Two views on rising poverty

Robert Greenstein of Center on Budget and Policy.
Robert Greenstein of Center on Budget and Policy.
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By Amy Goldstein
Friday, September 17, 2010

Census Bureau figures released Thursday show that Americans' economic well-being deteriorated last year in important ways. The number of people living in poverty rose by 3 million in 2009 to 44 million, the highest level in the half-century that the government has kept track. For the first time, the number of people without health insurance exceeded 50 million.

Here are two voices well-versed in such issues, one from the right of the ideological spectrum and the other from the left. Both talked to The Washington Post on Thursday about what this new snapshot means and what the government ought to do about it.

Robert Rector is senior research fellow at the conservative Heritage Foundation. Robert Greenstein is executive director of the liberal Center on Budget and Policy Priorities.

How significant were the changes last year in Americans' economic well being? Rector: The numbers in 2009 are the largest increase in poverty in recorded history, with 3.7 million people falling into poverty. Even as a proportion of the population, it ties the previous records. This is a significant increase in poverty.

Greenstein: These figures are significant. They show a large increase in poverty in 2009. But, actually, for an economy with an unemployment rate in the 9 to 10 percent range, it's noteworthy that the increase in poverty and deterioration of income of people at the bottom wasn't greater.

To what extent does this deterioration reflect recent and permanent changes in the U.S. economy? Rector: I think this is due to a surge in unemployment that hopefully is temporary. However, you have a sort of core underlying poverty of 35 million people that is there even in economic boom times. . . . If you look at that core poverty . . . it stems from three basic causes: failure to complete high school, having a child without being married and the failure to maintain an attachment to the labor force.

Basically, in our society, we have debate between the left and right, where the right is saying poverty is driven by specific human behaviors, specifically with respect to work and marriage, and the left says, no, this is based on some kind of abstraction that makes those behavior occur.

[The increase in 2009] seems to be more because of an increase in involuntary unemployment. The increase in poverty is among married [people] because of the severity of this recession. . . . That's one of the big questions here: What is the unemployment rate going to be two years from now? I do not have that crystal ball.

Greenstein: They primarily reflect recent, temporary changes in the economy. No one expects that we are permanently going to have unemployment rates at this level. This is the most significant recession since the Great Depression.

There's a slightly different answer with regard to health insurance. The increase [in people without coverage] reflects both a temporary and a permanent factor. The temporary factor is, more people lost their jobs and, hence, their employer-based coverage. The ongoing factor is, we have a decade-long erosion of employer-based coverage. The third factor here . . . is that despite the sharp drop [in people with insurance], there was no increase in the ranks of the uninsured among children and the elderly because of [Medicaid, the Children's Health Insurance Program and] Medicare.

What is the single most important thing the government could do now that would reduce the number of Americans living in poverty? Rector: The single most important thing it could do is articulate a clear and consistent message in low-income communities that it's best to be married before you have children. . . . It's like trying to run an anti-smoking program before you've told people that smoking causes cancer first. . . . We have to create that underlying message first.

Greenstein: In the short term, probably the single most important thing Congress needs to do is to extend key elements of assistance provided in the [American Recovery and Reinvestment Act] that are slated to expire - particularly the additional weeks of unemployment insurance that are slated to expire on Nov. 30 and a temporary emergency fund the act set up that is currently subsidizing 250,000 jobs for low-income parents and youth . . . that is set to expire Sept. 30.

Over the long term, there's no silver bullet. A lot of things need to be done, from much better education systems, better access for low-income students to higher education and improvements in certain assistance programs. More important than those would be stellar performance by the economy. If we were able to get the unemployment rate back below 5 percent, the impact over the long term would be very big . . . because, when you have full employment, it has upward wage pressure at the bottom.

How much will the new federal health-care law do to help people who are uninsured? Rector: We expect that the Obama plan will reduce the number of uninsured. But there will still be at least 23 million uninsured people in the United States, and probably a third of those will be illegal aliens. . . .The reality is that Obama is planning to spend more than $11 trillion on anti-poverty assistance in the next decade, and the cost of "Obamacare" is on top of that. Virtually none of [the health-care law] is funded. . . . When you do spending that's not funded, it looks like you got a freebie. In reality, that has a deleterious effect on the overall levels of unemployment and overall economy.

Greenstein: We saw a stunning increase in the number of uninsured in 2009. Had the new health-care reform law been in effect, that would not have occurred. Virtually all of the increase . . . in '09 was among people ages 18 to 64, large numbers of whom lost employer-based coverage and had no other place to get affordable coverage. Under health reform, they will be able to purchase private insurance in the new health-care markets that is made affordable both by the competition [among insurance companies] those markets will provide and . . . the help of subsidies for people up to four times the poverty line. Had that structure been in effect in 2009, the lion's share of people who . . . became uninsured would have been able to retain coverage.

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