The budget cap deal means the opportunity to address poverty is slipping away

On the debt ceiling deal I’m no expert, but like everyone I have a personal opinion.

My focus is on the economic condition of the poor in this country and improving the quality and affordability of their homes and neighborhoods, I fear that domestic discretionary spending cuts mandated in the debt ceiling deal will disproportionately fall on federal programs in these areas.

President Obama says the result of the negotiations will be “the lowest level of annual domestic spending since Dwight Eisenhower was president.” Those were not great times for the poor, their homes and neighborhoods. It is simply untenable to roll back housing and community development spending to those of the 1950s.

The wealth gap between whites on the one hand and blacks and Hispanics on the other, that I blogged about yesterday, will dramatically increase. According to the Pew Research Center in 2009, the median net worth of white households was $113,149. In sharp contrast, Hispanic and black households had median net worth of $6,325 and $5,677 respectively.

A significant fraction of U.S. households either have no wealth (zero net worth) or have more liabilities than assets (negative net worth). Overall, 20% of U.S. households were in this position in 2009, up from 15% in 2005. The share of households with zero or negative net worth is much higher among Hispanics and blacks. About one-third of Hispanics (31%) and blacks (35%) had no wealth or were in debt in 2009, compared with 15% of whites.

Keep in mind this is how things stand today — before the cuts in housing, community development and economic development programs begin.

Poverty has not been on the political agenda for 50 years. The Obama Administration is uniquely positioned to engage the country in a debate on the unfinished business of poverty and civil rights. That opportunity is slipping away.

I am especially worried that continued political wrangling over the budget in the coming months will exhaust Congress’ and the public’s limited capacity to focus on serious policy problems. Politicians and the public both prefer a political slugfest to a policy debate and the fight over the budget details promises many more rounds.

The debate over program budget cuts is going to force all energy into a life and death fight over resources for programs that everyone knows need reform. The new budget commission is going to have to find $650 billion in cuts in domestic discretionary programs. This inevitably means deep reductions in CDBG, HOME, elderly housing — housing and community development across the board.

I’ve been around long enough to have gone through budget walls, sequestration and other similar efforts by Congress to “impose fiscal discipline.” That experience shows budget battles trump the work to improve the quality of our lives.

I hope a time will come when our government can thoughtfully consider the way to address shelter and community poverty. The next several years looks like it will not be that time.

2 thoughts on “The budget cap deal means the opportunity to address poverty is slipping away

  1. Your data is flawed, simply because it’s in the best interest of the “poor” to lie about their incomes. Underreporting wages, et al, is part of working the system. You just don’t see reality, do you John. You should actually leave the computer from time to time and go see the “poor”, and what all the entitlements have created.

  2. [I do not normally permit the posting of comments where the commenter does not give their full and real name, but I have made an exception in the above case.]

    Sorry you didn’t understand what I wrote.

    It is not based on my data. The information cited is based on Census data analyzed by the Pew Research Center.

    Regarding you assertion that I do not understand reality because of a lack of experience with the lives of low-income people I am not sure how well you actually know me or my work in this area dating back to the early 1970s. But you will be happy to hear I just spent a week away from the computer with low-income residents of poor neighborhoods in South Texas just last week.

    You seem to feel there is some bad effect of entitlements on the poor. You will be glad to learn that TANF has not been an entitlement since the Clinton Administration. Housing assistance has never been an entitlement. Medicare, Medicaid and Social Security are the major entitlements, along with Food Stamps (which in Texas has a three year maximum benefit period).

    Doesn’t seem to me like these entitlements have exactly had a corrosive effect upon folks..

    If you would like to learn more about public assistance programs for the poor in Texas I would suggest you visit the web pages of the Center for Public Policy Priorities, http{//www.cpp.org ).

    Regarding income underreporting and the poor, I am aware of a large amount of research that has taken place in an attempt to test the highly controversial claims of Charles Alan Murray to which you refer. Namely that the poor underreport their income and this leads to systemic bias in studies of the poor. My sense is that such conclusions are not generally supported by the overwhelming majority of the research. In any case I don’t think the research would support your sweeping statement that income underreporting reduces a widespread problem.

    I would refer you to a paper by two researchers who have studied the question, Marlene Kim from the Department. Of Labor Studies and Employment Relations at Rutgers University and Catherine J. Weinberger from the Department of Economics and Institute for Social, Behavioral and Economic Research at the University of California, Santa Barbara.

    Their paper titled, “The Working Poor–A Statistical Artifact?” can be accessed at: http://www.econ.ucsb.edu/~weinberg/poor.pdf

    The paper is summarized as follows…

    “For many Americans, there is something immoral about the very existence of the working poor. Because most people believe that hard work should be rewarded with earnings that bring one above the poverty level, the existence of 9 million Americans who work but remain poor seems wrong. So wrong, in fact, that some scholars have suggested that estimates of the size of the working poor population are greatly exaggerated.

    “For example, Murray (1987) describes case studies of families who have current incomes below the official poverty threshold, but are not poor. Bradley Schiller (1994) believes that the Current Population Survey (CPS), the data set usually used to estimate the working poor population, overestimates the number of the working poor because of the way the survey is conducted. Rather than reporting current earnings, surveyed individuals must recall earnings over the past fifteen months. This is likely to produce a fair bit of error. Despite claims that the measurement error that results overestimates the size of the working poor population, no one has investigated whether this indeed occurs.”

    “We use a unique data set to examine the effect of measurement error on estimates of the working poor population. Because the data set includes each individual’s self-reported earnings in the CPS as well as the earnings reported by their employers to the Social Security Administration (SSA), the exact error in CPS earnings can be estimated for each person in the sample. We find that, surprisingly, measurement error does not bias estimates of the working poor population. Although some of those who have low reported earnings underreport their earnings, an equally large number of low earners overreport their earnings. By fortunate coincidence, these two sources of measurement error cancel each other out. The number of people who fall below the poverty line is exactly the same whether one uses self-reported or employer-reported earnings.”

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