Ending poverty in the U.S. will most likely be one of the major issues of the 2016 presidential election, as evidenced in the speeches of many hopefuls of the Republican and Democratic parties. The latest is 2012 presidential candidate and potential 2016 nominee of the Republican party Mitt Romney’s call before the Republican National Committee in San Diego to “finally end the scourge of poverty in this great land.” There is a greater recognition and widespread feeling that a small percentage of people in the U.S. benefited the most during the slow, painfully long recovery phase and something needs to be done to correct the imbalance and growing inequality.
Basis of measurementMany in India will have difficulty in understanding poverty in the U.S., where the measurement and nature of poverty are very different from what people in India generally associate the term ‘poverty’ with.
The poverty line in the U.S is estimated on the basis of income necessary to have enough food, clothing, shelter and other necessities of life.
A family of four is considered to be living below the poverty line if its income is less than $23,850 per annum. If you multiply this with the existing foreign exchange rate of 61.59, it will be over Rs. 14 lakh. My friend in Chennai tells me “you must be kidding.”
Using this definition, the poverty rate in 2013 was estimated at 15.4 per cent and the number of people living below the poverty line was over 46 million — one out of seven persons in the U.S. is poor. This figure will be about the same when we include income transfers from the government. While official poverty measures have not shown a long-term declining trend between 1967 and 2013, supplementary poverty measure, taking into account government income and in-kind transfers, calculated by economists at Columbia University, shows that government policies have reduced the incidence of poverty over time.
Categorising the poorWho are these poor people? U.S. Census Bureau data indicate that nearly 20.5 million poor people are white, 12.5 million are Hispanic, 10.2 million are African-American, 1.9 million Asian and Pacific islanders, and about 7,00,000 Native Americans. Relative poverty is more among Native, Hispanic and African-Americans (poverty rates ranging between 24.9 per cent and 28.3 per cent) and less among whites (10.6) and Asians (12.50). More women than men, more people under 18 years of age than working age groups, and more people with less than high school education than others with higher education, are poor.
President Lyndon Johnson initiated “War on Poverty” to provide early childhood education, improve financial assistance for collegiate level education and introduced many other programmes to increase access to education and improve quality of living.
Thousands of people benefited from these programmes, including President Barack Obama, and their standards of living improved. Problems in implementing these programmes have given opportunities to Republicans to cut funding for them. They favour programmes that are of the voucher kind to the existing ones, while Democrats would like to retain some of the successful programmes and introduce new ones to improve the skill levels of those who are now marginalised.
Republicans and DemocratsWhat is most disconcerting is more than half of the students enrolled in public schools depend on free and reduced price lunches, according to the Southern Education Foundation’s recent report. While Republicans who are now controlling the U.S. Congress would like to reduce taxes to improve the economy and reduce the poverty rate, Democrats would prefer high income earners — the greatest beneficiaries of economic growth during the last six years — to pay the same rate of capital gains tax as was done under Conservative President Ronald Reagan, to help provide more benefits to low income groups.
When I came to the U.S. in 1960, poverty was not visible; now it is being covered by the media for all to see.
(M.C. Madhavan is professor emeritus, Economics and Asian Studies, San Diego State University.)
