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What Government Can–and Can’t–Do About Poverty

The persistence of poverty, and in particular of children living in poverty, prompts the question: What can (and can’t) government do to respond?

Complicating matters is the fact that this question is raised in an environment of general skepticism regarding the efficacy of government programs to alleviate poverty. There is much government cannot do, yet this does not warrant the conclusion that there is little government can do.

As one example, we need only look at the history of Social Security and its success in reducing poverty rates among the elderly to see that government programs can be efficacious. Without income from Social Security, nearly half of the elderly would be poor. With Social Security benefits, their poverty rate falls to approximately 10 percent.

What then can government do to address child poverty? There are at least four steps government can take.

First, government can adopt a more adequate standard by which to measure poverty. In medicine, the first step to successfully treating an illness is an accurate diagnosis. Likewise, in responding to poverty, government must first develop an accurate picture of the challenge it is confronting.

In 2007, federal guidelines define poverty as an income below $20,650 for a family of four.  Granting that what people and families need to live varies from place to place, the official poverty measure is a remarkably conservative standard by which to measure the nature and extent of poverty in our society.

As an alternative, 34 states and the District of Columbia now offer a self‑sufficiency standard for income adequacy. This standard more accurately reflects the income necessary to adequately meet basic household needs by incorporating living costs–food, shelter, health care, transportation, miscellaneous incidental necessities, taxes, and tax credits–and by taking into account local differences in costs, which are considerable particularly in the areas of housing and child care.

Second, government can set clear and measurable goals in its efforts to reduce poverty. In 1999, Prime Minister Tony Blair introduced an initiative to end child poverty in the United Kingdom by 2020, with an initial goal of cutting it by one quarter by April 2005.

The British government designed a system to boost the incomes of working parents, including subsidies to low-wage workers and regular increases in the minimum wage. They established a 10‑year strategy to increase access to quality, affordable child care and launched programs to develop healthy and school‑ready preschoolers, teens, and young adults.

These and other initiatives have yielded mixed results, and reforms continue. But setting a quantifiable agenda “focused the minds of politicians, the agencies and the public,” Jared Bernstein and Mark Greenberg wrote in the Washington Post. “Without it they would never have gotten as far as they have.”

Despite missing its initial target, the government reported a decline of 17 percent in the number of children living in poverty, some 700,000 children, from 2000 to 2005. By contrast, in the same period, the number of American children living in poverty has increased 12 percent.

Third, government can mitigate the effects of poverty through a mix of programs of direct assistance and development. Three programs that have proven particularly effective in meeting the needs of children in poverty are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the free and reduced school lunch and breakfast programs, and Head Start.

Fourth, government can address poverty through tax policy. The clearest example of success in this regard is the Earned Income Tax Credit (EITC)–a tax credit for low‑income working families, which now lifts more children out of poverty than any other government program through tax reductions and wage supplements for low‑to‑moderate-income working families. Census data show that in 2003, the federal EITC lifted 4.4 million people out of poverty, including 2.4 million children.

The tax code could also provide a deduction for charitable contributions made by individuals who do not itemize deductions on their income tax returns, a group that includes more than two‑thirds of taxpayers. Each year, this group of Americans contributes an estimated $36 billion to charities.

Reinstating a limited deduction for non-itemizers would generate billions of dollars in increased giving to charities each year. Providing a deduction for charitable contributions has the double effect of providing additional support for charities while decreasing the tax burden on lower-to-moderate-income individuals who give a greater percentage of their incomes to charity.

There you have it. Four things government can do to address child poverty. First, adopt a more adequate standard for determining the extent of poverty. Second, set clear and measurable goals for reducing child poverty. Third, provide various programs of direct assistance and development. Fourth, supplement incomes through such tax policies as the EITC and provide tax incentives to encourage charitable giving.

Curtis Ramsey-Lucas is national coordinator of public and social advocacy for National Ministries of American Baptist Churches, U.S.A.

This column is adapted from Hope for Children in Poverty: Profiles and Possibilities edited by Ronald J. Sider and Heidi Unruh. Copyright © 2007 by Judson Press. Used by permission of Judson Press. To order, phone 800-4-JUDSON or visit http://www.judsonpress.com/product.cfm?product_id=11679. A free study guide is available through the Judson Web site by following the link to downloads, then book excerpts and extras.