Bicker, Jab And More Deadlock: Washington’s Bipartisan Solution For Income Inequality

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President Lyndon B Johnson smiles as he holds up the 'War on Poverty' bill after he signed it into law at the Rose Garden of the White House, Washington, DC. on August 20, 1964.

President Lyndon B. Johnson declared America’s “unconditional” War on Poverty fifty years ago Wednesday, setting up far-reaching government initiatives like Medicaid, a greatly expanded food stamp program, and federally funded education programs. A half century later, Democrats and Republicans agree that more work needs to be done, but the War on Poverty has become a war of words.

While both parties bemoan many of the same symptoms, they hardly agree on the disease, let alone the medicine. Democrats focus on income inequality: the gap between the nation’s highest and lowest earners is at its greatest level since the Roaring Twenties. Republicans, on the other hand, emphasize social mobility: the declining ease with which Americans can rise from the middle class to the top wage bracket. That makes the coming push less about policy as it is about election-year politics.

“While they may be using some of the same words, their perspectives are entirely different,” GOP pollster Whit Ayers said of the divide between Democrats and Republicans on the issue. “And that leads to fundamentally different conclusions.”

Ahead of the midterm elections, the Democrats’ shift to income inequality has been previewed for months, drawing from Sen. Elizabeth Warren’s fiery speeches ridiculing too-big-to-fail banks and their weak regulators last summer to New York City Mayor Bill de Blasio’s recent win after his “Tale of Two Cities” campaign. The issue was a focal point of the president’s second campaign, and will be at the center of his State of the Union Address later this month.

Many Republicans, meanwhile, have been pushing their party to address the issue of social mobility since just after the 2012 presidential election, concerned that their party had become defined more by what it opposes than what it favors. House Majority Leader Eric Cantor, Rep. Paul Ryan, and Sen. Marco Rubio have emerged as some of the leading voices for Republicans to prove that they care—even for what former Republican nominee Mitt Romney awkwardly called the “47 percent.” On Sunday, Rubio called for weaning back LBJ’s government expansion, so that “50 years from now, nobody in America will be trapped in a life of poverty.” Separately, Sen. Rand Paul has traveled to urban areas to pitch “economic freedom zones” to revitalize growth and increase opportunities in blighted areas.

First on the Democrats’ agenda is an immediate three month, $6.5 billion extension of unemployment insurance. House Republicans oppose the Senate measure, calling for the legislation to be paid for through cuts elsewhere. Sens. Dean Heller (R-Nev.), a co-author of the bill, and Susan Collins (R-Maine) publicly support the legislation; Majority Leader Harry Reid needs three other Republicans to join 55 Democratic and Independent senators for passage. Democrats also plan a push to raise the federal minimum wage from $7.25 an hour to around $10, even though Obama failed to enact an increase to $9 last year as he called for in his 2013 State of the Union. Lawmakers also want to expand the availability of pre-kindergarten education, pointing to an array of studies showing it leads to greater success later in life.

Democrats believe that raising the minimum wage is a particular political winner. “I don’t mean to be too pithy but I think the demographic is fairness,” says progressive pollster John Anzalone, who notes that Democrats do “surprisingly good” on this issue with women and Hispanics. “What it does do is it sends a signal to them—who’s side are you on?”

The Republican effort centers around traditional party priorities like school choice and welfare reform. On Wednesday, Rubio will call on the party to apply the lessons of the 1996 welfare reform legislation to reform other government programs. That same day Cantor will deliver remarks at the Brookings Institution reiterating the GOP’s longstanding call for school vouchers, among other reforms. The focus reflects the realization that the party’s long-term hopes ride on reaching out to younger voters who are frustrated with the status quo, by positioning the GOP as the party of smarter reforms. “There is absolutely an opportunity for Republicans to go on offense on these issues,” said a Rubio aide.

Both sides largely reject the others’ proposals as misguided. “The goal ought to be, is to get people out of entry-level jobs, into better jobs, better-paying jobs. That’s better education. That’s a growing economy,” Ryan said in response to President Obama’s State of the Union last year. “I don’t think raising the minimum wage, and history is very clear about this, doesn’t actually accomplish those goals.” Democrats object that Republicans are trying to gut welfare programs and public education with their so-called reforms.

At the root of the dueling rhetoric around the The War on Poverty is a political question: Does the government enable, or is it an enabler?

“There is a lot more clarity on the current trends in inequality than there is on what to do about it, much less any agreement,” said Isabel Sawhill, Senior Fellow in Economic Studies at the Brookings Institution. “Amongst experts there is much more clarity. We need a bipartisan agreement about what to do about inequality because if we don’t nothing will happen.”

Here is a back-of-the envelope breakdown of the two parties’ strategies for taking on the problems of income inequality.

The Democratic Strategy

The Republican Strategy

  • Focus on continuing long-term unemployment benefits to the 1.3 million Americans that are currently out of work. “The rich are getting richer, the poor are getting poorer, and the middle class is being squeezed out of existence,” said Senate Majority Leader Harry Reid (D-NV) on CBS’s Face the Nation on Sunday. Democrats posit that extending jobless benefits, which expired on Dec. 28, is critical to maintaining the economic recovery and keeping the jobless out of extreme poverty.

  • Promote universal pre-kindergarten as critical to the future of economic stability. Citing research that shows that kids who start school earlier earn more over time, Dems contend that early childhood education is the key to America’s future economic prowess.

  • Raise the federal minimum wage from $7.25 to $10.10 per hour.

 

 

  • Shift away from safety net programs that they say discourages upward mobility in favor of policies that provide opportunities for self-sufficiency. In a recorded message released on Sunday, Senator Marco Rubio began touting his latest messaging effort. “For millions of Americans living in poverty, the American dream doesn’t seem reachable,” Rubio said. “What America needs is a real agenda that helps people acquire the skills they need to lift themselves out of poverty.” On Wednesday, the anniversary of the War on Poverty, Rubio will deliver a speech at the American Enterprise Institute reiterating that sentiment

  • Promote of school choice and charter school education as a way out of poverty for low-income Americans. During a speech at a Philadelphia charter school in September, House Majority Leader Eric Cantor referred to educational opportunities provided by school choice as justice for children trapped in failing schools and in the cycle of poverty. On Wednesday, he’ll revisit that message at the Brookings Institute during the release of their annual School Choice index.

  • Push for the development of what Kentucky Sen. Rand Paul calls “economic freedom zones” in run-down urban areas like Detroit, in hopes of increasing social mobility by cutting taxes and regulatory red tape.

Both parties admit a political motivation in their embrace of these messages.

“The tectonic plates of our politics have shifted in the last few years,” Sen. Chuck Schumer, told reporters on a Sunday conference call highlighting Democrats’ shift to inequality. “Our politics are changing, and the issues which have dominated our politics in the past—both Obamacare and the deficit—are not unimportant, but these types of issues may now supersede them.”

But so far, both sides’ have provided more talk than action. In a memo obtained by TIME, Majority Leader Cantor’s January to-do list sent to legislators Jan. 3 doesn’t mention the introduction of any specific measures to address social mobility.

29 comments
godenich
godenich

Bi-partisan Poverty Plan? GDP Indexed Producer/Consumer Liquidity Insurance Program to phase out the Welfare State (AKA Negative Income Tax or the updated version  Indexed Uncondictional, Universal Basic Income). The idea has been around a long time. It benefits every individual taxpayer over time. The problem seems to be that it disadvantages monopolies of Big Business, Big Unions and Big Government.

SpikeLee
SpikeLee

So according to TIME, elections shouldn't have consequences, and we should go back to ignoring inequality when not supporting it, like Joe Klein.

Realworldnonfantasyland
Realworldnonfantasyland

Your Party is ruining the economy.... NO your party is ruining the economy..  Your party is mentally ill....No your party is beyond stupid.....

--- Political talk of 2 year olds in 2014

grape_crush
grape_crush

> Here is a back-of-the envelope breakdown of the two parties’ strategies

Odd thing is that every one of those points has been done at some point or is being done now, and poverty is still a problem. The only difference is that the Dem proposals offer a temporary alleviation of the misery of being poor (universal pre-K being the exception) while the GOPer points are just more ways to throw money at the already well-off.

Anything that would promote a real difference for the impoverished will be deemed too radical of an idea and summarily dismissed.


PaulDirks
PaulDirks

People are simply unwilling to consider cause and effect carefully. The same middle manager who congratulates himself for the job well done in reducing labor costs, can't understand why he's being accosted on the street by homeless guys wanting to wash his windshield.


tom.litton
tom.litton

It looks like none of the democrats or republican proposals are mutually exclusive.  So why not try them all and see what works?

bryanfred1
bryanfred1

By all means, raise the minimum wage by nearly 40% in the middle of a tepid economic recovery.  Then watch unemployment in the lower bracket explode.  You can only charge so much for a hamburger.  Even pushing cost increases through to customers only erodes everyone else's buying power, including other low-income earners.  So you get more umemployment and higher prices.  What a solution.

reallife
reallife

@tom.littonwe can all  see the amazing success of "income equality"  90 miles south of Miami - 


why dont you move there?





jmac
jmac

@tom.litton We know what works on income inequality.   Bill Clinton closed the gap between the rich and the poor.  He didn't do it with the GOP's trickle-down Ayn Rand philosophy. 


Sweet talking Reagan's rhetoric on welfare isn't going to help income inequality.  Certainly not with vouchers - the one solution offered in the article.   Reagan didn't even believe in vouchers!  They only help the child already blessed with parents who will get them a voucher.   

tom.litton
tom.litton

@bryanfred1This is one of the most studied areas of economics.  None of that will happen, and that is as close to fact as you can get in economics.

roknsteve
roknsteve

@bryanfred1 Here we go again, another conservative that thinks only fast food workers make minimum wage.   Conservative is another word for "mentally ill."   

ReneDemonteverde
ReneDemonteverde

@bryanfred1What can you do ? The man is so desperate to deflect people attention from the Obama Care fiasco. He is just so damn incompetent. Not yet into his eight year term he is already the worst and most incompetent President country ever had. He makes Carter look Reagan in comparison.

tom.litton
tom.litton

@jmac@tom.littonRepublicans want to increase upward mobility, not reduce income inequality.  However the goals are not mutually exclusive.


I'm thinking of it as a trade.  The democrats can get things that they think will decrease income inequality, and republicans can get things that they think will increase upward mobility.  It's certainly better then doing nothing.


As for what works and what doesn't.  I always thought the best approach is to require:

1. Every program to determine a set of metrics to measure.

2. What those metrics will look like in the future if the program is successful.

3.  Modify or repeal unsuccessful programs (as determined by those metrics).



bryanfred1
bryanfred1

@tom.litton @bryanfred1 Really.  Then why is unemployment highest among the bottom brackets?  Could it be because we already increased the minimum wage substantially in 2009?  If you want to talk economic theory, there is one that is immutable - supply and demand.  Increase the cost of something and you get less demand for it.  That includes labor.  If increasing wages without improving output by the same amount solves the problem, why not just give everyone in the country a 40% raise?  Boom, problem solved!!

bryanfred1
bryanfred1

@roknsteve @bryanfred1 That was obviously an example. If it makes you feel better I'll replace it with "you can only charge so much for a given product or service." I'm not even especially convservative, but I do understand basic economics. Increasing wages without a corresponding increase in productivity or output is useless. It makes food more expensive. It makes products more expensive. It makes basic services more expensive. For everyone.  Either that, or if the amount the business can charge for its product is fixed (e.g. the hanburger example), it means fewer workers.

reallife
reallife

@ReneDemonteverde Today president Kardashian said that "extending unemployment will create jobs".


How big of a dumbass do you have to be to believe that one, really?

Only in obamaworld...






tom.litton
tom.litton

@jmac@tom.littonAll i'm asking is don't vote against a democrat just because they are willing to go along with some republicans ideas, even if you think they are dumb ideas, to get something done on income inequality. 


In fact, it's better to actually encourage it in your representative.  The more things we try, the more we know what works and what doesn't.

jmac
jmac

@tom.litton @jmac  How about a specific on that trade?   What's going to increase upward mobility for those in the middle and bottom according to Republicans?  So far it's apparently vouchers and free economic zones (there's a specific for you) and reforming welfare (another specific - it usually means money taken away).   


It's all rhetoric.   When you get to their nitty gritty it's the same old same old.  

tom.litton
tom.litton

@bryanfred1@tom.litton  

"Then why is unemployment highest among the bottom brackets?"

Most people would say there aren't enough jobs.  However, i like to think of it as too many unskilled people.  I.e. we need to find ways to help those people acquire useful skills. 

"Could it be because we already increased the minimum wage substantially in 2009?"

No


"If you want to talk economic theory, there is one that is immutable - supply and demand."

I'm not sure i know what this means.  Immutable?  


"Increase the cost of something and you get less demand for it."

It depends on what that something is.  If it's bubblegum, sure.  If it's breathable air, then no.    See: http://en.wikipedia.org/wiki/Elasticity_%28economics%29

"That includes labor."

That's not what the economic studies say, at least not for min wage workers.  Other labor might be different.

"If increasing wages without improving output by the same amount solves the problem, why not just give everyone in the country a 40% raise?  Boom, problem solved!!"

The economic studies only looked at the min wage increase.  

 

knife700
knife700

But the fed printing money to loan to banks at zero interest so they can engage in arbitrage and paperpushing to "create" nonexistent wealth with no economic value behind it...thereby inflating the currency even more than just the moneyprinting...THAT is NOT inflation I suppose. Currently the Rich BENEFIT from inflation since there net gains more than offset it and they are inflating at the expense of workers savings and buying power. Also..you fail math...raising thenprice of goods by two percent while raising a workers income by twenty percent is abhell of a lot less inflationart than many current monetary policies...your economic heroes all FAVOR inflation anyway. It is the ONLY way to maintain the ILLUSION (delusion?) Of infinite growth, the physically impossible unsustainable fairytale on which our sham fake-laissez-faire economy depends. As for thenpublicly traded company choosinf firing over lower profits...falsedichotomy.The industry requires manual labor. They wont close down there stores and make NOTHING rather than pay increased wages...manufacturing sector maybe...bit they usually pay over thebproposed minimum already. This reminds me EXACTLY of the LAUGHABLE argument that if millionaires are taxed a FEW more percent they will go Galt or throw up their hands and make NO money at all just to spite the government rather than accept a SLIGHTLY lower but still stratospheric income.

bryanfred1
bryanfred1

@tom.litton@bryanfred1 But you just made the point yourself - increase the cost of a Big Mac by a dime, but that's okay because you're paying people more as well.  That's just inflation, not wealth creation.  Plus I think you're underestimating the willingness of a publicly traded company to accept substantially lower profits.  It will fire people.

tom.litton
tom.litton

@bryanfred1 It doesn't increase the cost that much because the cost of the labor is usually about a third or less of the total cost.  

I've seen (albeit questionable) reports saying the increase to a Big Mac would be about a dime. 

And most of that cost can be offset by increased revenue due to a significant number of their customers getting a raise and decreased profits.

Some of the extra cost can be made up by decrease in taxes / increase in government services due to these workers not needing as much government help. 

knife700
knife700

Regardless of my opinion or yours on the issue..."President Kardashian? " Really? Way to up the level of discourse. Are you a child?

mantisdragon91
mantisdragon91

@reallife@ReneDemonteverdeIt keeps 1.3 Million people with money to spend. 1.3 Million more consumers help the economy. Conversely 1.3 Million with no money to spend hurt the economy. No wonder the GOP does so badly when in power if you are an example of their economic brain trust.