By Benita M. Dodd
Fifty years ago this month – on January 8, 1964 – President Lyndon B. Johnson announced an “unconditional war on poverty in America.” Considering the money spent on poverty-related programs in the ensuing half century – $16 trillion, according to the Cato Institute – and the percentage of Americans still listed as poor, it’s time to concede defeat, change strategy or redefine poverty.
Conceding defeat against poverty is unacceptable, of course. But redefining poverty means building a better safety net, not opening a bigger umbrella, as President Obama is expected to propose in his State of the Union Address this month. He’s expected to dramatize income inequality – the gap between the “rich” and “poor” – and seek an increase in the minimum wage and an extension of long-term unemployment benefits.
Class warfare is not the answer. The quality of life of low-income individuals improves through economic opportunity, not when government or leadership demonizes and creates disincentives for those Americans who earn more. Further, paying people to stay out of work for extended periods provides an unhealthy incentive to remain unemployed, especially when government, funded by working taxpayers, provides more benefits to the jobless than a job might bring home.
Nor does increasing the minimum wage create jobs or lift people out of poverty. Many individuals would accept a job at a different pay threshold, but are unable to do so legally when government arbitrarily and artificially sets limits. The move raises the cost of doing business and forces employers to decide whether to restrict hiring, raise prices on customers or cut corners in other areas – such as putting off job-creating business expansion. Starting at a low wage does not mean remaining at low pay; employees work their way up the economic ladder by excelling at their job, improving their skills and proving their value.
Reducing the income tax – the amount government takes out of Americans’ paychecks – is far more productive in encouraging employment. Wealthier individuals have the ability to avoid income taxes but government’s taxes on wages, savings and investment drag down hard-working lower-income Americans. These are individuals who should decide for themselves how to use those funds to meet personal priorities and achieve economic independence.
Improving education opportunities has a far greater effect on closing the income gap and increasing upward mobility than does a government handout. To that end, school choice helps the poor. People who can’t afford private tuition or to move out of their neighborhoods are helped when they can at least choose a better public school or use a voucher at a public or private school with better outcomes. Georgia’s workforce development program is another positive force for adults.
The push for taxpayer-funded, government-run mass transit is another failure in the war on poverty. Instead of targeting the needs of low-income residents, transportation planners offer costly, short-sighted, elitist options such as streetcars, light rail and bicycles while whittling away at crucial bus routes. Ask low-income families how to hasten their upward mobility; few will say bicycles or buses. They understand the independence, reach and flexibility that auto ownership provides. Then consider how far many low-income families could have advanced had they been given use of some of the 700,000 vehicles destroyed in the government’s “cash-for-clunkers” program.
The official poverty rate in the United States, 19 percent in 1964 when Lyndon declared his war on poverty, was 15 percent last year. The needle has barely moved. If it isn’t a matter of throwing money at the problem, it also isn’t merely a matter of the poor having less money. Many government policies disproportionately harm the poor:
History shows the culture of government dependency and victimhood won’t be solved by indiscriminate government handouts. The war on poverty will never be won by attacking the wealthy. Far better a campaign for upward mobility and economic independence that uses the tools of education, entrepreneurship, individual successes, role models and mentors.
Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (January 10, 2014). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.
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