The Republican War on the Poor
Continued from previous page
Then there is the minimum wage. Republicans may now be trying to reduce its reach. In Arizona, Republicans have tried to repeal the minimum wage, claiming business can't afford it in a recession. But the federal minimum wage, now $7.25 an hour, has been raised so rarely in the last few decades, that it is well below its 1968 high when discounted for inflation. Mitt Romney has now backed off his long-held position to raise the minimum wage along with inflation to satisfy his fellow Republicans. They argue the old simplistic economic story that any increase in wages means lost jobs. But what America needs now is more spending -- and higher wages would help do that. America grew rapidly in the 1950s and 1960s when the minimum wage was relatively much higher than it is today.
One pro-Republican interviewee on Moyers and Company recently asked whether anyone really believed Paul Ryan was cruel and didn't care about the poor. People baring harsh policies do not grow fangs. The Ryan argument is a very old conservative one: that social programs make people dependent. One wonders whether he believe there were any poor when there were no substantial programs to redistribute money in America -- say, in the 1800s.
The Republicans of course say they want to provide jobs. Free markets, once released to work their magic, will enable workers to get a job and provide them the pride they lack. And Romney and Ryan they know how to do it -- tax cuts.
We'll get back to tax cuts. But, first, the markets don't work their magic -- anywhere. Economists like Tim Smeeding and political scientists like Lane Kenworthy have pored over the data on incomes across countries and have found that markets create a lot of poorly paid work, not only in the U.S. but also in much of Europe. The U.S. households with incomes less than 40 percent of the disposable income of the typical household comes to nearly 18 percent, but it is higher in England and not much lower in Germany or Sweden (Foreign Affairs, sept. oct, 2012, Campbell). One third of Americans have incomes below 200 percent of the poverty line -- the poverty line is about $14,000 for an individual, $22,000 for a family of four.
What makes this tolerable is that social programs, such as the Earned Income Tax Credit, Medicaid and Medicare, redistribute income. Europe requires those same programs, and theirs on balance are far more generous.
Paul Ryan has never, to my knowledge, presented evidence that reducing sharply these redistributive programs will work -- to motivate these people to find better jobs. His is an ideological argument, based on no serious theory and no serious experience. He knows, I suppose in his heart, that such a laissez-faire social state is better for the poor. And the Republicans pull out the Obama record to prove their point. The poverty rate went up in in 2009 and 2010 under Obama: he is clearly doing something wrong. Of course, Obama inherited that Bush recession.
But what they propose is more of what George W. Bush did. Big tax cuts to motivate the rich to create more jobs! It is worth noting that Bush's job creation record was the worst of any recovery in the postwar period. Moreover, wages remained essentially flat. And finally, Bush, who inherited a poverty rate from Bill Clinton of 11.3 percent, still had a poverty rate of 12.5 percent in 2007 after years of the housing-led economic expansion. In 2008, he left Obama a poverty rate of 13.2 percent, nearly two full percentage points above the one he inherited, and moving up inexorably. What about Reagan, the tax cutter? He left George H.W. Bush a poverty rate of 12.8 percent. Poverty rates had fallen to well below 12 percent in the 1970s as a result of Johnson's war on poverty. In the 1950s, the poverty rate was estimated at 22 or 23 percent.
Romney and Ryan promise jobs to reduce poverty. There is little doubt it is the healthiest of cures. But their policy of tax cuts is merely a repeat of the failed Bush years. And the only way the Reagan years look passable is if you lop off the severe recession of 1981 and 1982, a habitual trick of The Wall Street Journal editorial page. Under Reagan, the great American wage stagnation began, and productivity growth remained slow.