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The Safety Net, the Poor — and the Democrats

Allan Lichtenstein
January 21, 2015

NEARLY 50 MILLION AMERICANS LIVE IN POVERTY. WHAT IF THEY VOTED?

by Allan Lichtenstein

Ec. justiceAFTER THE DEMOCRATS lost seats in both houses of Congress last November, Senator Charles Schumer (D-NY), in a speech to the National Press Club blamed the losses on Obamacare. “Unfortunately, Democrats blew the opportunity the American people gave them (in 2008)," Schumer said. "We took their mandate and put all our focus on the wrong problem -- health care reform," which was "not the change we were hired to make.”

In Schumer's view, the political interests of the Democratic Party would have been served better by addressing the needs of the middle class -- “better wages and more jobs” -- rather than the needs of the “5 percent of the electorate” who stood to benefit most from the Affordable Care Act. In other words, the political weight of the poor was too small to be a factor in the electoral strategy of the Democratic Party. The plight of the "poor” was not a worthy political project.

Thomas B. Edsall, a contributing Op-Ed writer in the New York Times, noted that Schumer's speech has “forced a debate over fundamental party priorities” within the Democratic Party. It prompted the question whether Democrats should "focus primarily on the needs of the poor or first address the economic struggles of the working and middle classes”.

Taking issue with Chuck Schumer, Paul Krugman responded that Obamacare has been a success and has reduced the number of uninsured Americans significantly. Polls suggest that the newly insured are pleased with their coverage. To have focused on the economy as a whole would have been “wrongheaded,” as subsequent events showed: After the passing of the stimulus package, Obama did not succeed to pass any legislation that would have invigorated the economy. Kevin Drum, writing in Mother Jones, agrees with Krugman. Obamacare has been a success. It is doing what it was intended to do and people actually using it are happy with it. He wonders what the Democrats could have done that would have been “actually feasible.”

A RECENT SURVEY by the Pew Research Center, conducted just prior to the midterm election, might suggest a potential path the Democrats could pursue to win future elections. Paying more attention to the needs of the poor -- especially those who benefit from the safety net -- rather than less, as Schumer proposes, may be in the interests of the Democrats. Using a more developed definition of a person's financial situation than family income, the Pew Research Center finds that although the poor tend to vote Democratic, "at least as striking is the degree to which those who are financially insecure opt out of the political system altogether." This opting out disproportionately affects the Democratic Party.

Results from the survey showed that 42 percent of the least financially secure preferred a Democratic candidate, yet about 70 percent of this group was unlikely to vote. In contrast, just 17 percent preferred a Republican candidate. A sizable 41 percent of the least financially secure did not prefer either party, or preferred another candidate. And almost the entirety of this 41 percent was unlikely to vote. "As a consequence, in 2014, the Democratic Party left far more potential votes 'on the table' than did the Republicans," the Pew report concludes.

To understand why "financial insecurity is associated with a lack of support for the Republican Party, but does not translate into correspondingly greater levels of allegiance for the Democrats,” the survey also examined the relationship between financial security and political values. Using a scale based on ten political values questions, the research found that the financially insecure are much less likely to hold ideologically consistent liberal or conservative views than the financially secure. This, the authors note, may explain, in part, why the financially insecure are less likely to participate in the political process or to be knowledgeable about contending candidates. Nevertheless, two key political values held by the least financially secure cast doubt on the validity of Schumer's conclusions. They suggest a potential opening for a progressive agenda that could pick up the votes left on the table.

THE SURVEY results reveal that the least financially insecure hold more liberal attitudes than the four groups with greater financial security on the two social safety net questions. First, 60 percent of the least financially secure responded that government should do more for the needy, even if it means increasing the debt level. Second, 67 percent said that poor people have hard lives because government benefits don't go far enough to help them live decently. On both questions, the percentages were considerably higher for the least financially secure than for any of the other four groups.

The findings of the Pew Research Center are supported by recent research that has found that the preferences of voters and non-voters increasingly are diverging. The rich turn out to vote in much larger percentages than the poor. Actual voters tend to be more economically conservative than non-voters. The latter are more likely to support unions and greater government spending on programs such as health insurance and public schools. State-level research suggests that where the poor vote at higher rates, state public policy is more likely to be directed to areas such as increased welfare spending, raising the minimum wage, expanding children’s health insurance and legislating against anti-predatory lending policies

And just how effective is the safety net in reducing poverty in this country? The official poverty measure (FPL), originally instituted in the 1960s during the Johnson administration, is considered by many experts to be outdated and inappropriate for realistically estimating the extent of poverty in the United States. Building on work done during the Clinton administration, the Obama administration developed an alternative poverty measure, known as the Supplemental Poverty Measure (SPM). The SPM, unlike the official poverty measure, uses post-tax, post-transfer cash income to calculate the poverty rate. Taxes are subtracted, while tax credits, such as the Earned Income Tax Credit (EITC) are added. The SPM also includes as resources benefits such as SNAP (Food Stamps) and housing assistance and subtracts non-discretionary costs such as medical, childcare and work expenses. While it also does not do a sufficiently good job at estimating the depth of poverty in this country, it has one clear advantage over the official poverty measure: It allows for calculating the effectiveness of the safety net programs.

The chart below shows by how much various safety net programs such as Social Security, EITC, and SNAP reduced the SPM and by how much non-discretionary costs such as medical, childcare, and work expenses raised the SPM, in 2013.

With 48.7 million Americans living in households with incomes below the SPM, the poverty rate was 15.5 percent in 2013.

According to the calculations of the Center for Budget and Policy Priorities (CBPP), safety net programs lifted 39 million people out of poverty in 2013. If the safety net did not exist, 88.6 million Americans would have been living in poverty. The poverty rate would have been a sizable 28.1 percent. And, child poverty would have been 27.5 percent, rather than 16.4 percent.

By far the most effective safety net program is Social Security. If there was no Social Security program, the SPM would be about 8.6 percentage points higher. In other words, the poverty rate would have been about 24.1 percent, and not 15.5 percent. Social Security kept 27 million people out of poverty in 2013. Among the elderly (above age 65), Social Security reduced poverty by 38 percent. Without Social Security, the elderly poverty rate would have been 52.6 percent. More than half of all elderly would be living in poverty -- 23.4 million rather than 6.5 million elderly.

The next most effective safety net program is the EITC, which kept 2.9 percent of Americans, or 9 million, above the SPM. Other programs, while not making as big an impact on reducing poverty, also contributed to keeping millions out of poverty. For example, SNAP reduced the SPM by 1.6 percent and kept 4.9 million people out of poverty; housing subsidies reduced the SPM by 1.0 percent and kept 3.0 million people out of poverty; free or subsidized school lunch reduced the poverty rate by 0.5 percent and kept 1.5 million out of poverty; Women, Infants and Children (WIC) reduced the poverty rate by 0.2 percent and kept 0.5 million out of poverty; and housing energy subsidies (such as LIHEAP) reduced the poverty rate by 0.1 percent and kept 0.2 million out of poverty.

In contrast, out-of-pocket medical expenses (MOOP) raised the poverty rate by 3.5 percent in 2013. The poverty rate would have been 12.0 percent if no out-of-pocket medical expenses were incurred. There would have been 11 million fewer Americans in poverty—37.6 million people rather than the 48.7 million that were actually in poverty.

Effect of Individual Elements on SPM Rates: 2013

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THE PEW RESEARCH CENTER study showed that the least financially secure are the most reliant on government benefits; more than half received at least one type of means-tested government benefit. The millions of Americans receiving assistance from the safety net demonstrate that there is a large constituency of poor and financially insure people who potentially could provide electoral support to the Democratic Party. If the Democrats chose to broaden its electoral base, a large voting potential exists to be tapped. Of course, significant obstacles in registering these potential voters will need to be overcome. While helping the poor is the moral responsibility of all, irrespective of political affiliation, the Democrats have a particular political interest to help the poor and expand the safety net, in contrast to Senator Schumer’s view.

Allan Lichtenstein has a Ph.D in urban planning from Rutgers University and has been working in the field of poverty research for eight years. He grew up in South Africa, lived in Israel for sixteen years, and has lived in the U.S. since 1986.