Reducing Poverty

Big Picture

Despite federal spending on welfare programs, more than 30 million Americans were impoverished in 2019. Economic security programs made up eight percent of the U.S. budget in 2019, totaling $361 billion. During the COVID-19 pandemic, more than $1.1 trillion was spent ensuring that the poorest Americans would remain out of poverty. Modern anti-poverty legislation must address inefficiencies and enact innovative solutions rather than simply increasing spending.

Operative Definitions

1. Poverty line: A threshold set by the federal government, which varies depending on household size. If income falls below this threshold, the household is considered impoverished.

2. Poverty rate: The percentage of individuals living in impoverished households.

3. Welfare: Government assistance and benefits for those unable to meet the essential needs of living. Eligibility is often determined by the level of income relative to the poverty line. The federal government operates more than 80 welfare programs.

4. Housing Choice Vouchers (HCV): Vouchers that enable low-income families to lease or purchase safe, decent and affordable rental housing.

5. Supplemental Nutrition Assistance Program (SNAP): A program that provides nutrition benefits to low-income families so that they can purchase healthy food.

6. Universal Basic Income (UBI): A government program in which every adult, regardless of employment status, receives a set amount of money regularly. This basic living stipend will allow every person to receive the fundamental goods and services necessary for life.

Important Statistics

1. The 2021 poverty line for households of only one person is an income of $12,880 per year. Each additional person raises the threshold by $4,540. For example, the poverty line is set at $26,500 for families of four.

2. Over the past 20 years, the poverty rate has varied from 10.5% in 2019 to 15.1 % in 2010. 

Six-Point Plan

(1) Adjust federal spending on economic security programs for inflation only. Any proposed expansion must be coupled with a decrease in spending elsewhere during regular economic periods, with exceptions allowed during times of crisis, like the COVID-19 pandemic.

(2) Reform zoning regulations. Urban zoning regulations often make it illegal or expensive to build high-density structures. Issue discretionary tax breaks for allowing high-density housing or require a set percentage of high-density zones. This will decrease housing costs and increase housing security for low-income families. Promote planned communities with associated investment in public transportation and infrastructure.

(3) Tax acreage in urban areas rather than structures. Tax land at a rate four to five times higher than that of buildings to encourage high-density housing and allow individuals to live near work opportunities. This will also lead to increased funding for state economic security programs and public transportation systems.

(4) Expand housing subsidies in areas that implement the prior two reforms. Zoning reform without subsidies displaces low-income buyers. Using revenue from the tax proposed above to cover an additional $3 million with HCV will ensure that low-income recipients are housed in safe and decent environments.

(5) Reform SNAP to make provisions for long-term unemployment and health. Enact 30 percent subsidies on the purchase of produce by SNAP participants while expanding access to healthy foods in underdeveloped areas. Additionally, relax the time-limit restrictions on SNAP availability for able-bodied adults without children.

(6) Explore alternative methods of delivering welfare. Contract out case management to reduce administrative errors, such as unclaimed welfare checks or those sent to deceased individuals. Similar errors occur in programs such as SNAP and HCV. In addition, implementing a UBI as an alternative to a wide range of welfare programs has seen support from both parties and may decrease spending, but more research in this area is needed.

Why This Initiative Is Important

The United States must ensure that the basic needs of its citizens are being met. Reducing poverty will lower costs for related public program areas, such as healthcare, corrections and policing. This proposal is based on accurate data and survey results rather than idealism, leading to sustainable and practical solutions. Increasing program efficiency will ensure less money is needed; increasing funding without reform is unreasonable. Promoting measures that prevent poverty, rather than outright dependence, will improve long-term solutions and help lower welfare spending in the future.

Economic Impact (From Our Student Economist Team)

The estimated annual economic benefit measures $194 billion, while the associated costs would be covered by the revenue increases specified.

Acknowledgments

The opinions in this article are those of the individual authors whose information can be found below.

The following student(s) worked on this proposal: Marie Dishian, Centre College; Tim Antrim-Cashin, Columbia University.

The following individuals gave feedback during the creation of this proposal:

1. Dave Newton, Ph.D.: Economist; Venture Consultant. Santa Barbara, CA.

2. Karen Dolan: Fellow, Institute for Policy Studies. Washington, DC.

3. Danilo Trisi, Ph.D.: Director of Poverty and Inequality Research, Center on Budget and Policy Priorities. Washington, DC.

4. Wade Killefer: Co-Founder, KFA Architecture, Los Angeles; President, AIA Los Angeles. Santa Monica, CA.

Note: Not all participants necessarily agree with every aspect of this proposal.

Sources

De Wispelaere, Jurgen, and Lindsay Stirton. “The Administrative Efficiency of Basic Income.” Policy & Politics, vol. 39, no. 1, Jan. 2011, pp. 115–132., https://doi.org/10.1332/030557311X546352. Accessed 8 Nov. 2021.

Schuetz, Jenny. “To Improve Housing Affordability, We Need Better Alignment of Zoning, Taxes, and Subsidies.” Brookings, Brookings, 16 Mar. 2020, https://www.brookings.edu/policy2020/bigideas/to-improve-housing-affordability-we-need-better-alignment-of-zoning-taxes-and-subsidies/.

Williams, Jeremy. “Should We Tax Land Instead of Buildings?” The Earthbound Report, 23 Apr. 2012, https://earthbound.report/2012/04/11/should-we-tax-land-instead-of-buildings/.