Poverty is often described as one of the most intractable problems facing America. That's nonsense. We know how to make big reductions in poverty with clear-cut public policy solutions.
Last week, for instance, the Center for American Progress released Half in Ten, a new report that gives comprehensive guidance on how to reduce poverty by 50 percent in ten years. The plan, which emphasizes good job growth, family and community strength, and economic security, is actually an updated version of a 2007 report issued in the wake of Hurricane Katrina. From Poverty to Prosperity, outlined more than ten recommendations that, if enacted, would have saved 18 million Americans from poverty. But amid the 2008 financial crisis, these recommendations never found the champion they needed -- strange, given how obvious it was that the Great Recession would only perpetuate America's poverty problem.
At the core of the original CAP proposal were three recommendations that, by themselves, would have reduced the 2007 poverty rate by 26 percent. First, raising the minimum wage so that it equals 50 percent of the average wage. Second, tripling the EITC for childless workers, expanding the EITC for larger working families, and making the Child Tax Credit available to all families, including the poor. Third, guaranteeing child care to families with incomes below $40,000 and expand the childcare tax credit. If these recommendations had been implemented, more than nine million Americans would have been lifted out of poverty.
If the other nine recommendations had gained traction, the Urban Institute estimates that Black poverty would have fallen by almost six percent and Hispanic poverty would have been reduced by 8.5 percent. Child poverty would have fallen by 41 percent. Two million Americans would have been lifted out of extreme poverty (less than $12,000 for a family of four). All this for a mere $90 billion a year -- small change in a $15 trillion economy.
These proposals still form the core of the right response to poverty. That is why Congresswoman Barbara Lee is also moving on CAPs new anti-poverty policy. She will introduce the Half in Ten Act tomorrow. If this bill can find some Republican support in the House, it would establish an Interagency Working Group that will focus on poverty reduction, providing a policy response to America urgent problem.America must take up some or all of these new approaches to poverty reduction in the coming years if she is to have any chance at shared prosperity. We've done it before:
Between 1964 and 1973, under both Democratic and Republican administrations, the U.S. poverty rate fell by nearly half (43 percent) as a strong economy and effective public policy initiatives [e.g. Medicaid, Medicare, and Head Start] expanded the middle class. Similarly, between 1993 and 2000, shared economic growth combined with policy interventions such as an enhanced earned income tax credit and minimum wage increase worked together to cut child poverty from 23 percent to 16 percent.
And we've done it recently. The American Recovery and Reinvestment Act kept more than 6 million Americans out of poverty in 2009, according to the Center for Budget and Policy Priorities. There's no reason to believe we can't do it again. It may cost more than $90 billion this time around, but that's all right. Corporate profits are at record highs, as are Americans' appetites for higher taxes.