly mismanaged programs and disproportionate spending have crippled welfare’s ability to offer the help it once promised, and the Democratic proposals currently on the table do nothing to address underlying causes of the problem.

Tuesday, Obama will likely feature the war on poverty in his State of the Union address that will propose, among other things, to raise the minimum wage to $10.10 over the next two years. Raising the minimum wage has long been a popular way to score easy votes despite the negligible economic benefit it offers. His move will touch off a year of liberal grandstanding about policies that will ostensibly alleviate poverty, designed specifically to drive poor voters to the polls in an off-year election. But most of those policies, such as food stamp expansion included in the looming farm bill and unemployment insurance extensions, simply pump more money into programs that have demonstrated their inadequacy for years.

Education is the most reliable method of keeping individuals above the poverty line. High school drop-outs are three times more likely to be poor than those who have at least a twelfth grade education. A rarity in Washington, education reform has the potential to serve as a point of bipartisan unity. Republicans lead the way on the most effective education reforms, championing school choice, higher-quality teachers, and stronger curriculums.

On the other side of the aisle, income inequality denouncers like New York Mayor Bill De Blasio rail against charter schools, which provide a way for students stuck in failing schools to find alternatives. The Obama administration even scrapped a D.C. program that gave vouchers to inner-city children who wanted to attend private schools.

Unfortunately, the Democratic party’s close ties to teacher unions prevent it from making common-sense moves toward better school systems. The fact remains that poor children don’t have the same access to quality education as wealthier ones, and this creates a class gap that few can overcome later in life.

A little-mentioned solution to the inefficacy of modern welfare may come from a new field of social programs known as ‘pay for success,’ (PFS). New York City launched the first PFS project in 2011, and later this year, Massachusetts plans to implement a state-wide project that will become the world’s largest to date.

PFS programs rely on performance-based contracts between the government and social service providers; the government only funds the projects if specific outcomes are reached, providing both an incentive for firms to deliver on political promises and a way for Washington to avoid wasting capital.

Typically, infrastructure projects like highways and low-income housing construction are funded using outcome-driven contracts, so the idea behind PFS is not entirely new. However, unlike those projects, PFS requires social service providers to have the ability to diligently track results and to cost-effectively scale resources. This produces enormously complex arrangements, and so far the government doesn’t slate more than a few million for each one. But PFS promises to provide more effective relief for the poor, especially if politicians start drumming up hype.

Another way to attack poverty can come in the form of pregnancy prevention. Over half of all welfare money goes to families that started with a teen birth. As much as it may pain the more conservative Republicans, sex education and contraception availability would go a long way to prevent poverty without putting a bigger dent in the deficit.

The GOP’s message should focus on big government’s failure to make any significant reductions in poverty levels with its strategy of throwing ever-larger sums of money at the problem. Although some of the party’s leaders have begun to mobilize on the subject, Republicans still lack a unified strategy. Their division will prove dangerous against a party that moves in near lockstep on every issue, especially on one as central to its platform as wealth redistribution. Republicans care about poor people, too, and now is the time to prove that they have stronger weapons in the war against poverty.

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  • Tami Nantz

    Spot on! Great points, Sarah!